March 30, 2020

March 30, 2020
Share
Print Friendly, PDF & Email
  • WTI is down $1.37 to $20.14/Bbl, and Brent is down $2.10 to $22.83/Bbl
  • Oil prices fell over 5% on Monday as coronavirus induced lock-downs continue to depress economies across the world
    • WTI briefly dipped below $20/Bbl, on fears that the global shutdown could last months with demand for fuel declining further
  • Pipeline operators have begun asking oil producers to pull back their output (Bloomberg)
    • Plains All American Pipeline sent a letter last week asking its suppliers to scale back production
    • The Texas Railroad Commission’s Ryan Sitton said in a Saturday tweet that some oil companies are getting letters from shippers (pipelines) asking for production cuts because the are out of storage
    • AEGIS notes that as storage fills up and infrastructure is strained, inland crude grades are most at risk
  • Oil-directed rigs fell the most since 2015 last week, according to Baker Hughes
    • Companies idled 40 rigs, twice the pace of last week’s reduction
    • More than half the shutdowns occurred in the Permian Basin of West Texas and New Mexico
    • Halliburton, the No. 3 overall service provider, is planning for almost two thirds of all rigs in North America to shut down by the fourth quarter (Bloomberg)
  • Natural gas is down 4.5c to $1.626/MMBtu
  • JKM prices, the Asian LNG benchmark, have fallen to their lowest level on record at $2.62/MMBtu
    • Part of the reason for the slump can be attributed to three Indian importers declaring force majeure on prompt shipments, a declaration Italy and Spain are also considering
    • Europe is expected to import 11 million metric tons in March, a 14% increase from the previous record set in December according to HIS
    • Given already high storage levels following this warm winter, continued LNG deliveries into Europe will further pressure already historically low natural gas prices
  • LNG Limited’s financing, to keep the Magnolia LNG terminal afloat, fell through due to current market conditions
    • The proposed terminal would add a little over 1 Bcf/d of additional LNG export capacity upon completion; however, no long-term offtake contracts have been reached
    • A takeover offer for $75MM is on the table but will not be finalized until May 28th at the earliest
    • If no financing is reached before then, the project faces the possibility of liquidation which would trigger contract clauses to terminate project’s engineering, site lease, and construction contracts
  • The CFTC reported managed money short positions fell 42,957 contracts to total 221,495 contracts, this is the lowest short concentration since September
    • Managed money long positions rose by 281 contracts to total 135,899 contracts

Access Our Deeper Market Insights

Product Factor Matrix

Proprietary view of priced-in factors driving the market vs. potential bullish and bearish surprises.

Learn More

Trading Recommendations

Clear trading recommendations based on real market opportunities that enable clients to take action.

Learn More

Market Data

A comprehensive suite of the latest curves, spot pricing, settles, and strips to drive confident hedging decisions.

Learn More

Benchmarking and Trade Analytics

Real-time access to analyze your hedging strategy against AEGIS benchmarks and current market activity.

Learn More