November 20, 2019

November 20, 2019
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  • WTI is up 51c to $55.72/Bbl, and Brent is up 54c to $61.45/Bbl
  • California’s governor Gavin Newson stepped up pressure on oil and gas producers by seeking reviews of all pending hydraulic fracturing permits and halting approvals of a key production technique in the area (Bloomberg)
    • Mr. Newson ordered regulators to assess the safety of high-pressure steamflooding
    • The state is also requesting third-party scientific reviews of any pending application for fracking
    • AEGIS notes that California producers about 440 MBbl/d of the total 12.6 MMBbl/d nationwide
  • Skew and diffs:
    • Brent crude’s put skew grew to the most bearish since mid-September following yesterday’s selloff
    • There is currently a five point spread between the 25 Delta Put (at 33.45 vol) and 25 Delta Call (at 29.31 vol), where the options market sees more risk to the downside
    • Western Canadian Select’s (WCS) discount to WTI at Cushing widened by $2.90 to -$18.90/Bbl on Tuesday
    • WCS has retreated relative to WTI amid rail strike. Crude-by-rail is heavily utilized in exporting to the US due to not enough pipeline capacity
  • EIA weekly data is due at 10:00 AM CST
    • U.S. Crude Inventories:                  +      1,148 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             +         720 MBbls
    • U.S. Distillate Inventories:             –         883 MBbls
    • U.S. Refinery Utilization:               +       1.04% change
  • Natural gas is up 3.5c to $2.545/MMBtu
  • TC Energy is no longer providing an in-service date to the Tuxpan-Tula, an extension of the recently completed Sur de Texas (SdT) pipeline into central Mexico (Platts)
    • The project was last reported to enter service by 4Q2021 after disputes with locals over the pipeline have caused several years’ worth of delays
    • AEGIS notes that the delay of these extensions could continue to suppress flows on the 2.6 Bcf/d SdT which currently sit around 0.7 Bcf/d
  • FERC is moving in to address propane shortages in the Midwest (PointLogic)
    • Enterprise Products Pipeline Company may now switch a pipeline that normally carries refined fuels for propane distribution over the next 30 days
    • FERC is also introducing an alternative dispute resolution process with pipeline companies, shippers, and their representatives to determine how FERC can further alleviate constraints
    • The record propane demand is caused by a combination of heating and crop drying demand coming from the Midwest
  • North Dakota inactive well count is at 2,104, an all-time high
    • High breakevens and a lack of infrastructure in the region continue to stifle production growth
    • These factors have also attributed to a M&A slowdown for acreage in the area

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