November 27, 2019

November 27, 2019
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  • WTI is up 9c to $58.50/Bbl, and Brent is up 23c to $64.50/Bbl
  • Canadian National (CN) railroad and striking union workers have reached a tentative settlement that will bring commodity shipments back online
    • CN and Teamsters Canada said they reached an agreement after being on strike since November 19
    • During the strike CN was forced to drastically cut commodity shipments and the lack of deliveries contributed to a propane shortage and lower crude oil exports to the US
  • OPEC+ will have a “standard agenda” for the groups December meeting in Vienna, according to Russian Energy Minister Alexander Novak
    • Novak said “It’s traditional:  we’ll have to monitor the situation on the market, compliance with the agreement. And of course, we’ll talk about the future, forecasts  for the development of the market”
    • A Bloomberg Intelligence survey showed that 63% of respondents believe OPEC will keep production the same next month, to the question “Will OPEC+ keep the same level of output cuts?”
  • EIA weekly data is due at 9:30 AM CST
    • U.S. Crude Inventories:                  –       78 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             +     757 MBbls
    • U.S. Distillate Inventories:             +       10 MBbls
    • U.S. Refinery Utilization:               +    0.85% change
  • Natural gas is down 0.7c to $2.526/MMBtu
  • As gas production continues to average near 96 Bcf/d, and weather forecasts remain average, prompt month gas prices experienced their largest two-day drop in the past 10 months (PointLogic)
    • If production continues to remain at these levels, storage withdrawals could surprise on the bearish end especially if colder winter weather does not emerge
    • Natural gas imports from Canada fell to 2.75 Bcf yesterday, the lowest level in six years and the second time in over a decade
  • JKM, the LNG price benchmark for Asia, is below $6/MMBtu, the lowest it has ever been since prices were recorded
    • Europe, which notoriously has low levels of storage capacity, currently finds itself swimming in excess LNG cargoes due to the price erosion in Asian markets
    • In fact, Reuters reported that, due to the nature of take-or-pay contracts for U.S. LNG, many customers are considering paying for cargoes but not physically receiving them
    • Analysts at Citigroup and Morgan Stanley suggest that the U.S. may need to shut in supply and transition into a swing supplier role for global LNG markets
  • Cameron Train 2 has been approved for commissioning, potentially putting it ahead of schedule of the company’s anticipated 1Q2020 commissioning date
    • In other LNG news, Commonwealth LNG has signed an offtake agreement with Gunvor, a positive step before their Final Investment Decision in 2021
    • LNG feedgas demand is coming in around 7.4 Bcf as of this morning

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