November 9, 2020

November 9, 2020
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  • WTI is up $3.87 to $41.01/Bbl, and Brent is up $3.70 to $43.15/Bbl
  • WTI is trading nearly 10% higher this morning, its largest jump since June
    • Pharma company Pfizer provided an update on its progress towards a Covid-19 vaccine
    • OPEC+ minister’s comments hint at a possible delay in the proposed output hike in January
  • The proposed vaccine was effective in preventing more than 90% of infections in a study of tens of thousands of volunteers, according to Pfizer
    • The timing of this vaccine is essential as Europe is beginning to see more oil demand destruction due to the surge in infections
    • Pfizer and BioNTech have a $1.95 billion contract with the U.S. government to start delivering up to 100 million doses. The companies began manufacturing before they even knew the vaccine was effective, allowing them to produce up to 50 million by the end of this year and 1.3 billion doses by the end of 2021
  • OPEC+ ministers talk openly about the possibility of delaying output hikes in January as the resurgence of coronavirus cases cast doubt on the market’s ability to absorb the additional oil
    • Prince Abdulaziz said the cartel’s next move could go “beyond” what the market is expecting, hinting that the cuts could be extended beyond April 2022
    • Support for pushing the output hikes out further past January has begun to gain momentum. Algeria, which holds this year’s OPEC presidency, came out last week as the first country to support the move
  • Natural gas is down 1.0c to $2.878/MMBtu
  • Cheniere Energy is offering some of its gas supplies on terms that include a liquefaction fee of $2-$2.50/MMBtu, according to company executives
    • The company is offering volumes on a spot and contracted basis, at a significantly cheaper rate that what is charged under long-term deals used to build Cheniere’s Sabine Pass Liquefaction and Corpus Christi Liquefaction – making its LNG more competitive (Platts)
    • CCO Anatol Feygin said “We’re very comfortable with this $2-$2.50 range.” and that this range allows Cheniere to be cost competitive
    • The Sabine Pass LNG facilities were sanctioned under long-term contracts with an average liquefaction fee of $2.78/MMBtu, according to Platts
    • Corpus Christi’s three trains were sold with a liquefaction fee of $3.50/MMBtu, according to data
  • National Fuel Gas (NFG) is the contrarian Appalachian gas company as it plans to break with its peers and said it would spend an extra $60 million in 2021 to add another rig in Northern Pennsylvania
    • On their Nov. 6 earnings call, President and CEO David Bauer told analysts that the investment-grade company’s finances can handle the extra expense, even though the gas production isn’t expected to increase until late 2021
    • Other top Appalachian producers, led by the largest regional producer EQT, have cut spending on drilling new wells with plans to use cash to pay down debt
    • NFG Executives said the extra rig will operate primarily in Tioga and Lycoming counties in Pennsylvania

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