March 23, 2020

March 23, 2020
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  • WTI is up 31c to $22.94/Bbl, and Brent is down 68c to $26.30/Bbl
  • Oil prices are hovering in the low 20’s as governments continue to freeze economic activity to reduce the spread of the coronavirus
    • Prices received a jolt on Monday morning after the Fed promised unlimited quantitative easing
    • WTI was up 4% on the news and S&P 500 futures were up by about 2.9% as of 7:20 AM CT
  • Texas Railroad Commission member Ryan Sitton discussed the idea of reinstating “pro-rationing” policies with OPEC secretary-general Mohammed Barkindo on Friday
    • The Texas agency is split over the idea to restrict local crude production for the first time since 1973
    • The idea of reinstating pro-rationing was backed by some shale producers namely, Parsley Energy and Pioneer Natural Resources
  • The U.S. drilling rig count fell last week by 20 to 772, the lowest since March 2017, as producers pull back on spending (Baker Hughes)
    • By basin, Texas lost the most, at 11, while New Mexico lost five and Oklahoma lost three
    • Goldman Sachs expects U.S. oil production to fall 1.3 MMBbl/d over the next five quarters as producers reduce 2020 capex by an average of 35%
  • Natural gas is down 3.5c to $1.569/MMBtu
  • Six midstream companies are looking to reduce a combined $1.9 Billion in capital expenditures from their 2020 guidance, putting nearly 3 Bcf/d of new gas processing capacity and 700 MBbls/d of NGL takeaway capacity at risk (Platts)
    • OneOk will forgo a 0.2 Bcf/d expansion at its Demicks Lake processing facility in North Dakota and will also delay a 100 MBbls/d expansion of their West Texas LPG pipeline in the Permian
    • Hess Midstream noted it will specifically reduce expenses with new gathering systems
  • The CFTC reported managed-money short positions fell 121,934 contracts to total 264,452 contracts
    • Managed-money long positions fell 9,978 contracts to total 135,618 contracts
  • U.S. LNG feed gas demand appears to have recovered with Monday’s volumes clocking in at approximately 9.5 Bcf
    • Persistent fog has kept LNG cargoes from being loaded, in a timely manner, for much of the past month

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