January 9, 2019

By January 10, 2019First Look

January 9

Crude Oil:

  • WTI is up $1.48 to $51.26/Bbl, and Brent is up $1.59 to $60.31/Bbl
  • Trade talk optimism has acted as a bullish catalyst this week
    • Brent is back over $60 and WTI is over $51 this am, the first time since mid-December
  • The API says US oil, gas producers want end to China trade war, steel tariff (Platts)
    • US steel tariffs, the trade war with China and a prolonged federal government shutdown could each threaten to slow the growth of the US oil and natural gas industry, the president of the American Petroleum Institute said Tuesday
    • Plains All American estimated the tariff increased the cost to build the 585,000 b/d Cactus II crude pipeline by $40 million
  • AEGIS notes this is the first EIA survey of the new year, and company end-of-year accounting revisions can create some surprises in the survey data
    • The American Petroleum Institute (API) estimates a 6.1 MMBbl draw, but their estimate last week of a 4.5 MMBbl draw was a big miss as inventories hardly changed, per the EIA
  • EIA petroleum data is due out this morning at 9:30 am CT
    • U.S. Crude Inventories:                  –  1,743 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             +  2,629 MBbls
    • U.S. Distillate Inventories:             +  1,230 MBbls
    • U.S. Refinery Utilization:                –   0.64% change

Natural Gas:

  • Natural gas is down 0.1c to $2.966/MMBtu
  • Weather models show another demand gain overnight with the start of next week showing signs of being colder
    • Cold pattern signature gradually returning
    • Overnight demand showed an increase of 8.3 HDD’s
  • The Atlantic Coast Pipeline finally gets a win as the Virginia State Air Quality Board approved a permit for a natural gas compressor in Union Hill, Virginia (Platts)
    • Construction is still on hold for the 600-mile, 1.5 Bcf/d pipeline project because of other legal setbacks in appeals court over a variety of federal permits
    • The pipeline project is designed to move Appalachian shale gas to markets in the Mid-Atlantic
  • Chesapeake Energy announced plans to cut its rig count by about 20% and average 14 rigs during 2019 (Bloomberg)
    • This is an effort to reduce its 2019 capital expenditures as they also expect total net capital per rig line to fall by 15% to 20% compared to last year