May 8, 2020

May 8, 2020
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  • WTI is up 45c to $24.00/Bbl, and Brent is up 44c to $29.90/Bbl
  • Oil prices are on track for another weekly gain amid production shut-ins and demand hopes
    • More countries moved ahead with plans to reduce social lockdowns put in place to fight the viral pandemic (Reuters)
    • On Friday, Australia became the latest country to plan an easing of lockdowns. France, certain U.S. states, and a few other countries are also planning to ease restrictions
    • AEGIS notes that the combination of demand creeping back, plus large reductions in U.S. supply, has been the main catalyst for the multi-week rally in oil prices
  • EOG Resources Inc. is making one of the largest shale output cuts (Bloomberg)
    • The company is cutting about a quarter of its oil production for May
    • EOG’s drilling rigs will drop from 36 to just six and production will be curtailed by 125 MBbl/d in May
  • Natural gas is down 3.9c to $1.855/MMBtu
  • Enbridge confirmed there was no estimated timeline to return the Line 10 pipeline, on the TETCO system, to service after the explosion on Monday
    • Dominion South Basis has slipped $0.21/MMBtu lower, while TETCO M2 basis has fallen $0.22/MMBtu since the explosion
    • There has yet to be any meaningful change in flows on pipelines such as NEXUS, Rover, Tennessee Gas, and Columbia Gulf, according to PointLogic flow data
  • CME announced they have placed measures to support negative prices for 18 natgas contracts including LNG Japan/Korea Marker (Platts), Gulf Coast LNG Export, UK NBP and Dutch TTF futures (Tellurian)
    • While Asian spot LNG prices have seen some recovery on improved demand recently, the market remains well oversupplied
    • Goldman Sachs notes that LNG production cuts, U.S. LNG cancellations, and Equinor delaying gas production into 2021 could all help rebalance the global LNG market
  • On Thursday, the EIA announced an injection of 109 Bcf for the week ending May 1, 2020
    • This injection was significantly larger than the 70-Bcf build reported a week earlier
    • Storage now stands 52%, or 796 Bcf, above last year’s levels of 1.524 Tcf
    • Only the second triple-digit build on record for the month of April

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