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Natural Gas Prices Soar As Heat Wave Hits Large Parts Of U.S.

Natural gas prices spiked on Friday by nearly 9%, even as the weekly storage report showed little movement.

Natural gas prices hit $2.367 by 2:26 pm EDT, an increase of 8.48% or $0.185, even as the EIA’s weekly storage report a day earlier showed a small increase of 58 Bcf in working gas in storage. The market had anticipated a larger build.

Also bullish for natural gas on Friday were forecasts for hot weather and reports of increased LNG exports.

Front-month natural gas futures on Friday hit their highest since the end of last year on this data as air conditioning usage is expected to increase as people try to cope with the heat wave. This will increase the demand for natural gas.

This will be particularly true in Texas, where demand for power in general—and consequently natural gas—is expected to hit a record high today as the heatwave sets in, according to Reuters.

These record highs for power demand will come even as industrial activity has not yet returned to pre-pandemic levels.

This unprecedented power demand has led to increases in power prices in the western part of the United States, which has, in turn, boosted natural gas prices.

Front-month nat gas futures were up more than $0.15 to $2.335 on Friday afternoon.

LNG exports have also increased, with improved demand outlook over the next couple of weeks, although the EIA stated that U.S. LNG exports will remain at low levels for the remainder of the summer, with planned cargoes of LNG still being canceled. According to EIA data cited by Kallinish, 46 LNG cargoes were canceled in June, 50 canceled in July, 45 were canceled in August, and so far 30 have been canceled for September.

By Julianne Geiger for Oilprice.com

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Oil Prices Fall Back After A Brief Rally

Oil prices have been trading in a relatively tight range for the last few weeks, and despite the recent bullish momentum WTI hasn’t been able to break out.

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Friday, August 14th, 2020

Another week and another snoozer for oil prices. WTI and Brent remain in a narrow range, although their foothold in the $40s feels more solid than it has in the past. EIA data this week showed another decent stock decline, along with an uptick in gasoline demand. 

IEA: Oil demand takes a hit. The International Energy Agency expects crude oil demand this year to be 8.1 million bpd lower than it was in 2019, a downward demand forecast revision of 140,000 bpd, the authority said in its latest Oil Market Report. The agency cited the very weak aviation industry as a main reason why demand could remain depressed. 

Inventories to draw down at “record speed.” In the fourth quarter, oil inventories could draw down at “record speed,” according to SEB. “[T]he IEA yesterday (13 August) projected a call-on-OPEC in Q4 2020 of 29.5m bl/day. If this turns out to be correct and OPEC and OPEC+ both stick to their agreed caps, then global inventories will decline by between 4m bl/day and 5.2m bl/day in Q4 2020 – an inventory draw of between 370m bl and 480m barrels in a single quarter, which cannot be far from a historical record,” SEB’s Bjarne Schieldrop said in a statement.  Related: Oilfield Service Companies Are Bailing On The Permian

U.S. seizes Iranian fuel ships. The U.S. filed a lawsuit in July against four ships carrying gasoline from Iran to Venezuela. U.S. officials said the four ships are en route to Houston, and the seizures should deter shipowners from taking business in violation of U.S. sanctions. 

China’s refinery runs hit record. China’s refinery processing surged by 12 percent in July month-on-month, but that coincided with a buildup in refined product inventories. Refineries have likely cut processing this month. 

Trump admin rolls back methane regulations. The EPA announced a roll back of methane regulations on oil and gas operations. Smaller drillers favored the removal of regulation, but the oil majors opposed the move. The majors have bet big on natural gas as a source of growth in a low-carbon world, and fear the reputational stain on gas from increased methane emissions. 

France sends navy to Eastern Mediterranean. France sent naval forces to the Eastern Mediterranean to provide military assistance to Greece and to deter Turkey from oil and gas exploration in contested areas around Cyprus. “The situation in the Eastern Mediterranean is alarming. Turkey’s unilateral decisions in matters of oil exploration provoke tensions,” French President Emmanuel Macron tweeted.

