- 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.
