November 11, 2019

November 11, 2019
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  • WTI is down 60c to $56.64/Bbl, and Brent is down 51c to $62.00/Bbl
  • OPEC+ oil producers will probably extend oil supply cuts but are unlikely to deepen their cuts, according to Oman’s energy minister
    • OPEC and its allies have reduced crude supply by 1.2 MMBbl/d since January to last until March 2020 under the current agreement
    • You can check out AEGIS fundamental webcast recorded last week that shows different scenarios supply and demand could take, possibly influencing OPEC’s supply policy
  • Enbridge is moving forward with an expansion of its 280 MBbl/d Express crude pipeline from Hardisty, Alberta, to Casper Wyoming, after a successful open season (Argus)
    • The expansion will add 50 MBbl/d of capacity on the line starting in 1H2020, adding takeaway out of western Canada
    • The Express pipeline connects to the Platte system which moves up to 164 MBbl/d from Casper to Guernsey in Wyoming, and 145 MBbl/d from Guernsey to Wood River Illinois
    • AEGIS notes Western Canadian Select crude prices have been under pressure due to lack of oil pipeline takeaway capacity. New pipeline expansions and green field projects out of the region stand to improve price as shippers can utilize pipelines instead of the more expensive crude-by-rail method
  •  The US oil-directed rig count fell by seven to 684 last week, according to Baker Hughes
    • The drop in rigs this year is mostly due to lower capex by producers, but some large independents like EOG said that it doesn’t need as many rigs today in-order to meet its production targets
    • EOG said as drilling efficiency improves they need less rigs to produce the same amount of crude. Pioneer Natural Resources echoed some of the same points in their latest earnings call
  • Natural gas is down 12.2c to $2.667/MMBtu
  • Prompt month gas prices dropped $0.13/MMBtu as weather models subtracted 15 Heating Degree Days due to warmer weather emerging in the 6-to-15-day forecast
    • The winter ‘19- ‘20 strip is down to $2.67/MMBtu from $2.78/MMBtu as a result
    • AEGIS has been recommending to opportunistically take advantage of significant upward price movements to layer on hedges. These movements can come quick if weather models turn cold
  • Managed money long positions in natural gas increased to 128,791 contracts, up from 118,419 contracts
    • Managed money short positions fell to 226,933 contracts, down from 299,053 contracts
    • Despite the short covering, long positions are just 24,000 contracts above the 52-week low of 105,241 contracts
  • The 1.5 Bcf/d Atlantic Coast Pipeline (ACP) will be delayed until at least 1H2022, a more than one-year delay from the previous November 2020 start date
    • The latest delay to the project involves a ruling on whether the pipeline is allowed to cross through the Appalachian Trail, a trail that runs from North Georgia all the way to Maine
    • The original planned in-service date for this pipeline was late 2018

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