October 25, 2019

October 25, 2019October 28th, 2019
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  • WTI is down 32c to $55.91/Bbl, and Brent is down 33c to $61.34/Bbl
  • Oil prices are on track for the largest weekly gain in more than a month amid tighter oil supplies
    • The Energy Information Administration (EIA) showed a surprise withdrawal in crude stocks in the US that is contributing to WTI’s 4% increase so far this week
  • The US said companies still doing business with a US-sanctioned unit of China’s biggest shipping company have less than 60 days to wind down their transactions (Bloomberg)
    • This will provide temporary relief for China’s COSCO who were sanctioned on September 25
    • US sanctions caused tanker rates to skyrocket to record levels as COSCO is a big player in the world’s tanker market
    • Higher shipping rates can cause pressure on petroleum exports
  • The prompt contract for WTI Midland-WTI Trade Month (TM) futures is near recent highs ahead of Phillips 66’s 900 MBbl/d Gray Oak pipeline expected start-up next month
    • Permian crude differentials to WTI TM closed yesterday at +79c
    • Gray Oak will be the third new major crude pipeline to enter service this year from the Permian to the US Gulf Coast
  • Natural gas is down 2.3c to $2.293/MMBtu
  • The EIA reported a build of 87 Bcf, which was smaller than the 92 Bcf estimate analysts were expecting
    • Total storage is now at 3.6 Tcf, a 519-Bcf surplus to last year
    • The end of season storage number is predicted to come in around 3.8 Tcf
  • Southbound flows on the Tennessee Gas Pipeline have fallen some 0.75 Bcf/d in the last two weeks, as local demand in the Appalachian region ramps up (PointLogic)
    • This increase in local demand is most likely a reason why both Dominion South spot and futures prices have seen an improvement since the beginning of October
    • A decrease in southbound Appalachian flows to downstream markets, like the Gulf Coast, opens up the ability for other gas regions to fill in the gap
  • There is a 70% chance of a cyclone formation in the Gulf of Mexico
    • Current spaghetti models have the storms trajectory hitting Southern Louisiana
    • PADD 3 (Gulf Coast) refinery runs and LNG exports could be impacted should this storm become powerful enough

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