Mountain Valley Pipeline sees NC permit rejected. North Carolina regulators denied a key water permit for the Mountain Valley Pipeline, one of the few remaining high-profile long-distance natural gas pipelines under construction. The pipeline would carry Marcellus shale gas to the southeast. MVP is a joint venture between developer EQM Midstream and the subsidiaries of several utilities including NextEra Energy (NYSE: NEE) and Consolidated Edison (NYSE: ED).

BP considering remote work. BP (NYSE: BP) is considering a “radical reconfiguring of its offices,” including letting leases expire on office space and shifting nearly 50,000 employees to remote working, The Guardian reports

Decline in U.S. flaring. In 2019, global gas flaring hit its highest level in a decade, with much of the increase coming from U.S. shale. However, in the past 12 months, gas flaring in the U.S. has declined by 70 percent, according to the Earth Observation Group at the Payne Institute for Public Policy. The decline was largely driven by a slowdown in drilling. Capital discipline presents a hopeful scenario in which a consolidated industry can get a handle on the flaring crisis, the FT reports

Brookfield to buy stake in Cheniere. Brookfield Asset Management Inc.’s (NYSE: BAM) infrastructure arm is in talks to acquire Blackstone Group Inc.’s (NYSE: BX)minority stake in liquefied natural gas terminal operator Cheniere Energy Partners LP (NYSEAMERICAN: CQP), according to Bloomberg

Shell eyes stake in $9B Indian petrochemical project. Royal Dutch Shell (NYSE: RDS.A) is eyeing a 50 percent stake in a $9 billion petrochemical project in India. 

Venezuela’s oil production could fall to zero. Venezuela’s oil exports are suffering another blow these days: the quality of the crude loaded on tankers is so poor that loadings are being delayed. IHS Markit said that Venezuela could soon be producing “close to zero barrels of oil.” Currently, production has fallen to about 100,000 to 200,000 bpd, down from 650,000 bpd a year ago.  Related: Iran Seizes Oil Tanker In Strait Of Hormuz

U.S. offshore wind to see “explosive growth.” The U.S. could have as much as 25 gigawatts (GW) of offshore wind built by 2030, according to Wood Mackenzie. 

Exxon Payara project in Guyana on hold. ExxonMobil’s (NYSE: XOM) Payara-Pacora joint development project in offshore Guyana has been put on hold until the new administration of President Mohamed Irfaan Ali conducts a thorough review of the project.

Aramco to make spending cuts. Saudi Aramco (TADAWUL: 2222) could cut spending, lowering its planned capex to $20 to $25 billion this year from previous guidance of $25 to $30 billion.  

Hi-Crush gave out millions to executives right before bankruptcy. Frac sand supplier Hi-Crush (OTCMKTS: HCRSQ) handed out $3 million in executive compensation to four executives five days before declaring bankruptcy, according to Reuters.

By Tom Kool for Oilprice.com

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China’s Diesel Demand Set To Jump To Record This Year

State-stimulated recovering industrial activity and increased road freight and e-commerce deliveries are set to push up China’s diesel demand to a record high this year, analysts have told Reuters.

China’s recovering economy and the government stimulus to infrastructure activities are set to boost demand for heavy machinery and diesel to power them, analysts say. Other factors contributing to the high demand for diesel include booming e-commerce with road freight deliveries and strong mining activities, SIA Energy’s senior director Seng-Yick Tee said.  

China’s diesel consumption in 2020 could increase by between 60,000 bpd and 90,000 bpd to reach a record of 3.8 million bpd-4.1 million bpd, beating the previous all-time high from last year, consultancies SIA Energy and FGE told Reuters.

Sales of heavy-duty trucks in China are expected to boom this year, while gasoline-powered passenger car sales are set for a third consecutive year of annual declines, IHS Markit’s light vehicle expert Tao Gao told Reuters.

While diesel demand is set for an all-time high, demand for gasoline is forecast to be either flat year over year, or to post a small single-digit decline, analysts told Reuters.

China’s jet fuel demand, like everywhere in the world, will suffer the most in terms of percentage slump. Domestic flights have somewhat recovered, but the number of international flights is still much lower than it was before the pandemic, travel restrictions, and quarantine rules.  

