May 12, 2020

May 12, 2020
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  • WTI is up $1.22 to $25.36/Bbl, and Brent is up 63c to $30.26/Bbl
  • Oil prices moved higher this morning as signs of demand returned following the easing of lockdowns in some regions (Bloomberg)
    • While a huge glut remains, clusters of fuel demand are starting to show up in India and China, helping global oil storage builds to slow
  • Heavy Canadian crude settled at the narrowest difference to WTI yesterday, according to data going back to May 2008
    • Western Canada Select’s (WCS) discount to WTI narrowed to -$3.05/Bbl on Monday
    • WCS has rallied versus the U.S. benchmark as producers in Canada shutter some heavy oil production or begin maintenance early amid depressed oil prices (Bloomberg)
    • Prices also received a lift as additional OPEC+ cuts include heavy sour crudes that compete with WCS
  • Continental Resources said it shut in 70 percent of its oil production in May, the largest reduction among medium-sized U.S. Independents
    • The company had initially forecast a 30 percent decline for April and May
    • Harold Hamm’s company is operating five rigs now and one completion team in Oklahoma, none in the Bakken
  • Natural gas is down 3.1c to $1.795/MMBtu
  • TETCO has provided an update on the Line 10 outage, near Owingsville Compressor Station
    • The company announced, “At this time, TE anticipates it will continue to restrict to zero, for a minimum of, an additional two to three weeks from today.”
    • The Texas Eastern outage has caused 460 MMcf/d in gas headed for markets in the South East and Gulf Coast be redirected into neighboring markets in the Midwest
    • During Monday’s trading session both Dominion South and TETCO M-2 cash prices were up 10c, with downstream locations- Texas Eastern M-3, Transco Zone-6, and Algonquin City Gates trading nearly 20c higher
  • Energy Transfer is reducing capex and deferring some projects according to their most recent earnings call
    • The 400 MBbls/d Permian-based NGL pipeline, Lone Star Express, will still complete its expansion in 4Q2020
    • Frac VIII at Mont Belvieu is being deferred until 1Q2022
    • The 250 MBbls/d Appalachia-based NGL pipeline, Mariner East 2X, is expected to be in service in 1Q2021
    • Energy Transfer also stated that they will still move forward with developing the 1.8 Bcf/d Lake Charles LNG facility, despite Shell backing out of the venture
  • U.S. LNG feedgas demand has fallen by 1 Bcf to total 6.5 Bcf (PointLogic)
    • The decline can be attributed to receipts from the Sabine Pass LNG Terminal, down 811 MMcf/d, and Freeport LNG, down 148 MMcf/d
    • It is unclear whether the decline is due to maintenance or cargo cancellations

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