May 14, 2019

By May 15, 2019First Look

May 14

Crude Oil:

  • WTI is up 60c to $61.64/Bbl, and Brent is up 91c to $71.14/Bbl
  • Prices were sharply up early this morning after news that Saudi facilities were attacked
    • Drones attacked Saudi Arabia crude oil pumping stations, causing the country to suspend some operations (Bloomberg)
    • Iran-backed Yemeni rebels claimed responsibility
    • This comes after two Saudi tankers were “sabotaged” offshore over the weekend, according to reports
    • AEGIS notes crude oil had been remarkably stable, without much volatility, despite equities suffering from uncertainty in US-China trade relations
  • Houston Ship Channel traffic both upstream and downstream resumed yesterday after a spill had closed the channel (Argus)
    • Traffic was initially limited to just one ship at a time near the spill
    • First priority were outbound vessels, which were cleared during the day, when dozens of inbound vessels waited
  • Drilled-but-uncompleted (DUC) wells in inventory declined in April again, but Permian DUCs still increased
    • Anadarko, Appalachia, Bakken, Niobrara, and Eagle Ford areas reduced DUC inventory

Natural Gas:

  • Natural gas is up 4.2c to $2.663/MMBtu
  • Prices were supported this morning by weather models that showed some demand gains through day 15
    • Eastern US warmed up in the short-term, and there is more promise of hotter South and Midwest in the 11-15 day period
    • Early June models still suggest no big heat threat
  • China has retaliated against the US with tariffs of their own, lifting the tariff rate from 10% to 25%
    • China’s tariff retaliation could be detrimental to US LNG export growth momentum (Reuters)
    • The new tariffs will take effect on June 1
  • Mexico President Andres Manuel Lopez Obrador (AMLO) has promised to ban hydraulic fracturing (NGI)
    • Rice University’s Baker Institute researchers say limited access and a lack of infrastructure are most likely to stall shale gas development in Mexico, regardless of the president’s promise
    • Fracking has seen limited use in Mexico, and they still import the majority of their natural gas. A fracking ban could eventually increase the demand for natural gas in Mexico from the US.