Frac Spread Count Inches Up and other news

Frac Spread Count Inches Up and other news

The Frac Spread Count came out at 182 from 165 last week, adding 17 more spreads. Most of the increases were smaller basins – as we have been pointing out. Prices are getting better and the liquids remains robust supporting additional activity. We will continue to see increases. Rig counts faced a small decline, levelling off. However, additional activity is there but not at the same pace. There are some big storms coming through Colorado but it won’t have a similar effect on spread – like that of the Texas one.

An interesting and relevant question in terms of the FSC and overall U.S. production is that when do we get over 200? It will take a little longer, some point in April depending on the prices, of course. We expect that FSC may hit 230 in future and a 11.3 mbpd of U.S. production is possible and sustainable. This ties to drilling permits which have started to get back up – and the focus is now on strengthening the review process not stopping the permits itself.

Also, some of the refinery outages has started to reverse as the effects of the storm wither off. Also, as we mentioned that it will take about 4 weeks for business to get back to normal, this is the third week – and much of the refinery outages has been restored. On the other hand, number of tankers seeing coming from Europe into PADD 1 and PADD 3 is at May 2018 highs – typically March experiences this increase but the proper shift is to be seen between weekend and week day activity where the latter is 30 – 40 percent down – and headwinds remain on this side.

COVID-19 continues to leave its impact around the world as India has seen an increase in cases, Italy is going into another lockdown, France and Germany has also extended. Brazil is getting worse and all of this might effect U.S. exports. In terms of the physical demand, Angola still hasn’t 10 cargo of the 38 that they plan to send next month. As OPEC+ decision to continue with the cuts show – everyone acknowledges the headwinds in physical demand.

In another video here. Mark talks about the yields. Inflation metrics has continued to point higher. FED has already started to employ some sort of yield control. FED has also limited the amount of future purchases (see graph below). Foreign investors have sold a record amount of bonds last year. The private side is, however, struggling creating pressures.

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By: Osama Rizvi; Energy Market Analyst at Primary Vision Network