May 28, 2020

May 28, 2020
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  • WTI is down 34c to $32.47/Bbl, and Brent is down 6c to $34.68/Bbl
  • Oil prices were down on Thursday morning after U.S. industry data showed a surprisingly large build in crude oil stocks
    • The build, reported from the American Petroleum Institute (API), was very unexpected as U.S. producers have shut-in a portion of production which has led to stock withdrawals in previous weeks
    • Data from the API showed U.S. crude stocks rose by 8.7 MMBbl in the week to May 22, compared to analyst’ expectations for a draw of 1.9 MMBbl
  • Saudi Arabia and Russia agreed to closely coordinate on the OPEC+ out cuts deal, two weeks ahead of a crucial meeting of the group (Bloomberg)
    • The talks come as Russia was said to be determined to start easing oil-output cuts in July, as agreed by OPEC+ in April
    • OPEC+ will hold online meetings on June 9-10 to discuss their current policy and if they should extend their record production cuts
  • EIA weekly data is due at 10:00 AM CST
    • U.S. Crude Inventories:                  –       1,275 MBbls (Avg. Bloomberg surveys)
    • U.S. Gasoline Inventories:             –          150 MBbls
    • U.S. Distillate Inventories:             +      2,274 MBbls
    • U.S. Refinery Utilization:               +       1.00% change
  • Natural gas is down 0.2c to $1.884/MMBtu
  • The Commodity Weather Group is currently forecasting June to be one of the top-ten warmest on record in terms of population-weighted Cooling Degree Days (CDD)
    • The current forecast calls for 270 CDDs compared to the 30-year normal of 230 and the 10-year normal of 264
  • Analysts expect a 101-Bcf injection for the week ending May 22 (Platts)
    • This would be below both the 110-Bcf injection reported in the corresponding week last year, and the five-year average of 93 Bcf
    • Analyst injection estimates ranged from a low of 88 Bcf to a high of 114 Bcf
    • A withdrawal within expectations would increase the surplus to the five-year average to 415 Bcf with total stocks at 2.604 Tcf
  • Goldman Sachs forecasts that LNG arbs, for domestic exporters, will be out of the money until November
    • The Dutch TTF prompt-month contract, known as the European gas benchmark, continues to slide lower with the last settle at $1.19/MMBtu
    • JKM prices have fallen slightly below $2.00/MMBtu
    • Other analyst forecasts have called the domestic LNG arbitrage to be closed until September

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