March 13, 2020

March 13, 2020
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  • WTI is up $2.10 to $33.60/Bbl, and Brent is up $2.26 to $35.48/Bbl
  • Oil prices are higher this morning by over 5%, but still set for the worst week since 2008 amid decreased demand and increasing OPEC supply
    • Panic selling due to coronavirus fears also setup world stocks for the worst week since the financial crisis
    • Oil supply is expected to outpace demand by 6 MMBbl/d by April, according to Goldman Sachs
      • The surplus comes as Saudi Arabia and the UAE promise to ratchet up production in April
      • OPEC’s Joint Technical Committee meeting planned for March 18 has been canceled. No new dates have been put forward (S&P)
  • Fast stats:
    • The CBOE/Nymex oil volatility index climbed to 116 on Thursday, the highest since at least 2007 (Bloomberg)
    • WTI’s discount to Brent at -$1.55/Bbl on Friday is the narrowest since 2016
    • Brent’s spread to Dubai swaps, flipping to a discount on Wednesday, weakened further to settle at -$1.71/Bbl, the weakest on record
    • Gasoline futures fell to their lowest level in more than a decade at 87c a gallon
  • Natural gas is up 7.2c to $1.913/MMBtu
  • The EIA reported a withdrawal of -48 Bcf, this was noticeably weaker than the -55 Bcf withdrawal analysts were expecting
    • The surplus to the five-year average increased to 227 Bcf and total storage now stands at 2.043 Tcf
    • Price action immediately following the report was flat
  • Apache is slashing its dividend by 90% and cutting capital expenditures by 40% to $1.0 to $1.2 Billion; the company will also cease all drilling in the Permian Basin
    • Devon Energy is cutting capital expenditures by 30% and reducing activity in the STACK and Powder River Basin
    • Murphy Oil is slashing capital expenditures by 35% and will reduce rigs in the Eagle Ford
    • Exxon is reducing Permian output by 10% over the next two years, but will stick to its long-term plan to triple output by 2024

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