March 5, 2020

March 5, 2020
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  • OPEC has agreed to cut production by an additional 1.5 MMBbls/d, but the deal does not currently have Russia’s support (Bloomberg)
    • Non-OPEC countries would be expected to account for 500 MBbls/d of the proposed cuts, while OPEC countries would account for the other 1 MMBbls/d
    • Alexander Novak, Russia’s energy minister, walked out of talks yesterday before giving his support
    • Russia would prefer maintaining current production cuts through 2Q2020, as opposed to agreeing to additional restrictions
    • A 1.5 MMBbls/d cut would represent a 1.5 percent decline in global oil production
    • Iran’s Oil Minister is quoted saying that if Russia does not agree to the new cuts, there will be no “Plan B” and the whole deal is off
  • The EIA reported a build of 784 MBbls, this was smaller than the average analyst estimate of 2,854 MBbls
    • Crude prices still took a nosedive, following the announcement, over concerns that OPEC would not be able to agree on a large enough cut to offset the demand destruction from the coronavirus
  • CNPC has issued a Force Majeure on natural gas imports for the foreseeable future (Bloomberg)
    • The Force Majeure applies to all global LNG imports as well as pipeline-delivered gas
    • As the Coronavirus continues to devastate demand in China, imports have been going into storage as the firm has been fulfilling its contractual obligations
    • The firm also added that withdrawals have stopped at 10 of its underground storage sites, and injections have started at, at least, one location
  • Analysts estimate a withdrawal of -105 Bcf for the week ending February 28, this would be less than the -152 Bcf withdrawal in the corresponding week last year (Platts)
    • Withdrawal estimates ranged from -89 Bcf on the low end and -121 Bcf on the high end
    • A withdrawal within expectations would expand the surplus to the five-year average to 180 Bcf and bring total stocks to 2.095 Tcf

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