October 5, 2020

October 5, 2020
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  • WTI is up $2.18 to $39.25/Bbl, and Brent is up $2.13 to $41.40/Bbl
  • Oil recovered from a three-week low, rising over 5% on Monday morning
    • A labor dispute has reduced Norway’s output by 330 MBOE/d
    • Markets were also buoyed after a member of Donald Trump’s medical team said the U.S. president could leave hospital as soon as Monday
    • Offsetting production losses in Norway is Libya, where the OPEC nation has increased output to 300 MBbl/d
  • A total of 169 oil workers off Norway are now striking after no deal was struck with producers before a midnight deadline (Bloomberg)
    • The total amount of supply offline is about 330 MBOE/d
    • The strike started last Wednesday with 43 workers at Johan Sverdrup and now 126 workers are striking
  • Put skews for Brent and WTI steepened to the most bearish since May on Friday, with volatility surging
    • Brent 2nd-month put skew rose to about 16.3ppt on Friday, the most bearish since May 8 (0.0ppt would be equal skew for a put and offsetting call)
    • Put skew is where the price for a put is more expensive than the offsetting call
    • This type of skew can make structures like costless collars less appealing
  • Natural gas is up 22.6c to $2.665/MMBtu
  • Baker Hughes gas rig count decreased by one rig, to bring the total gas rig count to 74
    • The major gas basins, Marcellus and Utica, and Haynesville remained unchanged
  • The CFTC reported that managed money net positioning has decreased further from its three-year high
    • Long positions decreased by 7,084 contracts to total 273,861
    • Short positions also decreased by 19,849 contracts to total 161,330
  • Flows to LNG facilities increased to 8 Bcf/d over the weekend for the first time since hurricane Beta
    • Feedgas flows to Cameron LNG reached 150 MMCf/d; No update has been provided yet on when the site expects to be fully operational, however dredging is supposed to be complete by October 8, 2020
    • Cove Point LNG flows are still at zero, as seasonal maintenance continues

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