March 22, 2021

March 22, 2021
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  • WTI is down 18c to $61.24/Bbl, and Brent is down 25c to $64.28/Bbl
  • China claims it imported no Iranian crude for the first time in months, according to official customs data
    • There were zero imports from Iran in January and February, according to Chinese customs. This contrasts with several third-party sources that claim that China imports of Iranian crude have risen exponentially over the past two months
    • The customs data shows that China did increase imports from Oman and Malaysia, as buyers likely tried to circumvent barrels through other countries to hide the origin of Iranian crude
  • The Baker Hughes oil rig count gained nine rigs, its largest increase since January, to bring the total oil rig count to 318
    • The Permian basin added four rigs, while the Eagle Ford added three rigs, and the Denver-Julesburg rig count remained unchanged
    • The recent rig additions have helped the total oil-directed drilling rig count to increase by 146, from a bottom of 172 rigs during the week ending August 14, 2020, to 318 rigs during the week ending March 19, 2021
  • Renewed lockdowns in the European Union threaten oil demand recovery (Reuters)
    • Germany plans to extend a lockdown to contain COVID-19 infections into a fifth month, according to a draft proposal
    • AEGIS notes that while supply has remained steady so far, thanks to OPEC, the demand side of the equation is weighing on oil prices as renewed lockdowns threatened the demand recovery
  • Natural gas is down 3.3c to $2.502/MMBtu
  • Higher than expected production and underwhelming demand have pushed the Summer 2021 and Winter 2021-2022 strips down to the lowest level since Dec. 31, 2020
    • The Summer 2021 strip traded at $2.60/MMBtu Monday morning, and the Winter 2021-2022 seasonal strip was near $2.85/MMBtu
    • On the demand side, March has continued to be mild in the Northeast and the Midwest, two key heating-demand regions. U.S. LNG demand has been strong to help offset some of the residential and commercial demand losses
    • Gas production for March has averaged about 92.3 Bcf/d, according to Platts data. This is 800 MMcf/d higher when compared to its 30-day average before the mid-February output freeze-offs in the South Central
    • Due to the lower demand and resilient production, gas in underground storage will likely close out the withdrawal season close to 1.7+ Tcf. This is about 100 Bcf below the average and will keep the summer more supplied than what estimates even a month ago were showing
  • U.S. LNG demand hit a new record on March 19 with total deliveries just shy of 12 Bcf/d, according to Bloomberg data
    • With U.S. gas prices lower than what many had expected, the arbitrage from the U.S. to Europe and Asia has remained profitable
    • The Japan-Korea Marker (JKM) for May was trading near $6.50/MMBtu as of March 19. JKM is the spot-traded benchmark for LNG deliveries into Northeast Asia
    • LNG capacity in the U.S. could rise this fall when Venture Global’s Calcasieu Pass terminal in Louisiana is expected to come online earlier than expected
      • Venture Global said in a recent regulatory filing that it could ship its first cargo in late 2021, a year ahead of schedule.

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