May 29, 2020

May 29, 2020
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  • WTI is down 69c to $33.02/Bbl, and Brent is down 69c to $34.60/Bbl
  • Oil prices opened down on Friday morning amid deteriorating U.S.-China relations
    • President Trump is expected to announce new policies on China after Beijing escalated its crackdown on Hong Kong
    • “We’ll be announcing what we’re doing tomorrow (Friday) with respect to China. And we are not happy with China. We are not happy with what’s happened,” Trump told reporters on Thursday
    • AEGIS notes that escalating tensions between the U.S. and China cast doubt on the trajectory of demand recovery, which weighs on asset prices
  • The Energy Information Administration (EIA) reported a rather unusual crude inventory report on Thursday
    • The agency showed Cushing stocks fell for a third week, easing 3.4 MMBbl to 53.5 MMBbl
    • In contrast, overall commercial stocks ex-SPR rose 7.9 MMBbl to 534.4 MMBbl last week compared to the previous week, largely reflecting a 10.2 MMBbl build in the Gulf Coast (PADD 3)
    • Crude imports were mostly to blame for the large PADD 3 build as imports from Saudi Arabia averaged 1.6 MMBbl/d, up from 644 MBbl/d in the previous week. The boost comes as 11 of the 16 very large crude carriers (VLCC) that arrived at the U.S. Gulf coast with Saudi crude this month have completed their discharges (Argus)
  • Natural gas is up 1.4c to $1.841/MMBtu
  • The Kremlin announced that construction of the NordStream 2 pipeline will continue despite the threat of additional U.S. Sanctions (Reuters)
    • Two U.S. senators said they would draft additional sanctions on the NordStream 2 pipeline if Moscow finished laying the pipe
    • Gazprom has 100 miles of pipe remaining before the project is completed, with an expected in-service date of late 2020 through early 2021
    • Once completed, the pipeline will increase capacity of the NordStream AG pipeline to 10.6 Bcf/d – competing with US LNG exports to Europe
  • America will receive it’s first imported LNG shipment since November 2015 (Bloomberg)
    • The shipment has come as European natural gas prices have dropped to record lows, making the U.S. an attractive destination for some LNG producers
    • The British Diamond LNG tanker is scheduled to deliver the cargo to Sabine Pass in Louisiana on June 12 from Belgium
  • On Thursday, the EIA announced an injection of 109 Bcf for the week ending May 22, 2020
    • This injection was larger than the 81-Bcf build reported a week earlier and almost identical to the 110-Bcf build during the same week for 2019
    • Storage now stands 42.5%, or 778-Bcf above last year’s level of 1.834 Tcf

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