October 16, 2019

October 16, 2019
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  • WTI is up 17c to $52.98/Bbl, and Brent is up 5c to $58.79/Bbl
  • The IEA said OPEC and other producers face a “serious challenge” next year amid the possibility of a further reduction in the demand forecast while global supplies continue to grow (Bloomberg)
    • The IEA, who advises major economies, could further lower its forecasts for demand again as the global economy continues to deteriorate, according to Neil Atkinson at the IEA
    • Global oil-demand growth estimates for 2020 were trimmed by 100 MBbl/d to 1.2 MMBbl/d last week by the IEA
  • The International Monetary Fund (IMF) downgraded its projections for global economic growth this year and next, citing the US-China trade war
    • In its World Economic Outlook, the agency projected on Tuesday that global GDP will grow by 3% this year, down by 0.2 percentage point from its July forecast
    • The forecast for 2020 was lowered by 0.1 percentage point to 3.4%
    • IMF forecast are widely used in the modeling behind key oil demand projections, including the IEA’s
  • Record freight rates are limiting US crude export demand and are weighing on the WTI price in Midland, Texas, relative to Cushing and WTI Houston (Argus)
    • The WTI Midland November premium to WTI at Cushing fell by 75c/Bbl to 15c/Bbl on Monday from a week prior
    • New long-haul pipelines from west Texas to Corpus Christi have opened up over the past few months. Corpus has limited storage space, meaning crude that might otherwise be exported from there is getting sold in Midland, where it will be stored or sold into the Houston market, according to Argus
    • AEGIS notes that if freight cost continue to make many waterborne routes around the world uneconomical, crude prices are likely to fall, in-order to open up more exports
  • Natural gas is up 1.9c to $2.358/MMBtu
  • Cameron LNG is seeking permission to begin the commissioning process for its second train
    • Each train represents roughly 0.7 Bcf/d of demand
    • The company appears on track for its 4Q2019 start date for Train 2 and could begin exportation from the facility in the near term
  • The Gulf South Pipeline, a statewide pipeline system in Louisiana that gathers gas from the Haynesville, Barnett, and Eagle Ford, has been undergoing several planned outages since the end of September (Platts)
    • Many of these maintenance plans are expected to last well into November, restricting capacity throughout the system by as much as 0.3 Bcf/d on some sections
    • Planned service outages should not have much of an impact on local basis forward curves, however cash prices could be exasperated during this time period
  • There is currently a 50% of a cyclone formation projected to hit the Gulf Coast within the next five days
    • Strength and trajectory of the storm will ultimately determine its impact on the regional market dynamics
    • The most recent storm to come into the Gulf Coast flooded several pipelines and export facilities in and around the Houston area for several days

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