May 21, 2020

May 21, 2020
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  • WTI is up 88c to $34.37/Bbl, and Brent is up 91c to $36.66/Bbl
  • West Texas Intermediate climbed on Thursday to its highest level since March, buoyed by lower U.S. crude inventories, and global production cuts
    • A draw in U.S. crude oil inventories surprised analysts yesterday as the consensus was a small build in stocks
    • The combination of lower world oil production and increases in demand has caused a tighter supply/demand picture observed in previous months
  • Crude stocks at Cushing, Oklahoma, hub fell sharply for a second week in a row, the Energy Information Administration (EIA) said on Wednesday
    • Cushing stocks eased by 5.6 MMBbl to 56.9 MMBbbl in the week ended May 15 compared with the previous week
    • Last week marked the second draw after nine weeks of builds where the hub swelled by more than 28 MMBbl
    • AEGIS notes that PADD 3 on the Gulf Coast and the Strategic Petroleum Reserve had their stocks build, indicating that oil was avoiding Cushing
  • The Trump administration is temporarily cutting royalty rates on federal oil and gas leases by as much as 80 percent as it processes royalty relief request from operators (Argus)
    • The U.S. Bureau of Land Management (BLM) over the past month has cut royalties on at least 76 federal leases in Utah, reducing the royalty rate to as low as 2.5%, from 12.5%, on production from May 1 to June 29
    • The total number reductions is expected to be far higher after accounting for other federal leases
  • Natural gas is down 3.8c to $1.733/MMBtu
  • Analysts expect a 81-Bcf injection for the week ending May 15 (Platts)
    • This would be below both the 101-Bcf injection reported in the corresponding week last year, and the five-year average of 87 Bcf
    • Analyst injection estimates ranged from a low of 67 Bcf to a high of 99 Bcf
    • A withdrawal within expectations would contract the surplus to the five-year average to 407 Bcf with total stocks at 2.503 Tcf
  • Texas Eastern expects to restore partial capacity through line near Owingsville Compressor Station, according to a critical notice on the company’s website
    • Company expected to return Line 25 to service between May 22, 2020 and May 24, 2020
    • Texas Eastern will post an additional update containing expected capacity returning closer to in-service date
  • Buyers have requested to cancel at least seventeen LNG cargoes, for loading in July, from Cheniere-owned export facilities (Bloomberg)
    • Total U.S. July LNG cargo cancellations could total 35 to 45, this would equate to half of the United States’ average monthly shipments
    • TTF prices, the European gas benchmark, reached a new record low of $1.406/MMBtu yesterday
    • JKM prices, the Asian LNG benchmark, remained steady above $2.00/MMBtu at $2.195/MMBtu
  • TC Energy declared force majeure on ANR storage injections in Michigan yesterday, after an incident at its Excelsior Six storage field
    • According to the company, this notice should end by June 17, 2020
    • ANR storage and Blue Lake Gas Storage have a combined storage capacity of 250 Bcf, the loss of this capacity may have some negative impact on Appalachian basis given current pipeline constraints southward

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