September 3, 2020

September 3, 2020
Print Friendly, PDF & Email
  • WTI is down $1.08 to $40.43/Bbl, and Brent is down $1.10 to $43.33/Bbl
  • Oil futures in New York traded near $40/Bbl Thursday morning, after the deepest drop since July as concerns grow over OPEC supply and fuel demand
    • Iraq may seek a two-month extension to implement its compensatory cuts, indicating it won’t be able to reduce production as quickly as previously promised (Bloomberg)
    • Profit from making diesel plunged on Thursday to the lowest since at least 2011 in Europe, signaling that demand is still weak
  • Crude oil’s recent price weakness is also due to a rally in the dollar
    • The dollar has moved higher the past three days, off its two-year low set on Monday
  • The EIA reported a decline in U.S. crude oil stocks for the sixth consecutive week, the first time inventories dipped below 500 MMBbl since early April
    • Crude inventories fell 9.4 MMBbl to 498.4 MMBbl last week as offshore production tumbled because to two Gulf of Mexico storms
    • Domestic oil production dropped to 9.7 MMBbl/d, a decline of 1.1 MMBbl/d from the prior week
      • The amount of oil still shut-in in the Gulf is 368 MBbl/d or 19.9%, according to the Bureau of Safety and Environmental Enforcement (BSEE)
  • Natural gas is up 1.6c to $2.502/MMBtu
  • The EIA is expected to report a 34-Bcf injection for the week ending August 28, which would be much less than the 77-Bcf build in the corresponding week of last year
    • Analysts estimates ranged from a build of 27 Bcf to 48 Bcf
    • A build within this range would bring total stocks near 3.454 Tcf and the surplus to the five-year average near 406 Bcf
    • The current end-of-season storage number is being offered on ICE at 4.0 Tcf, an increase from 3.975 Tcf last week
  • The JKM prompt month contract has rallied by 25c over the last week to settle at $4.225/MMBtu on September 2, 2020
    • Power outages in Louisiana, Texas have stymied the U.S Gulf Coast LNG recovery that was expected after Hurricane Laura
    • The 2.0 Bcf/d Gorgon LNG site in Australia faces additional delays as the company announced that the Train 2 repairs are taking longer than expected. Chevron has said that they intent to bring the unit online in October, a revision from their earlier plans of an early September startup date
    • AEGIS notes, the outages at LNG facilities will likely put upward pressure on Japan-Korea Marker (JKM) prices, widening the LNG arbitrage for U.S. LNG exports
  • The Bureau of Safety and Environmental Enforcement (BSEE) provided an update on GoM production outages in the wake of Hurricane Laura
    • The BSEE estimated 19.65% of gas production (532.55 MMcf/d) is still shut in, an improvement from 49% reported on Monday
    • The BSEE announced that only 9.18% of production personnel were still evacuated from 59 platforms

Access Our Deeper Market Insights

Product Factor Matrix

Proprietary view of priced-in factors driving the market vs. potential bullish and bearish surprises.

Learn More

Trading Recommendations

Clear trading recommendations based on real market opportunities that enable clients to take action.

Learn More

Market Data

A comprehensive suite of the latest curves, spot pricing, settles, and strips to drive confident hedging decisions.

Learn More

Benchmarking and Trade Analytics

Real-time access to analyze your hedging strategy against AEGIS benchmarks and current market activity.

Learn More