Oil Price - April 18

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Oil Price - April 18

Post by dan_s »

The front month NYMEX contract (June) for West Texas Intermediate (WTI) closed right at $64.00/bbl today, an increase of $0.24/bbl.

MY TAKE is that WTI will stay within my "Right Price" range of $60 to $65 until we get clarification on a few things. I do believe it will move higher eventually because...
1. Refinery utilization will continue to move higher (to 95%) by mid-May as the semi-annual maintenance period comes to an end and demand for gasoline and diesel increases.
2. Global demand for refined products will increase by 1.5 to 2.0 million barrels per day over the next few months. < This happens each year.
3. Traders are watching carefully what "Team Trump" does with Iran. The waivers given to 8 countries expire in early May. My guess is that a few will be extended, but not all of them.
4. Venezuela is going from bad to worse.
5. Libya's Civil War is getting worse. Read: https://oilprice.com/Energy/Crude-Oil/L ... hreat.html
6. Last but not least >>> It looks like Trump's "Tariff War" with China will end in May with China agreeing to buy more stuff from the U.S. including more oil and LNG.

If all goes as I think it will, I will be increasing the liquids prices and lowering the natural gas prices in my forecast models. A few companies have announced Q1 realized oil, gas and NGL prices for the first quarter with liquids prices coming in much higher than I expected. The NYMEX strip for gas is higher in Q2 and Q3 than what I'm using in the models, but the storage reports have turned a bit bearish. A shift to a "Sudden Summer" can change the outlook for gas since a lot more regions now depend on gas fired power plants for electricity. I still think EIA's forecast of a big surge in associated gas from the Permian Basin coming on-line this year are too optimistic. Keep in mind that all of our "gassers" do have a lot of the gas production hedged and NGL prices are more tied to oil prices than gas prices.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil Price - April 18

Post by dan_s »

There is some FEAR that Russian will pull out of the OPEC+ deal.
1. I doubt it because Putin wants to build better relations with the cartel.
2. So what, Russia does not have the ability to raise or lower their production quickly.
Dan Steffens
Energy Prospectus Group
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