November 29, 2019

November 29, 2019
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  • WTI is down 32c to $57.79/Bbl, and Brent is down 60c to $63.27/Bbl
    • If oil prices hold steady today, this would be the fourth straight week of price gains, a first since April this year
  • Saudi Arabia may take a harder line in requiring OPEC “cheaters,” those countries producing more than current OPEC quotas, to cut their production instead of Saudi Arabia taking up the slack (Bloomberg, Energy Aspects”
    • Some “cheaters” include Iraq (producing 300 MBbl/d extra), Kazakhstan (100 MBbl/d), and Nigeria (120 MBbl/d), while non-OPEC participant Russia produced more than promised most of the year
    • Meanwhile, Saudi Arabia had reduced its production by 700 Mbbl/d
    • A full OPEC meeting is scheduled for the end of next week
  • AEGIS notes a lack of continued OPEC supply cuts at its meeting next week would be a bearish development
    • OPEC members’ rhetoric ahead of the meeting are for status quo production quotas
    • Reaffirmation of this policy is neutral for price, in our view. We classify deeper cuts as a surprise, and bullish.
  • Oil rigs operating in the US are down to 668 as of November 29 data, according to Baker Hughes
    • The 4Q slump continues; there were 713 oil-directed rigs operating at the end of September
    • A year ago, the count was 887
  • Natural gas is down 10.0c to $2.401/MMBtu
  • US gas markets were closed yesterday for the Thanksgiving holiday
  • Weather forecasts shifted to a colder Northeast and warmer West/Rockies in the 6-10 day period
    • However, temperatures shifted warmer for all but the East in the end of the 14-day forecast, which may signal a risk of milder weather toward the middle of December
    • Blocking patterns that can direct arctic air into the Great Lakes and Eastern US failed in some of the forecasting models
  • EIA reported a storage draw of -28 Bcf for the week ending 11/15/2019. This was slightly larger than the median estimate of -25 Bcf, and prices were hardly changed after the government’s announcement.
    • Storage usually decreases by 57 Bcf during that week of the year
    • The smaller withdrawal – compared to normal and last week’s -94 Bcf figure – was due to much milder temperatures throughout the US
  • A butadiene plant in Port Neches, TX (between Beaumont and Port Arthur) experienced two explosions on Wednesday, requiring community evacuations (AP)
    • Yesterday, owner TPC Group’s managers said the plant would continue to burn through Friday to prevent more explosions
    • AEGIS notes butadiene can be a product of the cracking process when heavier NGLs are used as feedstock in a steam cracker, but the output is small compared to other cracker products. The effect on NGLs prices is likely minor.

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