October 28, 2019

October 28, 2019
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  • WTI is down 6c to $56.60/Bbl, and Brent is down 9c to $61.93/Bbl
  • Russia says it is too soon to talk about deeper OPEC+ production cuts (TASS News Agency)
    • Russian Deputy Energy Minister Pavel Sorokin was interviewed by TASS and was making comments on possible OPEC+ policy
    • He said the oil market is currently balanced but there’s a range of possible risks that include trade wars and slowing economies
    • OPEC+ will take into account the recent slowdown in US oil-out growth at the group’s December meeting
  • US rigs seeking oil fell a whopping 17 last week to 696, according to Baker Hughes
    • The Permian basin lost the most rigs out of major shale basins at five to now stand at 417
    • Permian rigs are down 72 rigs Y-o-Y
  • Linefill is underway on the 900 kbpd Gray Oak pipeline, with initial start-up in November and full service in Q1 2020, which is set to increase flows of Eagle Ford and Permian crude to US Gulf Coast refineries and export terminals (Bloomberg)
    • Kinder Morgan recently completed a connection to Gray Oak which allows shippers to move up to 100 MBbl/d of Permian crude to KMCC delivery points
    • The owner of Gray Oak, Phillips 66, and Kinder Morgan are offering a joint tariff on the two lines
  • Natural gas is up 8.0c to $2.380/MMBtu
  • The CFTC reported that long positions in natural gas increased by 1,459 contracts to 106,700 contracts
    • Short positions increased by 19,250 contracts to 320,829 contracts, a nearly 400% increase compared to this time last year
    • The percentage of positions held long stands at 25%, the lowest percentage in some seven years
  • Weather forecasts continue to trend unseasonably colder for the next 15 days
    • The majority of the arctic temperatures will be concentrated in the Midwest for the beginning of November, where it will then move to engulf much of the East Coast for the next two weeks
    • Cities like Denver are reporting temperatures in the upper 20s, which is 30 degrees below normal for this time of year
  • Rig count continues to trend lower as natural gas directed rigs fell by four from last week to 133
    • However, natural gas production continues to remain around record highs with PointLogic reporting that production hit 95.25 Bcf/d on Sunday, the highest single day ever
    • The decline in rig count has yet to show up in the production numbers, but given the weak commodity price environment capex strains could emerge in the near future and start to lower production growth

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