Oil imports into China – the world’s top oil importer – held up during the Chinese lockdown and surged to record-highs in June, after Chinese refiners had rushed in April to stock up on the cheapest crude in years.

For the first half of 2020, despite the lockdown in the pandemic, China’s crude oil imports jumped by 10 percent year over year to an average of 10.95 million bpd.  

In July, China imported 12.08 million bpd of crude oil, according to official customs data, which was lower than the record-breaking import rate in June but 25 percent higher than the average for July 2019.

By Charles Kennedy for Oilprice.com

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As Vaporizer Use Increase So Does The Value Of Marijuana Stocks

Vape Use is Increasing Which is Good News for Pot Stocks

In the past few months, reports have shown that cannabis vaporizer use is up in North America. While many still prefer to smoke cannabis flower, marijuana stocks have benefitted from the rise in the use of vapes. With this, some leading pot stocks to watch have invested heavily in the cannabis vape market. In the past few years, we have steadily watched the use of vaporizers increase. But, it seems as though the Covid pandemic has meant that more people are afraid of smoking a combustible material. Instead, many are turning to vaporizers which can be less harsh than traditional marijuana flower.

[Read More]

  • 2 Marijuana Stocks With Solid Potential For the Future Of The Cannabis Industry

  • These Marijuana Stocks Continue To Rise Alongside The Stock Market


With the demand increasing, many leading pot stocks to watch have been working to put out new products. This means that some leaders in the cannabis industry are becoming specialized in the vape industry. While cannabis vaporizing presents a  relatively new industry, the concept has been around for quite some time. Because of the rising demand, innovations in how people use vaporizers are occurring every day. All things considered, the rise in cannabis demand is worth taking a closer look at.

What The Study Means For Marijuana Stocks

Marijuana stocks have a big role when it comes to vaporizers. For one, cannabis companies can produce large quantities of vaporizer pens to meet the growing demand. In Canada, the use of oils and vaporizing forms of cannabis were only legalized at the beginning of this year. Since that time, more and more of the public have chosen to use vaporizers as their preferred cannabis consumption method. The study, which is specific to Canada, states that vape pen sales amounted to more than 16% of cannabis industry market share in June of this year. This represents a large increase from where it was at the same time last year. 

Major pot stocks like KushCo Holdings Inc. (OTC:KSHB), that produce vaporizers, have benefited greatly from this increase. Although the demand varies in different parts of Canada, the data largely shows that demand has increased in the past few months alone. The study states that there is a great deal of resiliency when it comes to the vaporizer market. This makes it an almost Covid proof investment opportunity.. With that in mind, pot stock investors may want to take a look at marijuana stocks that deal with vaporizers.

What This Demand Means For The Future Of The Cannabis Industry

One of the aspects of the cannabis industry that the study did not address is how vapes will make their way into North America. Given the nature of the product, the vast majority of vape pens are manufactured in China. With the world in its current state, it seems as though production may be slowed for some time. But, fear not because this demand does not seem to be going anywhere anytime soon.

And although vaporizers are still quite expensive when compared to smoking cannabis flower, this issue too seems like it is being resolved. The study states that there is “some significant price dropping, and now there’s some new companies entering the market.” With this, it seems like pot stocks that work in the vaporizer market, may be pot stocks to watch moving forward. Although there is a lot of uncertainty in the cannabis industry, we do know that vaporizers are here to stay.

The post As Vaporizer Use Increase So Does The Value Of Marijuana Stocks appeared first on Marijuana Stocks | Cannabis Investments and News. Roots of a Budding Industry.™.

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U.S. Oil Rig Count Falls Despite Stabilizing Crude Prices

Baker Hughes reported on Friday that the number of combined oil and gas rig count in the US fell yet again this week by 3, to 244, as the pandemic continues to batter the oil and gas industry that is coming off a second-quarter financial season filled with billions in industry writedowns and projections of weaker-than-projected oil demand growth going forward.

Total oil and gas rigs in the United States are now down by 691 compared to this time last year.

