November 13, 2019

November 13, 2019
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  • WTI is down 16c to $56.64/Bbl, and Brent is down 36c to $61.70/Bbl
  • The oil markets, most asset classes for that matter, have been ultra-sensitive to headlines pertaining to the progress on the US/China trade war
    • Oil is down this morning after President Trump said the two countries were close to finalizing a trade deal, but did not provide a date or venue for the signing of “Phase One” (Reuters)
    • Oil market participants have two main focuses right now; US/China trade war and OPEC+ supply strategy
  • President Trump said the US will increase tariffs on China in case the first step of a broader agreement isn’t reached (Bloomberg)
    • During a speech to the Economic Club of New York, Trump said on Tuesday “If we don’t make a deal, we’re going to substantially raise those tariffs”
    • The fear of recent trade war progress reversing has investors and traders nervous and likely unwilling to place upward bets on crude oil
  • The IEA said global oil demand will hit a plateau around 2030 as the use of more efficient cars and EVs ends an expansion that dominated the past century (IEA long-term World Energy Outlook)
    • The Paris based agency forecast that the current growth rate of 1 MMBbl/d – or about 1% – will hold for the next five years, then fall to 100 MBbl/d in the 2030s
    • It wasn’t all doom and gloom for producers as the IEA said the necessity to find new supplies should cause prices to rise from current levels of about $60/Bbl to reach $90/Bbl in 2030 and $103/Bbl in 2040
    • The IEA’s World Energy Outlook is published annually and is the agency’s flagship publication
  • Natural gas is down 2.4c to $2.597/MMBtu
  • Freeport Train 2 will begin to receive initial feed gas flows later this week (Platts)
    • Flows to Train 2 begin as Train 1 completes maintenance that began on November 9
    • Feed gas demand came in at 7.68 Bcf today, a new record
  • Spot prices in Northeastern markets continue to surge as most major basis locations rose above the $5/MMBtu mark with some nearing $6/MMBtu
    • The Arctic weather moving across the country is set to wind down by the end of the week
    • Current weather forecasts do not have any severe winter weather moving in within the next 15 days, this has attributed to the almost 10% selloff, in the front of the curve, from the highs last week
  • The NEXUS Gas Transmission pipeline is operational again
    • The western-Appalachia-to-Michigan running pipeline, which has a capacity of 1.5 Bcf/d, had flows reduced to zero last week due to maintenance

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