March 5, 2021

March 5, 2021
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  • WTI is up 137c to $65.20/Bbl, and Brent is up 157c to $68.31/Bbl
  • Oil breaches $65 as OPEC+ announces its intent to keep output steady in April, in contrasts with analyst’s expectation of a 1-1.5 MMBbl/d hike
    • Saudi Arabia will keep its 1 MMBbl/d supplementary cut in place for at least one more month
    • Russia and Kazakhstan will be allowed to increase production by 130 MBbl/d and 20 MBbl/d per day, respectively (OPEC Press Release). This means the cartel will continue to withhold around 7 MMBbl/d of supply from the market
  • Crude futures, options surged following OPEC+’s announcement to keep output steady
    • WTI’s M1-M12 spread is currently at $6.07, its highest level since September 2019
    • Option markets also saw a surge in trading, with total volume reaching 254k, its highest since March 2020
  • Yemen’s Houthis claim attacks on Saudi military base and airport
    • The attack comes only one day after the group hit an Aramco fuel depot in Jeddah (Reuters)
    • Attacks by the militia group have become more frequent, though the damage has been limited. AEGIS notes if attacks persist or grow in scale, a geopolitical risk premium could return to crude prices
  • Natural gas is down 1.1c to $2.735/MMBtu
  • Most gas storage forecasters whiffed at predicting last week’s inventory pull that came in at only -98 Bcf for the week ended February 26
    • The average analyst estimate according to Bloomberg was -142 Bcf – a miss of about 45 Bcf
    • Storage inventories now stand at 1.845 Tcf as of February 26, the EIA reported the morning of March 4
    • S&P Platts pointed out that it was the largest miss by their storage survey in at least five years. Platts average draw surveyed was calling for a 137 Bcf pull
    • By comparison, the survey has missed the EIA estimate by an average of 8 Bcf year to date
  • LNG spot tanker rates have plunged to record lows in the Atlantic basin as the market cooled from the sharp rally in January (Spark Commodities, Bloomberg)
    • The spot Atlantic rate for a 160k cubic-meter vessel fell 18% from March 2 to $16,750 per day on Friday; the previous record low was $17,500/day in May 2020
    • The cost of chartering an LNG vessel on the spot market surged to more than $300,000/day in January
    • AEGIS notes that LNG flows this summer may be less than recent averages of winter, but for bullish reasons – Be on the lookout for our email containing a link to our March 4 webcast recording that goes into detail

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