October 12, 2020

October 12, 2020
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  • WTI is down 58c to $40.02/Bbl, and Brent is down 57c to $42.29/Bbl.
  • Oil is trading 50c lower this morning, with futures falling below $40
    • The market received several key bearish news items regarding an increase in output this weekend, including Norway, Libya, and Hurricane Delta, which collectively account for 2,113 MBbl/d. This will likely create some selling pressure today as the market reacts to the hike in output
    • Last week’s reduction in output contributed to the buying pressure that helped crude prices rise 9% on the week. As Coronavirus cases continue to pile, the market will shift its eye to demand to see how consumption in Europe and Asia are affected by the rise in Coronavirus cases
  • The National Oil Corp (Libya) lifts force majeure on its largest field, the Sharara
    • The field will initially produce at a rate of 50 MBbl/d, before reaching its capacity of 300 MBbl/d next week, according to the National Oil Corp
    • That would double Libya’s oil production, bringing the total to 600 MBbl/d
  • The Norway oil strike came to an end last Friday after successful mediation talks
    • The strike had already caused around 130 MBbl/d (8%) of Norway’s output to be shut-in, and an additional 460 MBbl/d was slated to be shut-in if no deal was reached this weekend
  • The majority of GoM oil and gas output remains offline, as Hurricane delta leaves the region
    • 1,683 MBbl/d (91%) remains offline; however, companies have begun sending personnel back to work. Chevron Corp. began sending workers back offshore and restoring shut-in oil and gas wells, according to a company statement
    • No major refinery outages have been announced yet, though several were said to have been affected by the storm. The nation’s largest refinery, Motiva – Port Arthur, Tx, had several key units knocked offline, according to Bloomberg
  • Natural gas is up 14.3c to $2.884/MMBtu
  • November gas continues its Friday rally, climbing over 5%, or 14c this morning
    • The winter 20/21 strip (Nov-Mar) has risen over 20c to $3.25 in the past three trading days
    • The combination of reduced gas production and additional heating degree days (HDDs) gained over the weekend have helped buoy price
  • Offshore gas production fell from 2 Bcf/d to less than 200 MMcf/d due to Hurricane Delta (S&P)
    • Cameron LNG started a controlled shutdown on October 8. Cameron was only starting to take feedgas following the last hurricane before having to shut down as Delta approached
    • LNG exports declined from just under 5 bcf/d to about 3.5 bcf/d last week
    • Deliveries into U.S. LNG facilities are now back near 7.5 Bcf/d as of Monday October 12 as Delta passed
  • Gas-directed drilling rigs fell by one last week to total 73 (Baker Hughes)
    • Haynesville active rigs total 36, down from 52 a year ago
    • Marcellus at 25, down from 47 a year ago
    • Utica at six, down from 11 a year ago

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