March 3, 2020

March 3, 2020
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  • WTI is up $1.18 to $47.93/Bbl, and Brent is up $1.17 to $53.07/Bbl
  • Oil prices are higher again this morning on expectations that central banks will provide stimulus and hopes that OPEC will agree on deeper cuts this week (Reuters)
    • G-7 finance ministers will discuss how best to lessen the impact of the virus outbreak on economic growth this week, according to French Finance Minister Le Maire
    • OPEC and its allies are mulling a 1 MMBbl/d cut
    • AEGIS notes that deeper cuts by OPEC may not have the impact as previous cuts have had. Peak oil demand loss from the coronavirus is around 4 MMBbl/d in late February, OPEC’s potential deeper cuts can only do so much
  • Canadian oil prices has recently gained strength with both heavy and light grades of oil from Alberta at the tightest discounts to WTI futures since October
    • Enbridge told shippers it had extra capacity available in its light oil export lines in March, possibly indicating tighter supply (Bloomberg)
    • Rising crude-by-rail shipments and new pipeline capacity coming online has helped narrow Western Canadian Select’s discount from -$25/Bbl in early January to about -$14/Bbl
  • Natural gas is up 3.3c to $1.789/MMBtu
  • Waha cash prices have dipped negative to $-0.64/MMbtu fixed price, the lowest they have been since May 2019
    • Despite cash prices going negative, Waha futures have seen a roughly $0.20/MMBtu to $0.30/MMBtu pop across all seasonal strips through 2021
  • Tellurian’s 3.6 Bcf/d Driftwood LNG facility is facing increasing pressures as securing long-term offtake agreements and financing in the project is moving slower than expected
    • Australia LNG’s 1.0 Bcf/d Magnolia LNG facility is facing similar issues as the company is currently considering a buyout offer for the project
    • AEGIS notes that given current global LNG market conditions, there is a possibility that only some of the “Phase Two” projects end up being completed on time or completed at all
    • This, in turn, could extend the length of the period from 2H2020 to 1H2022 where there is only one new LNG train planned to come online
    • LNG feed gas demand is down to 7.4 Bcf, a 0.7 Bcf drop from yesterday’s levels

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