Energy Report: Shaking It Off

India's refinery runs hovered in the 4.3 million b/d range over June-October. The sharp increase in October demand and the conclusion of fall maintenance season helped boost November runs by an estimated 400,000 b/d month per month.

Oil traders: do not fight the trend. As we said, the worst is over for crude, and the outlook looks very tight. While US demand lags, more stimulus will boost demand. Senate Majority Leader Mitch McConnell said Tuesday that the Senate would not leave Washington for the holidays until a coronavirus aid package is passed, "We're not leaving, I assure you. We're not leaving until we finish this package." That statement and the market's knowledge that politicians hate to not be home for the holidays makes it likely a deal will pass. 

Natural gas prices are pulling back as winter has been underwhelming. Andrew Weissman of EBW Analytics writes that while winter supply adequacy concerns remain improbable at this point, particularly after considering Canadian storage surpluses and elevated imports. Even if late-December weather turns colder, more measured gains are likely. Yet he still holds his "strongly bullish outlook for the coming injection season has turned even more optimistic on recent strength in international gas demand boosting domestic LNG export prospects for summer 2021, including emerging deficits in Europe. Domestic natural gas prices may have to rise high enough to shut-in LNG exports to conserve supplies for heating demand—implying steep price gains may be required over the next eight to ten months to balance the market.

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