March 31, 2020

March 31, 2020
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  • WTI is up 80c to $20.89/Bbl, and Brent is up 54c to $23.31/Bbl
  • Oil prices are higher this morning as signs of a recovery in the Chinese economy help the prospect for a rebound in demand (Bloomberg)
    • Chinese manufacturing activity rebounded in March. The purchasing managers’ index (PMI) rose to 52.0 this month, according to the National Bureau of Statistics
    • That was up from a record low of 35.7 in February
    • China’s oil refineries are also increasing crude processing rates to levels last seen before the viral outbreak
  • Prices also firmed on Tuesday morning after Trump and Putin agreed to talks designed to stabilize energy market (Reuters)
    • The Kremlin said that both leaders agreed to have their top energy officials discuss stabilizing oil markets
  • Pioneer Natural Resources and Parsley Energy asked the Texas Railroad Commission on Monday to call an emergency virtual meeting no later than April 13 and issue an order setting the “reasonable market demand for oil from Texas” for May, according to Bloomberg
    • Matt Gallagher, the CEO of Parsley, said “ We need dramatic government action, because we know the operators cannot uniformly talk together”
    • Gallagher said he’s concerned that if the U.S. energy industry drops to complete inactivity for a couple of months, it would hit oilfield services so hard than many companies could never recover
  • Natural gas is up 0.1c to $1.691/MMBtu
  • Shell is relinquishing its stake in the 2.2 Bcf/d Lake Charles LNG project, according to Reuters
    • The other partner, Energy Transfer, is expected to make a Final Investment Decision on the project by early 2021
    • AEGIS notes that development partners dropping out of projects could further delay final investment decisions already hampered by weak global markets
    • Downsizing the project from three to two trains is another option being considered
  • Cheniere Energy, one of the world’s large global LNG players, has begun soliciting bids to purchase six shipments of LNG slated for delivery to Europe later this year (Bloomberg)
    • As global LNG prices continue to deteriorate, LNG economics have changed in the US as firms may look to purchase LNG abroad rather than produce and export LNG to Europe and Asia
    • This could become a trend for LNG firms located in the US Gulf Coast, as the inter-continental spread between spot LNG prices has contracted to where it is no longer profitable to ship cargoes abroad

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