May 11, 2020

May 11, 2020
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  • WTI is up 29c to $25.03/Bbl, and Brent is up 14c to $31.11/Bbl
  • Crude oil prices jumped this morning after Saudi Arabia announced a voluntary and unilateral cut of 1 MMBbl/d in its oil production (Bloomberg)
    • The kingdom aims to prop up prices by producing just under 7.5 MMBbl/d in June, compared with an official target under the most recent OPEC+ agreement of 8.5 MMBbl/d
  • Oil stockpiles in China, the world’s biggest buyer, have stopped growing (Bloomberg)
    • Crude inventories have fallen in recent weeks after rising to record levels, according to satellite observations
    • Refineries have ramped up inputs to meet rising demand as China’s economy emerges from lockdown
    • “The combination of inventories falling and strong imports implies really solid refining activity,” said Geoffrey Craig, an analyst with Ursa Space Systems Inc., which uses radar to track storage tank fills
  • The U.S. drilling rig count fell by 34 to 374 this week, to the lowest in more than three decades as operators abandon drilling plans (Baker Hughes)
    • Oil-directed rigs fell by 33 to 292
    • The oil and gas sector has idled nearly 419 rigs in the past nine weeks, since crude prices took a dive in early March
  • Natural gas is up 2.0c to $1.843/MMBtu
  • TETCO issued a statement that the system will be down for several weeks, gas will be redirected onto competing inter-regional pipes (PointLogic)
    • Since the outage began, Appalachian outflows have been down by 0.5 Bcf/d equating to 40% of impacted capacity
    • Currently, 0.7 Bcf/d of flows have been redirected towards the Midwest via Midwestern, Trunkline and REX pipelines
  • NextDecade, the developer of the 3.6 Bcf/d Rio Grande LNG export facility, expects to delay its Final Investment Decision on the project (Platts)
    • As with most companies seeking to move forward with funding for new LNG export facilities, low prices and the current demand environment have delayed project timelines for the foreseeable future
    • AEGIS notes that, as the arbitrage to Asia and Europe remain negative, project schedules could remain delayed until at least 2021

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