January 7, 2019

By January 8, 2019First Look

January 7

Crude Oil:

  • WTI is up $1.01 to $48.97/Bbl, and Brent is up $1.10 to $58.16/Bbl
  • Crude oil is up nearly $8/Bbl since Christmas Eve in the biggest week-on-week rally in two years (Reuters)
    • Oil has drawn support from lower December OPEC output and possible easing tensions between the US and China as face-to-face meetings start this week
  • Canadian crude-by-rail traffic on two systems was up 23% in 2018 (The Canadian Press)
    • Canadian National Railway and Canadian Pacific Railway saw increased demand due to insufficient pipeline capacity
    • Rail demand is likely to remain high as expanded pipeline capacity doesn’t arrive until later in 2019 and new projects have faced political and regulatory difficulty
    • AEGIS notes Canadian production will be limited in 1Q2019 because of Alberta’s mandated production cuts
  • The EIA reported US crude inventories on Friday last week due to the holiday
    • US crude stocks showed almost no movement for the week ending December 28, up 4 MBbl at 441.4 MMBbl
    • Refiners processed 17.8 MMBbl/d, up 410 MBbl/d from the previous week – operating at 97.2% of capacity
    • Stocks at Cushing, Oklahoma rose 641 MMBbl/d to total 41.9 MMBbl in a sixth consecutive week of builds

Natural Gas:

  • Natural gas is down 8.1c to $2.963/MMBtu
    • Weather models show a slight demand loss over the weekend, but support a strong Eastern cool down next weekend
      • Models show a loss of 1.7 HDDs
    • US natural gas in storage fell by 20 Bcf last week to 2.705 Tcf
      • It was smaller than expected, as survey responses ranged for a draw of 36 Bcf to 64 Bcf
      • Stocks were 450 Bcf, or 14.3%, less than the year-over-year level of 3.155 Tcf, and 560 Bcf, or 17.2% less than the five-year average of 3.265 Tcf
    • Mexico Pacific Limited expects to reach a final investment decision by the end of the year for a new LNG export terminal on Mexico’s Pacific Coast (Platts)
      • The first phase of the project is expect to be between 2 and 4 million tons per year while the entire project is expected to be about 12 million tons per year
      • Gas could be sourced for the terminal from Permian and San Juan basins
    • Natural gas-directed drilling rigs count remained at 198, according to Baker Hughes
      • Marcellus, Utica and Haynesville remained at 57, 17 and 52, respectively