The number of oil rigs slipped for the week by 4 rigs for the second week in a row, according to Baker Hughes data, bringing the total to 172, compared to the 770 active oil rigs this time last year.  The Permian Basin alone lost five rigs this week, with Ardmore Woodford losing one, and Arkoma Woodford gaining one. The Permian now has just 117 rigs, compared to 441 a year ago.

The total number of active gas rigs in the United States increased by one, landing at 70 total rigs. This compares to 165 rigs a year ago.

To compare active rigs with supply figures, the EIA’s estimate for oil production in the United States fell for the week ending August 7—the last week for which there is data, at 10.7 million barrels of oil per day. Oil production in the United States is 2.4 million bpd less than its all-time high reached earlier this year.

Canada’s overall rig count rose this week by 7, reaching 54 active rigs. Oil and gas rigs in Canada are now down 88 year on year. 

The Frac Spread Count in North America, provided by Primary Vision, fell last week, to 76 from 80. In terms of activity per basin, Primary Vision’s Mark Rossano notes that ”the demand for completion crews remains range bound with support in the Appalachia and Permian basins. Pricing headwinds and reduction in activity in other basins will keep the ceiling in place as the U.S. struggles to find a footing.”

Oil prices were trading down on the day on Friday despite tensions between the United States and Iran, and reports of decreases to crude oil inventories in the U.S.

At 12:57 pm EDT, WTI was trading down 0.66% at $41.95—roughly $0.30 up on the week. Brent was trading down 0.58% on the day, at $44.70, a lackluster $0.20 per barrel higher than last Friday.

At 1:08 pm, WTI was trading at $41.97 per barrel, with Brent changing hands at $44.75 per barrel.

By Julianne Geiger for Oilprice.com

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What Will It Take For Oil Prices To Break Out?

U.S. West Texas Intermediate crude oil futures are edging lower on Friday, giving up some of this week’s gain. Prices are being capped by doubts about demand recovery due to the COVID-19 pandemic and rising supply.

Although the futures contract is hovering near the high of its two-month trading range and slightly above a long-term 50% level, bullish traders are having a hard time extending the rally because of lingering demand concerns.

The market is also posting an inside move on the weekly chart despite a small gain for the week. This tends to indicate investor indecision and impending volatility. The weekly range is extremely tight with most of this week’s gains taking place on Wednesday. A lower close on Friday will mark the third lower close for the week, which isn’t a particularly bullish sign.

Fundamentally, crude oil was boosted this week by U.S. government data showing crude oil, gasoline and distillate inventories all declined the week-ending August 7, but gains were capped because the global oil supply is rising due to OPEC and its allies increasing output this month.

US Energy Information Administration Weekly Inventories Report

In its weekly report, the U.S. Energy Information Administration (EIA) reported that U.S. crude oil, gasoline and distillate inventories fell last week as crude production dropped sharply and refiners ramped up production.

Crude oil inventories fell by 4.5 million barrels, the EIA said,…

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U.S. Oil Companies See Production Decline

1. Gold rally comes to “explosive end”

– The gold rally came to an “explosive end” this week, as Commerzbank described it. Gold lost 6 percent on Tuesday, the largest single-day loss since 2013.

– Silver prices plunged by 15 percent, the largest decline since 2008.

– But the rally may not entirely be over. After a historic bust in 2013, “it took nearly seven years for prices to regain their previous levels,” Commerzbank said. “No such prolonged period is likely this time, however.”

– The reason is that the fundamentals favor gold and silver – negative real interest rates, an unprecedented increase in the money supply and skyrocketing debt. The chance of an interest rate increase in the near-future is nil.

2. U.S. oil production declines from a few companies

– The U.S. accounted for 30 percent of the global quarter-on-quarter decline in oil output in Q2, with production falling by 2.36 mb/d, according to Standard Chartered.

– But the bulk of U.S. oil production declines has come from a surprisingly small number of companies. “50% of the decline in the sample came from the first 3 companies and 80% of the decline from the first 10,” Standard Chartered said.

– The top 3 include EOG Resources (NYSE: EOG), ConocoPhillips (NYSE: COP) and Continental Resources (NYSE: CLR).

