October 23, 2019

October 23, 2019
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  • WTI is down 70c to $53.78/Bbl, and Brent is down 64c to $59.06/Bbl
  • OPEC and Russia will consider whether to take deeper supply cuts when they meet in December amid worries about weak demand growth in 2020, according to OPEC sources (Reuters)
    • Saudi Arabia, the de facto leader of OPEC, would like to beef up compliance levels among OPEC+ members before committing to more cuts, according to Reuters
    • The kingdom has been over complying with production cuts as OPEC members Iraq and Nigeria have failed to comply with pledged output reductions
  • The American Petroleum Institute (API) estimated a crude oil inventory build of 4.45 MMBbl for the week ending October 17
    • The API typically releases its data Tuesday afternoon, a day before US government data is posted
  • EIA weekly data is due at 9:30 AM CST
    • U.S. Crude Inventories:                  +      2,751 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             –      2,139 MBbls
    • U.S. Distillate Inventories:             –     2,777 MBbls
    • U.S. Refinery Utilization:               +       0.96% change
  • Natural gas is up 2.0c to $2.292/MMBtu
  • The long-delayed Mountain Valley Pipeline will be further pushed back to late 2020
    • Management believes that the project will be approximately 90% complete by the end of 2019
    • The pipeline was originally anticipated to be complete by mid-2020
  • Construction has commenced on the Cheyenne Connector Project
    • The pipeline represents 0.6 Bcf/d of additional takeaway capacity in the Denver-Julesburg (DJ) basin
    • The project is expected to be completed by 4Q2019 or 1Q2020 and is designed to move natural gas from receipt locations in the DJ basin to the Rockies Express Pipeline (REX) Cheyenne Hub just south of the Colorado/Wyoming border
    • REX can reach markets in the Midwest and connect with other major interstate pipelines
  • PG&E is set to cut power off in California to some 200,000 customers, once again
    • These blackouts will remain a threat until PG&E can inspect and upgrade all of their existing infrastructure, a process that is expected to take years
    • Local basis, as well as basis that has California as a downstream market, could experience an increase in volatility, especially in the spot markets

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