September 25, 2020

September 25, 2020
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  • WTI is down 24c to $40.07/Bbl, and Brent is down 11c to $41.83/Bbl
  • November oil futures fell on Friday as the dollar made gains and equity markets declined
    • This week has been tough for oil prices despite the small move in price. Libya announced the return of some oil production and parts of Europe are likely to return to lockdowns amid a surge in coronavirus cases
  • Brent’s premium to West Texas Intermediate reached the lowest level since late May at $1.63 on Thursday
    • The Brent-WTI spread is likely weaker due in part to additional supply on the water coming from Libya and Iraq
    • A decline is this spread could force WTI (and WTI Houston) to move lower in-order to keep U.S. exports flowing
  • Natural gas is down 4.1c to $2.207/MMBtu
  • The NG prompt month (OCT 20) contract was up 12.3c yesterday, to settle at $2.248/MMBtu
    • Prompt month gas prices have been quite volatile, falling 20c to start the week from $2.048 on September 18, to $1.834/MMBtu on September 22. The prompt month contract has since rallied 41.4c to break a streak of consecutive week-over-week declines
    • Colder forecasts for October and a storage build that was 11 Bcf below what analysts were expecting, coupled with the recovery in LNG feedgas flows, are likely behind the upward pressure on price
  • Current forecasts suggest that this could be the coolest start to October in the past eleven years, in terms of gas-weighted heating degree days, according to the Commodity Weather Group
    • Prompt-month gas prices, which had fallen as much as $0.80/MMBtu since the start of September, have bounced back some $0.40/MMBtu given the forecasts
    • AEGIS notes the October contract can, at times, be more volatile as the transition from shoulder to heating season occurs
    • This is especially true when weather is not playing ball as storage facilities switch from injection to withdrawals (and finalize their injections for the season)
  • The EIA reported a 66-Bcf build for the week ending September 18; the build was much smaller than the 77-Bcf build analysts expected
    • Total stocks now stand at 3.680 Tcf, which is 407 Bcf above the five-year average, and 504 Bcf more than a year-ago
    • The end-of-season storage EIA inventory estimate on ICE was at 3.97 Tcf following the latest injection report
  • LNG flows to feedgas facilities have risen over the past two days, after falling to a low of 3.93 Bcf/d on September 22, 2020
    • Feedgas flows reached 6.10 Bcf/d on September 24 and are expected to reach 6.46 Bcf/d today (September 25). Flows are still nearly 2 Bcf/d removed from its post-pandemic high of 8.3 Bcf/d reached on September 18
    • Flows to both Cameron LNG and Cove Point LNG remain at zero, while flows to Sabine Pass and Freeport LNG have recovered to 3.93 Bcf/d and 1.52 Bcf/d, respectively, as Tropical Storm Beta exits the Gulf
    • Prices at Henry Hub were up 5.8%, or 12.3c yesterday, settling at $2.248/MMBtu. JKM prices were up 11.5c (2.4%), settling at $4.950/MMBtu, while the TTF prompt-month contract was down 10.7c (2.6%), settling at $4.069/MMBtu

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