November 3, 2020

November 3, 2020
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  • WTI is up $1.29 to $38.10/Bbl, and Brent is up $1.121 to $40.18/Bbl
  • Oil futures picked up where they left off during yesterday’s session, trading nearly 3% higher this morning
    • OPEC+ has mulled extending its output curtailments amid rising Coronavirus cases, Libyan output
  • Russia’s energy minister called for a meeting among the countries oil firms to discuss the OPEC+ agreement
      • OPEC+ and its member countries are scheduled to ease production cuts in January, returning nearly 2 MMBbl/d of output to the market
      • The renewed pressure on oil demand is likely to stymie the cartel’s plans of increasing output, as Libya, who is exempt from the cuts, is expected to reach 1.3 MMBbl/d by the end of the year. Additionally, rising Coronavirus cases in the U.S. and Europe have added to concerns about the markets ability to absorb the crude
  • Top executives at global trading firms, Trafigura and Vitol, said the rising coronavirus cases in the U.S. and Europe could destroy up to 2.5 MMBbl/d of oil demand
    • Supply tightness has helped prop up the crude markets. Output cuts globally have accounted for nearly 6-7 MMBbl/d of production, which is more than covering the demand drop, according to Vitol
    • Weir (Trafigura’s Chief Executive) said, “We’re possibly talking another 1MMBbl/d in the U.S., probably 1.5 MMBbl/d in Europe. It’s not looking good for the foreseeable future”
  • Marathon Petroleum, the largest U.S. independent refiner by capacity, says more U.S. refining capacity must be brought off-line to bring fuel production in line with immediate and future demand
    • Marathon ruled out an exit from any of its Gulf Coast refining assets but said that a review of all facilities continues
    • The company has already chosen to shut its 27 MBbl/d Gallup, New Mexico refinery, and plans to convert its 166 MBbl/d Martinez, California refinery to renewable diesel production
  • Natural gas is down 10.7c to $3.137/MMBtu
  • Prompt gas prices are down due in part to overnight weather model runs shifting warmer
    • Over the past 24 hours a warmer forecast change removed 5 HDDs (CWG)
    • With the December contract down about 3% this morning, the winter strip as a whole is also under pressure, falling about 12c to $3.16
  • Strong Asian demand has helped boost U.S. LNG feedgas demand above 10 Bcf/d for the first time this past weekend (Platts)
    • The Japan Korea Market (JKM) for December was assessed at about $7/MMBtu; providing a strong netback for Asian buyers of U.S. LNG
    • There is still room for U.S. LNG to increase flows, once Freeport LNG resumes production from Train 1
    • Train 1 could return later this week, according to Freeport. The terminal’s train was shut after a small fire was discovered on Oct. 21
  • Gas production in the Gulf of Mexico is still reduced following hurricane Zeta
    • An estimated 518 MBbl/d of crude production and 431 MMcf/d of natural gas production was still shut-in on Nov. 2, according to the U.S. Bureau of Safety and Environmental Enforcement
    • AEGIS notes that Lower 48 dry gas production is already hovering just under 90 Bcf/d as Appalachia producers returned previously shut-in volumes. A full Gulf of Mexico recovery would likely push daily gas production over 90 Bcf/d on average

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