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Oil and Gas move higher

October 5, 2020

Oil and Gas prices are moving substantially higher on Monday morning. Oil prices (up over $2) are getting a lift from a few sources. While early reports cited President Trump's improving health after being infected with Covid, that was probably not the main driver, as the market knew that on Sunday 6PM ET when prices opened unchanged. What is more likely helping the market is (1) A Gulf of Mexico hurricane ("Delta") expected to hit Louisiana (with a decent possibility of shutting in the LOOP) and (2) surprisingly upbeat reports that Gasoline demand this past week was unusually strong.

 

Gas prices are also up ~24 cents in spot. The storm will shut in production but it is also expected to miss LNG export facilities by arcing East. More importantly, Cameron LNG export facility is back up and sendouts from the US are hitting 8 bcf/d, a high since the Spring Covid collapse. Also, an international investment bank put out new research raising their Cal 2021 price target from $3.05 to $3.25, citing lower production, decline rates, less associated gas growth, increased LNG, and a need for higher prices to incentivize gas to coal switching.  



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