March 26, 2020

March 26, 2020
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  • WTI is down 88c to $23.61/Bbl, and Brent is down 43c to $26.96/Bbl
  • The Trump administration is pressing Saudi Arabia to pull back on its plan to unleash record oil supply into the market after a price war with Russia has sent crude prices to their lowest levels in almost 20 years (Bloomberg)
    • Secretary of State Mike Pompeo spoke to Crown Prince Mohammed bin Salman on the eve of a conference call between the leaders of the G-20
    • The State Department said Pompeo told Saudi Arabia that it “has a real opportunity to rise to the occasion and reassure global energy and financial markets when the world faces serious uncertainty”
    • Oil is expected to be discussed on the now virtual G-20 call, at least as part of discussions on the wider economy
  • The growing glut of oil has a major pipeline owner concerned some traders may try and stow away crude on its network until prices improve (Bloomberg)
    • Plains All American Pipeline is requiring customers to prove they have a buyer or place to offload crude they are shipping
    • AEGIS notes that cratering demand has stoked fears of storage hubs like Cushing, Oklahoma, which is already more than half full, could be overwhelmed and fill to capacity, forcing producers to shut down wells
  • Goldman Sachs’ latest estimates show oil demand falling by 10.5 MMBbl/d in March and by 18.7 MMBbl/d in April
    • The group’s 2020 y-o-y demand forecast is now -4.25 MBMbl/d, overwhelming any potential coordinated supply response
  • Natural gas is down 2.0c to $1.639/MMBtu
  • TTF, the European gas benchmark, is at its lowest level since 2009 at $2.45/MMBtu
    • With European gas storage currently near 60%, this could help drive prices in the front of the curve lower
    • If prices in Europe continue to weaken, AEGIS notes that this could further pressure U.S. LNG exports into Europe, especially as oil-linked contracts have become more competitive
  • Sempra may be delaying its Final Investment Decisions on both its 0.3 Bcf/d Energia Coastal Azul project and its 1.3 Bcf/d Port Arthur project
    • So far the FIDs have only been delayed by one quarter each, according to the company
    • However, the head of Sempra’s Port Arthur project noted that, like most LNG projects, the current environment is impacting time schedules

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