October 19, 2020

October 19, 2020
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  • WTI is down 7c to $40.81/Bbl, and Brent is down 9c to $42.84/Bbl
  • OPEC+ is planning to hold a virtual meeting today to discuss the current oil market outlook given the resurgence of COVID cases across the globe (Bloomberg)
    • Despite the conference, no formal supply decisions are expected to be made until December 1, 2020
    • The International Energy Agency estimates that global oil demand has recovered to 94% of pre-pandemic levels, but certain refined products demand could take several years
  • The month one vs month two Brent contract spread is at its highest level since late August
    • The spread, which is currently printing at -$0.34, is used as an indicator for the strength of the physical crude market
    • The spread has tightened up some ~$0.20 since the start of October
  • The CFTC reported that managed money long positions fell 16,812 contracts to total 379,184 contracts
    • Managed money short positions fell 7,750 contracts to total 85,355 contracts
    • Net positioning now stands at a one-month low of +293,829 contracts
  • Natural gas is down 7.9c to $2.694/MMBtu
  • Prompt natural gas futures are down about 3% this morning and the Cal 2021 strip hit a new multi-year high
    • Cal 2021 traded at $3.07/MMBtu on Monday morning, the highest print for the strip since late 2016
    • The Winter 20-21 strip is within 5c of its highest level since 2016 at $3.18
  • Waha winter futures remain strong while near-term prices languish
    • Cash markets for Waha have dipped back into negative territory at -12c fixed price on Oct. 16 as El Paso Natural Gas began another set of maintenance on Oct. 14
    • The pipeline work is scheduled to last through the end of the month, and are currently restricting westbound capacity of the pipe’s mainline by an estimated 540 MMcf/d (Platts)
    • Despite the cash market weakness, the Waha winter 20-21 strip has remained around -55c to Henry Hub

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