October 22, 2020

October 22, 2020
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  • WTI is up 4c to $40.07/Bbl, and Brent is up 10c to $41.83/Bbl
  • WTI pared some of yesterdays losses in after-hours trading after seeing its worst day in over 2 weeks
    • While yesterday’s draw in crude stocks was not particularly bearish (-1 MMBbls), U.S. motor gasoline inventories increased by the most (1.9 MMBbls) since mid-May.
    • The NYMEX gasoline crack fell to its lowest level since April, as RBOB prices tanked in response to the large build in stocks
  • Libyan output reached 560 MBbl/d on Wednesday, representing a 410 MBbl/d increase since the beginning of October
    • JPM estimates that production could reach 1 MMBbl/d by March 2021, while Bloomberg estimates that it could return to 1 MMBbl/d by the end of 2020
    • AEGIS notes, that the increase in production will continue to weigh on prices. OPEC has yet to release a statement regarding the increase in production, however, the additional output will weigh on prices just as an increase in coronavirus cases dampens demand
  • Venezuela’s PDVSA sets output goal of 1.8 MMBbl/d for 2021 – (Bloomberg)
    • PDVSA plans to base its 2021 budget on an oil price of $35/Bbl
  • Natural gas is down 2.5c to $2.998/MMBtu
  • No LNG cargoes from Cheniere terminals are expected to be cancelled for the month of December, according to Platts
    • This is the first month zero cargo cancellations have been reported since March
    • U.S. LNG feedgas flows are averaging 7.4 Bcf/d for the month of October
  • The front spread between the November and December contracts has tightened up ~$0.20 since Monday and is now printing at $-0.32
    • The tightening of the spread is the result of the prompt-month contract rallying $0.30/MMBtu over the course of the week
    • The prompt-month contract has eclipsed $3.00/MMBtu for the first time since 2019
  • The EIA is expected to report a 51-Bcf injection for the week ending October 16, which would be much less than the 92-Bcf build in the corresponding week of last year
    • Analysts estimates ranged from a build of 38 Bcf to 68 Bcf
    • A build within this range would bring total stocks near 3.928 Tcf and the surplus to the five-year average near 329 Bcf

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