May 7, 2020

May 7, 2020
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  • WTI is up $2.38 to $26.37/Bbl, and Brent is up $2.00 to $31.72/Bbl
  • Oil prices moved higher Thursday morning after Saudi Arabia raised prices for refiners globally (Bloomberg)
    • The Saudi price hike could indicate a recovery in some demand
    • May 1 marked the start of OPEC+ supply cuts in which the group agreed to cut 10 MMBbl/d
  • Crude oil stocks swelled less than what analysts were expecting last week
    • The EIA reported a build of 4.6 MMBbl to total 532.2 MMBbl, for the week ending May 1
    • Stocks at Cushing rose by 2.1 MMBbl to 65.5 MMBbl
    • The U.S. SPR also increased its stocks, rising 1.7 MMBbl to 637.8 MMBbl
  • Natural gas is up 1.7c to $1.961/MMBtu
  • The prompt-month natural gas contract pared back all its gains, and more, yesterday after a steep selloff sent prompt-month prices back below $2.00/MMBtu
    • Part of the reason could be attributed to a Goldman Sachs note stating that the rally on Tuesday overshot its price targets for this summer
    • The bank also noted that the rally may have been driven by speculation as spot prices did not match the jump in futures prices
  • JKM spot prices, the Asian LNG benchmark, dipped below prompt-month Henry Hub futures prices (Reuters)
    • Dutch TTF prompt-month futures, widely considered as the European gas benchmark, also find themselves below Henry Hub prompt-month futures
    • This is the first time ever that U.S. gas prices are at a premium to both European and Asian markets, which will continue to put pressure on domestic LNG exports
    • U.S. LNG feed gas demand continues to average around 7.5 Bcf
  • Analysts expect a 105-Bcf injection for the week ending May 1 (Platts)
    • This would be above both the 96-Bcf injection reported in the corresponding week last year, and the five-year average of 74 Bcf
    • Analyst injection estimates ranged from a low of 88 Bcf to a high of 116 Bcf
    • An injection within expectations would contract the surplus to the five-year average to 391 Bcf with total stocks at 2.315 Tcf

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