October 15, 2019

October 15, 2019
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  • WTI is down 22c to $53.37/Bbl, and Brent is down 20c to $59.15/Bbl
  • Speaking at CERAWeek in India, OPEC Secretary-General Mohammad Barkindo gave the audience an update on how OPEC is seeing the oil markets (Bloomberg)
    • Demand side is driving the market not the supply side
    • OPEC producers are committed to maintaining stability beyond 2020
    • Trade dispute between the US in china is casting long shadows on the global economy
    • The Saudis and Russia ratified a new OPEC+ charter on Oct. 14
  • China’s largest refiner, Sinopec, plans to reduce operations next month after soaring shipping cost have eroded margins
    • Sinopec could reduce total processing by 7.33 MMBbl in December, which equates to about 5% of the company’s refining, according to company sources talking with Bloomberg
    • Cost for chartering a supertanker from West Africa to China have quadrupled
      • Current charters on this route cost about $10/Bbl, that’s up from about $2.20/Bbl in late September – right before the US sanctioned Chinese shipping company COSCO
  • Natural gas is up 1.5c to $2.295/MMBtu
    • Flows from the Appalachia grew by 1 to 2 Bcf/d in September as spot prices in the region began to sink, encouraging exports to markets with a larger netback (EIA)
      • However, Enbridge’s Texas Eastern line will be constrained for southbound flows until at least 2Q2020
      • As demand dynamics in the Northwest pull Rockies gas into the region and away from the Midwest, Appalachian gas should be able to fill in the gap in the near term as Gulf Coast markets may be harder to reach
      • A more detailed run down of the Rockies and Pacific Northwest market dynamics can be found in last week’s Market Summary
    • Enterprise Products Partners will expand its Appalachia-to-Texas (ATEX) ethane pipeline, allowing for an additional 45 MBbls/d to flow on the line
      • The pipeline, which runs from Eastern Ohio down to Mont Belvieu, is planned to have the additional capacity ready by 2022
      • The investment in additional NGL infrastructure comes during a time where low domestic gas prices are encouraging wet gas producers to extract and ship ethane abroad to demanding Asian markets
    • An empty, Shell owned, LNG tanker has arrived outside the Elba liquefaction facility in Savannah, GA
      • Elba is one of the last “first wave” LNG facilities to begin the commercial exportation process

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