First Look

October 10, 2019

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  • WTI is up 54c to $53.13/Bbl, and Brent is up 55c to $58.87/Bbl
  • Crude stocks in the US rose more than expected last week amid a rise in production and a drop in refinery runs, according to the EIA
    • Inventories rose by 2.9 MMBbl to 425.6 MMBbl, marking the fourth straight week of builds
    • Stocks at Cushing, Oklahoma, rose by 941 MBbl to 41.7 MMBbl
    • WTI price action following the government’s data release on Wednesday was rather muted as large product stock withdraws offset the crude build
  • The long-awaited Saudi Aramco IPO is finally set to hit the market (Bloomberg)
    • The Saudi government is set to make a formal announcement in late October
    • The crown prince has always insisted that Aramco is worth more than $2 trillion
    • AEGIS notes targeting a stratospheric valuation means its in the Saudis best interest to try and keep oil prices from getting too low
      • They can accomplish this by restricting supply when price moves too far down
  • OPEC’s Secretary-General Mohammad Barkindo said at the Oil & Money conference in London that OPEC+ will do “Whatever it takes” to prevent another oil slump as the global economy weakens
    • Barkindo said the US-China trade dispute has “cast a shadow” over oil demand and a failure to reach a deal would be “catastrophic” for the market
    • AEGIS notes futures were down in afterhours trading on Wednesday as it was reported that deputy-level talks between the US and China made no progress. Prices have recovered as of this morning.
  • Natural gas is up 0.7c to $2.241/MMBtu
  • Analysts estimate natural gas storage to increase by 97 Bcf for the week ending October 4
    • Forecasts ranged from 82 Bcf to 111 Bcf
    • The corresponding build last year was 91 Bcf
  • Flows from the United States, on the Sur de Texas (SdT), to Mexico have crept up to 0.75 Bcf/d, setting a new record (Platts)
    • Flows could see a significant boost when the Tula-Villa de Reyes and Tuxpan-Tula extensions of the SdT come into service in 2H2019 and 2H2020, respectively
    • The pipelines can bring gas from the United States down into Southern Central Mexico, thus increasing demand and flows on the SdT
  • FERC has approved the change of waterbody crossing for the 1.4 Bcf/d Midship pipeline
    • This is a positive step towards Cheniere’s anticipated 4Q2019 start date for the pipeline
    • Once complete, the pipeline will be able to source SCOOP/STACK gas and deliver it towards northern Louisiana for further transportation to the Gulf