February 17, 2021

February 17, 2021
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  • WTI is up 63c to $60.68/Bbl, and Brent is up 89c to $64.24/Bbl
    • Oil remained above $60/Bbl Wednesday morning as the cold temperatures in the south wreak havoc on the petroleum industry
      • Extreme temperatures have curtailed more than 2 MMBbl/d of U.S. production and refinery demand is also being hampered with over 3 MMBbl/d of capacity idled (Energy Aspects)
      • Barring any lasting damage to the midstream and downstream oil complex, the impact of the cold on crude prices is seen as short-lived (Bloomberg)
    • The deep freeze could affect oil and gas production more severely than downstream infrastructure, according to industry experts (Reuters)
      • Icy roads in the Permian halted the trucking of everything from sand supplies to cement, while power losses affect electricity to oil pumps and saltwater disposal facilities
        • “Some producers in West Texas had to shut in entire fields when they lost power,” said Texas Railroad Commissioner Jim Wright
      • Todd Staples, president of the Texas Oil & Gas Association said “Hazardous travel conditions limit the accessibility of repair equipment to repair equipment, it limits the ability for service companies to reach production sites. You have unplanned communication and power outages that all create difficulties.”
  • Natural gas is down 1.0c to $3.119/MMBtu
  • Prompt gas gained 21.7c yesterday, as futures started to budge after having a muted response to price action in the spot market last week
    • The Summer 2021 strip is up by 5c this week, while the Winter 2021/2022 strip is up by 8c
    • The deep freeze affecting gas prices could last for days, according to the Texas grid operator (ERCOT). The blackouts spread to North Dakota, Arkansas, Louisiana, and Mississippi on Tuesday. Rolling blackouts may persist for days as the disrupted power supply has required consumers to curtail usage
  • The recent Arctic blast affecting much of the U.S. has disrupted flows to U.S. Gulf Coast LNG facilities
    • Freeport LNG has reduced flows to 0.049 Bcf/d from around 1.95 Bcf/d last week, as Texas-governor Greg Abbott asked the plant to dial back operations in accordance with the state’s disaster declaration
    • During the height of the freeze, total LNG flows fell to 1.4 Bcf/d from 11.15 Bcf/d last week, as gas was redirected from LNG export facilities

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