- WTI is up $1.59 to $21.96/Bbl, and Brent is up 72c to $25.60/Bbl
- Oil traders are calling for prices to fall a bit further, even after a 60% drop so far this year (Bloomberg)
- Analysts and traders try to guess crude’s bottom (Brent):
- Survey of traders $20/Bbl
- Goldman Sachs $20
- Citigroup $17
- Energy Aspects $10
- “WTI will fall below cash cost of U.S. shale production, which is around $20,” according to Zhang Chenfeng, an oil-trading analyst at Chinese hedge fund Shanghai Youlin
- Analysts and traders try to guess crude’s bottom (Brent):
- The sudden collapse in demand, and Middle East producers flooding the market, has resulted in a glut of unsold crude oil (Reuters)
- Nigeria, which produces high quality crude that typically commands a premium, has 30 or more unsold April-loading cargoes, equal to 30 MMBbl, according to traders
- Demand for exports from the U.S. Gulf Coast has collapsed, traders said
- The lack of options for storage, as well as high freight cost are deterring buyers
- Tanks in Cushing, one of the world’s largest storage hubs, are expected to fill to capacity as early as May, traders said (Reuters)
- Volatility gauges for Brent and WTI skyrocketed to new all-time highs on Wednesday, as outright prices fell to the lowest level in nearly 20 years (Bloomberg)
- The CBOE/Nymex oil volatility index hit 166.17 points. The index’s typical level is about 30 points. The previous high of 80 was seen in early 2016
- WTI Put skew is the most bearish on record at -38.6 points
- This means a 25 Delta Put is extremely more expensive than the offsetting 25 Delta Call
- Natural gas is up 2.6c to $1.630/MMBtu
- The front of the Waha curve continues to improve as tenors through the start of Spring ’21 have gained roughly $0.30/MMBtu since last Friday
- The basis improvement could potentially signal lower production out of the Permian, as there is a possibility that producers are buying back Waha hedges they no longer need
- AEGIS maintains its recommendation to consider layering in basis hedges at these favorable prices
- Australia LNG halted trading of its shares before an undisclosed announcement on Friday regarding its 1.1 Bcf/d Magnolia LNG terminal
- The struggling Magnolia LNG project recently received a takeover bid for the project at the end of February
- While the project has received FERC approval, it, like many second-wave projects in the U.S., does not have any firm offtake agreements signed
- Analysts expect a -8 Bcf withdrawal for the week ending March 13, this would be less than the -91 Bcf withdrawal from the corresponding week last year
- Analyst estimates ranged from a low of -5 Bcf to a high of -12 Bcf
- A withdrawal within expectations would expand the surplus to the five year-average to 282 Bcf with total stocks at 2.035 Tcf
