November 7, 2019

November 7, 2019
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  • WTI is up 82c to $57.17/Bbl, and Brent is up 72c to $62.46/Bbl
  • The US and China have agreed to cancel tariffs in phases that have been imposed during the trade war, according to the Chinese commerce ministry
    • A ministry spokesman said tariff cancellation was important condition for any agreement in-order to reach a “phase one” trade deal
    • As both the US and China have shown progress on the trade war front, we have continued to move our factor “trade war resolution” down into more priced-in on our Factor Matrix
      • Our Factor Matrix, which is available in our Market Summary, shows most of the market moving items and how bullish or bearish we perceive them
  • US crude stocks rose by 7.9 MMBbl to 446.8 MMBbl last week, surprising analysts who were expecting a small build
    • Oil futures immediately dropped following the 9:30 AM government data release on Wednesday
    • Crude exports contributed to the larger build by declining 956 MBbl/d to about 2.4 MMBbl/d, according to EIA estimates
  • Permian crude oil is at its highest level relative to WTI at Cushing since January 2018
    • WTI Midland’ spread to Cushing rose 10c to +$1.05/Bbl on Wednesday
  • Natural gas is down 3.5c to $2.793/MMBtu
  • Analysts estimate a 39 Bcf build for the week ending November 1, this would be less than the 63-Bcf build in the corresponding week last year
    • Estimates were relatively tight and ranged from 31 Bcf to 45 Bcf
    • An injection of this size would be in stark contrast to the string of above-average builds markets have faced over the last few months
  • Kinder Morgan is nearing the final steps for placing its Train 5 into service
    • LNG feed gas demand is also recovering near the 7.0 Bcf/d level after falling nearly 1 Bcf/d since the start of November
  • Flaring in the Permian reached a new high in 3Q2019, averaging around 0.75 Bcf/d, according to Rystad Energy
    • The Permian basin doesn’t receive additional takeaway capacity until the 1H2021 when Kinder Morgan’s Permian Highway Pipeline is expected to come online


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