– With companies bringing supply back online, U.S. liquids output could rise…

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Oil Companies Battle For Survival As Production Falls

COVID Market Update

– The IEA has cut its 2020 oil production forecast by 140,000 bpd to 91.9 million bpd, sending the FTSE 100 index down 73 points. The IEA cited the airline industry’s troubles as a key source of weakness in the oil market.

– Saudi Aramco this week reported a $6.6 billion profit for Q2, with H1 profits dipping 50% from H1 2019 when net income reached almost $47 billion. Despite the profit shrinkage, Aramco is keeping its nearly $19 billion dividend payout. Aramco is still planning to boost production capacity to 13 million bpd (at some undisclosed point in the future) despite a planned capex cut to somewhere between $20 and $25 billion next year – down from more than $32 billion last year.

– Scorpio’s offshore support vessel company Hermitage Offshore Services (NYSE:PSV) filed for Chapter 11 protection this week after being unable to reach a deal with its creditors. All of Hermitage Offshore’s 28 subsidiaries have filed. The company has blamed low oil prices as a result of the pandemic.

– Tellurian has scrapped three of its four gas pipelines in its Driftwood LNG Phase 1 project – and that’s if the project moves forward at all. Scrapping three of the four pipelines, combined with finding cheaper sources of feedgas, will allow Tellurian to cut costs by 30%. Tellurian could revisit the viability of the pipelines in the future.

– Capital spending in Alberta’s oil industry is set to fall by a third…

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A Long-Term Trade As Oil Markets Recover

If, like me, you like to trade energy-related products, whether futures, stocks, options, or whatever, the last two months or so have been boring or, more positively I guess, peaceful. Part of the joy of markets in general and of energy, in particular, is that there’s always something moving, so I’ve done well on things like fuel cells on the way up and then down and a few intraday momentum trades in natural gas, but when oil isn’t moving, most energy stocks get stuck too.

As you can see from the chart below, WTI has been stuck in a narrowing channel with a very gradual upward trend for two solid months…

After all the drama of the collapse and the front end contract going negative back in April and then the rapid bounce back, a period of calm could be anticipated at some point, and it makes sense now given the delicate balance between supply and demand factors.

Supply has been contracting as the OPEC+ group held steady with their output cuts (until the July meeting at least) and the collapse in oil forced massive rig shutdowns outside that group, particularly in the U.S. That is a bullish influence on oil, but it has been offset by one of the sharpest, deepest recessions in human history, the impact of a resurgent Covid-19 in the U.S. and recently by the relaxation of the cuts by OPEC et al.

Recently, though, the focus of the market has been on the demand side of the equation. That is why crude has been essentially following…

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What’s Behind Israel’s Latest Peace Treaty?

After 25 years, we have the first peace treaty agreement between Israel and an Arab country- in this case, the UAE. That makes allies (including in energy) out of two of the most powerful national lobbies in Washington. For energy, it is a geopolitical game-changer, but one that was bound to come about now that Israel is officially a major player in the global hydrocarbons game. 

For Turkey, it is a nightmare scenario. Both the UAE and Israel have lined up on the side of General Haftar in the Libyan conflict and against the Turkish-backed Government of National Accord (GNA). Turkey’s meddling in Libya is all about ensuring that it doesn’t get shut out from the oil and gas bonanza in the Mediterranean Sea. To that end, Turkey has redrawn the maritime border with Libya, and Egypt and Greece have responded (on the flip side of this conflict) by creating their own EEZ. 

We have noted repeatedly that the Mediterranean is the next major oil and gas conflict zone, and a peace treaty between the UAE and Israel – unthinkable prior to Israel’s emergence as an energy power – all but guarantees that. 

Now, Israel has boosted its alliance power many times over with the UAE – a peace treaty that will include energy cooperation. But while energy cooperation has played a role in this particular Arab-Israeli peace, even trickling down to the Palestinian issue, it will likely foment conflict elsewhere, particularly in Libya, and with Turkey.


