November 1, 2019

November 1, 2019
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  • WTI is up 75c to $54.93/Bbl, and Brent is up 3c to $60.26/Bbl
  • Oil is on pace for its biggest weekly loss since late September as US crude stocks grew and doubts about a longer-term trade deal between the US and China (Bloomberg)
    • China said they will not budge some of the biggest issues
  • Western Canadian Select’s (WCS) discount to WTI at Cushing fell to -$19/Bbl on Thursday, the widest since early December as the Keystone crude pipeline remained shut, keeping some crude stranded in Canada
    • The outage of Keystone stands to affect US Gulf Coast refiners looking for alternative heavy crude supplies as Venezuela is still sanctioned by the US
    • The oil spill on Keystone is the third along the route in less than three years
  • Natural gas is down 2.8c to $2.605/MMBtu
  • EQT provided some insights on the macro gas environment and Appalachian market dynamics on their third quarter earnings call
    • The company believes there needs to be 50 rigs to maintain production flat in the Appalachia, current rig count in the region stands at 52
    • Given current strip pricing, maintenance capital is not enough to keep production flat without exceeding free cash flow, according to CEO Toby Rice
      • Production declines could show up in the back half of 2020 and support price
    • EQT expects their production to remain flat in 2020
      • Production could also remain flat in 2021, growth will depend on the price environment
      • Focus is on trying to reduce costs in order to grow at $2.50 gas
  • Some heat is starting to emerge in the 11-to-15 day forecast across the Western and Southwestern portions of the United States, including Texas
    • Populous demand regions in the Northeast are still forecasting colder than normal temperatures
    • Fundamentally, very little has changed in markets. Supply remains near record levels.
  • The EIA reported a build of 89 Bcf for the week ending October 25, the corresponding build last year was 49 Bcf
    • Total storage, which stands at 3.7 Tcf, is at a surplus of 559 Bcf compared to last year and 52 Bcf compared to the five-year average
    • Given the emergence of early winter weather, we could start to see minor builds or withdrawals earlier than expected

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