Oil & Gas Prices - Feb 24

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - Feb 24

Post by dan_s »

Opening Prices:
WTI is down $2.58 to $50.80/Bbl, and Brent is down $2.77 to $55.73/Bbl.
Natural gas is down 4.4c to $1.861/MMBtu.

The roller-coaster ride continues, fueled by FEAR of the coronavirus.

Closing Prices;
WTI prompt month (APR 20) was down $1.95 on the day, to settle at $51.43/Bbl. < Low for the day was $50.45 right after noon, so the rise into the close was encouraging. Today was the first full day of trading with the April NYMEX contract being the front month. If Phil Flynn is right that we get a bullish storage report on Wednesday, I think WTI should firm up.
NG prompt month (MAR 20) was down $0.078 on the day, to settle at $1.827/MMBtu. < March weather is the key for natural gas.
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Energy Report: Time To Panic?
By Phil Flynn (Feb 24, 2020 08:44AM ET)

Is this the virus scare pandemic that we have all worried about? Fear is beyond reason and it is reasonable to be fearful. Concerns of the virus spreading around the globe and fears of more oil demand destruction as cities are shut down. Vox reports that as of Sunday, there were 78,000 cases of Covid-19 in at least 29 countries, including surging case tolls in Italy, Iran, and South Korea, as well as an ongoing outbreak on a cruise ship off Japan. < Words like "surging case tolls" don't help. For some reality, go the website below.
From John Hopkins: https://gisanddata.maps.arcgis.com/apps ... 7b48e9ecf6

For oil, the fear is we will see more demand destruction and turn a very tight global oil market into an oversupplied market. The oil market is pricing in the risk of a global slowdown as the virus spreads. We can give historical contexts to these types of events and in the big picture demand shocks should be bought not sold, yet try telling the market that.

Reports that the virus is creating tensions between Saudi Arabia and Russia. The Wall Street Journal reported that the Saudis were considering breaking up the OPEC arrangement with Russia though Saudi Arabia denies it.

In the meantime product supply in the U.S. should fall again this week. Look for crude to fall by 2 million barrels and gasoline to fall by three and distillates by 3 million barrels. Bloomberg reported that money managers’ WTI net-long position, or the difference between bullish and bearish bets, dropped 22% to 95,536 contracts, the lowest since October, according to data released Friday by the U.S. Commodity Futures Trading Commission. Long-only wagers fell 6.7%.

Natural gas is not fazed. EBW analytics says that in the natural gas market, the March contract finally broke through resistance last Thursday morning after EIA reported a much larger-than-expected 151 Bcf withdrawal—but quickly reversed course after resistance held twice at $2.025/MMBtu, forming a bearish double top.

Since then, weather forecasts for the current 10-15-day window have trended significantly milder. While the loss in natural gas demand has been modest, if this trend continues, NYMEX futures could lose significant ground this week—with only a few weeks left in the withdrawal season.
Last edited by dan_s on Mon Feb 24, 2020 6:26 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Feb 24

Post by dan_s »

New Oil Price Forecast from Raymond James 2-24-2020:

"Remember the Iran war scare from early January? This was less than two months ago, but it feels like ancient history. Since mid-January, MidEast geopolitics — along with practically everything else — has been vastly overshadowed by the coronavirus (COVID-19) crisis. As an issue that has come from the proverbial "left field", the virus outbreak is a headwind for the entire global economy, with some sectors more affected than others. Case in point: the global oil market.
Following up on our initial take from January 27 and our broader refining update from February 18, today we are updating our global oil model and oil price forecast to reflect (1) the virus-related demand impact and (2) demand impact from the warmer-than-normal winter, partly offset by (3) the concurrent Libyan production outage. There is no escaping the fact that China — the world's largest oil importer — will have meaningfully weaker near-term oil demand than we had envisioned as the year began. However, the virus and weather issues are transitory, and they do not change our view that the global oil market will need sustainably higher prices in order to avoid a major undersupply in 2021 and beyond."


I cannot send out the new report to all members, but if you want to read it just send me an email: dmsteffens@comcast.net

WTI averaged $56.86/bbl in Q4 2019. The average WTI price in Q1 should be in the range of $52.00 to $53.00 per barrel, assuming support at $50/bbl holds. As I pointed out in my podcast, most of the companies in our model portfolios have hedges in place that insulate them somewhat from the recent pullback in oil prices. For the Permian Basin companies, better realized natural gas and NGL prices thanks to new pipeline access should result in revenues in Q1 about where they were in Q4. The regional differential for Permian oil has gone positive.
Last edited by dan_s on Mon Feb 24, 2020 12:25 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Feb 24

Post by dan_s »

A colder than normal March for much of the U.S. could give some much needed support for natural gas price.
Read: https://www.wunderground.com/article/fo ... =hp-slot-3
Dan Steffens
Energy Prospectus Group
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