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China Aproves Mega Merger Of Two Coal Giants

China has approved the merger of two of Shandong province’s top state-owned coal miners, Shandong Energy Group and Yankuang Group, a decision that effectively creates a new top company in the world’s top producer and consumer of the fossil fuel.

The combined company, China’s second-largest coal producer after China Energy Investment Corporation (CEIC), will operate under the name Shandong Energy Group.

It’s expected to account for close to 7% of the country’s total coal output

Gewin Ho, a Moody’s vice president and senior credit officer, said that because the combined group will derive most of its businesses from coal mining, its credit profile will remain constrained by significant carbon transition risk and by its exposure to coal-price volatility.

“While support from the Shandong Provincial Government should remain forthcoming, it will be constrained by the predominantly commercial and competitive businesses of the combined group,” Ho said in a July note to investors.

The merger of Yankuang and Shandong Energy comes as China forges ahead with the reform of its stated-owned enterprises. The newly merged company will further increase its competitiveness on the market as it will have a whole industrial chain integrating coal production, coal-fired power plants and coal chemicals, International Energy Agency’s analysts said in July.

Coal for years

Other Chinese coal-producing provinces are pushing for similar consolidations to improve efficiency. The government of Shanxi, the country’s second biggest coal-producing province, approved earlier this year the merger of state-controlled producers Shanxi Coal Import Export and Shanxi Coking Coal. Related: Lithium-Ion Battery Production Set To Quadruple This Decade

Despite global efforts to abandon the use of coal, the most polluting fuel, China has continued to rely on the ubiquitous and low-cost commodity. This has put coal on a dominant position in the country’s power sector, accounting for almost 58% of the nation’s energy use last year.

Coal plants, which burn close to 54% of all coal used in the country, provide 52% of generating capacity and 66% of electricity output — down from a peak of 81% in 2007.

China will adopt next year its 14th five-year-plan, which will provide a roadmap for the country’s political and economic priorities through 2025.

State-run National Center for Climate Change Strategy has advocated for that plan to include hard caps on carbon emissions. Premier Li Keqiang, director of the National Energy Commission, which determines China’s energy policy, has a different idea. Last year, he spoke of the need to “promote the safe and green mining of coal and the clean and efficient development of coal power.”

By Mining.com

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U.S. Sanctions On Nord Stream 2 Upset European Lawmakers

The hostile U.S. position on the Gazprom-led Nord Stream 2 pipeline project is a breach of international law, according to the majority of EU members, German daily Die Welt reported today.

According to the report, the European Union communicated a sharp note of protest against U.S. interference in the construction of the pipeline to Washington. The note was supported by 24 of the EU’s 27 members, Reuters reported, citing Die Welt.

Reuters also quoted a statement it received from the U.S. embassy in Germany, which said, “The United States must act to address the threat to our national security and foreign policy interests,” noting, however, that Washington would like to continue cooperating with the EU rather than resort to sanctions to enforce these interests.

However, the EU’s communication to Washington stated that “We are highly concerned about the increasing use of sanctions by the U.S. against European companies and interests,” and that “The EU considers the extraterritorial use of sanctions as a breach of international law.”

The United States last month warned the companies helping Russia to complete the Nord Stream 2 and the TurkStream 2 natural gas pipelines that they should ‘get out now’ or face the consequences, as the Trump Administration steps up efforts to stop the construction of the controversial Russia-led pipelines in Europe.

The U.S. Department of State is updating its sanctions guidance under the Countering America’s Adversaries Through Sanctions Act, CAATSA, to include Nord Stream 2 and the second line of TurkStream 2, U.S. Secretary of State Mike Pompeo said in mid-July.

Five European companies are working on Nord Stream 2 with Gazprom, including Shell, OMV, Engie, Wintershall DEA, and Uniper. Each of these is funding the project by some $1.12 billion, the total equal to half its cost estimated at $11.2 billion.

The twin pipe of Nord Stream will carry an additional 55 billion cubic meters of Russian gas to Europe and, more specifically, Germany, whose gas hunger is growing as it shuts down coal and nuclear power plants.

By Charles Kennedy for Oilprice.com

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