October 8, 2020

October 8, 2020
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  • WTI is up $1.05 to $41.00/Bbl, and Brent is up $1.10 to $43.09/Bbl
  • WTI is trading $1/Bbl higher this morning, on news of a renewed push for an agreement on the stimulus package
    • The EIA reported a build in inventories of 501 MBbls for the week-ending October 2, the first build in 4 weeks
    • Chatter of Mexico’s annual oil hedge has emerged. The country has kept this year’s hedge under tight wraps, declaring it’s details a “state secret”. Time is running out to hedge 2021, and the market will be keeping a close eye on put options to see if there is any indication that the deals are underway
  • Norway strike escalation may lead workers to cut a quarter of oil, gas output
    • Six offshore oil and gas fields shut down on October 5 as Lederne ramped up the strike, cutting output capacity by 8%, or around 330 Mboe/d
    • If escalated, production outages could total 966 Mboe/d. Another seven oil and gas fields could be shut down by October 14
  • Hurricane Delta nears U.S. Gulf Coast, is expected to make landfall on Friday
    • The storm, expected to intensify over the Gulf’s warm waters to a Category 3 hurricane with winds of 115 mph, has halted 80% of the region’s offshore oil and nearly 50% of its natural gas output
    • Gulf of Mexico operators have shut in 1.5 MMBbl/d of oil production ahead of Hurricane Delta, according to the BSEE
  • Natural gas is down 4.3c to $2.563/MMBtu
  • Gas futures are down over 3% to about $2.52/MMBtu this morning, a reversal of 3% in gains observed on Wednesday
    • The EIA is expected to report a 72 Bcf injection for the week ended October 2, according to the average Bloomberg survey
    • A 72 Bcf injection would be bullish when compared to the five-year average and 2019
  • Fermaca, a pipeline developer, said it plans to double the amount of capacity offered on its Wahalajara pipeline system (S&P)
    • The company intends to provide more cheap natural gas from Waha to state utility CFE
    • Mexico has utilized large amounts of LNG imports to fulfill their gas demands in the past. New U.S. to Mexico pipeline connections have allowed Mexico to buy cheaper west and south Texas gas instead of the some of the more expensive LNG
    • The total Wahalajara system, which starts at the U.S. border, has capacity of more than 5 Bcf/d, mostly contracted by CFE

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