Oil & Gas Prices - May 18

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

Oil & Gas Prices - May 18

Post by dan_s »

Opening Prices:
> WTI is up $2.28 to $114.68/bbl, and Brent is up $1.77 to $113.70/bbl.
> Natural gas is up 20.6c to $8.51/MMBtu.

AEGIS Notes
Oil


The Biden administration plans to relax sanctions against Venezuelan oil so that more of the country's oil may reach Europe < dirtiest oil on Earth.
> European companies operating in the country might ship oil immediately as Chevron is allowed to negotiate a license with Venezuela’s national producer PDVSA
> The sanctions are being eased as global oil supply constraints drive up the cost of crude and fuels, threatening to exacerbate already high inflation < Team Biden is now out of ideas.

Russian crude production in April fell by nearly 9% from March, showed an internal OPEC+ report on Tuesday (Reuters)
> According to figures compiled by OPEC+ from secondary sources, Russia's oil output was 9.16 MMBbl/d in April, down roughly 860 MBbl/d from March
> The recent spike in crude prices pushed Russia’s oil and gas earnings to 1.81 trillion roubles ($27.92 billion) in April, compared to a total of 2.97 trillion roubles for the first three months of the year, as per the finance ministry.

Natural Gas

Natural gas prices are trading 20.6c higher this morning, near $8.510
> The lower-48 pop-weighted temperature for the 1-15 day range increased by 1.2°F, primarily driven by warmer temps in the Northeast region in the 1-5 day range
> This morning's pipeline nominations show lower-48 dry gas production is down again by 0.45 Bcf/d week-over-week at 94.1 Bcf/d. The fall over the last couple of days has been pretty evenly dispersed among the Northeast, Rockies, and South Central regions

Feedgas demand is back up at around 13.0 Bcf/d
> Cameron LNG flows increased by 0.5 Bcf/d, and it appears maintenance is wrapping up early. Corpus Christi LNG nominations are climbing higher as well

Permian supply growth outlook brightens as companies rush to announce pipeline expansions (none of this increases pipeline capacity in 2022)
> On May 16, Kinder Morgan declared the start of an open season for an expansion on its Gulf Coast Express Pipeline, which will run through June 6. The expansion project would add around 570 MMcf/d of spare capacity on its Gulf Coast Express Pipeline and is targeting an in-service date of December 2023
> The open season announcement for Gulf Coast Express comes just days after the developer wrapped up an earlier open season for a separate brownfield expansion on its 2.1 Bcf/d Permian Highway Pipeline, which has promised to expand the pipe's capacity by some 650 MMcf/d, or by more than 30%.
> Developer MPLX reached an FID on its own 2-Bcf/d Whistler Pipeline that adds around 500 MMcf/d of capacity to the pipe
> The expansion projects account for around 1.7 Bcf/d of new dry gas production in the basin and would allow producers to increase output further

Historically, drilling economics are driven by oil prices in the Permian basin but gas pipeline capacity has been the constraint that has limited growth in the past. According to S&P Global, Permian crude oil takeaway capacity is around 7 MMBbl/d, or around 1.8 MMBbl/d higher than current production levels

AEGIS notes If the ratio of gas to oil is 3.2 Bcf/d per 1 MMBbld, that means that the current crude oil takeaway capacity would support dry gas production growth of 5.76 Bcf/d, which is more than would be available with the recent expansions. Analysts say there is around 1.5 Bcf/d of takeaway capacity currently and another 1.7 of expansion announced, which would mean that growth may be capped at around 3.2 Bcf/d of growth or 1 MMBbl/day
---------------------------------
MY TAKE: Our government's blocking of pipeline projects is the primary reason we are on the verge of an Energy Crisis. We cannot keep LNG exports at capacity and refill our natural gas storage system before the next winter heating season arrives. This means that the utilities that bring gas to our homes for space heating will be in a Bidding War with the LNG exporters for physical supply. Double digit natural gas prices are one heat wave away. American consumers will pay for Europe's stupidity.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - May 18

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Jun 22) was down $-2.81 on the day, to settle at $109.59
> Prompt-Month Henry Hub (Jun 22) was up $0.064 on the day, to settle at $8.368

The prices above are way over what I am using in my Q2 forecasts: $100.00 for WTI and $6.00 for HH gas.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - May 18

Post by dan_s »

LONDON (Reuters) - Oil prices rose on Wednesday on expectations that easing COVID-19 restrictions in China will boost demand and as supply concerns grew. < This + a bullish EIA Petroleum report should push up prices when the overall market settles down.

Brent crude was up $1.24 cents, or 1.1%, at $113.17 a barrel at 0921 GMT, while U.S. West Texas Intermediate (WTI) crude climbed $1.69 cents, or 1.5%, to $114.09 a barrel, reversing some of the previous session's losses.

Hopes of further lockdown easing in China boosted expectations for demand recovery. The country's authorities allowed 864 of Shanghai's financial institutions to resume work, sources said on Wednesday, a day after the Chinese city achieved a milestone of three consecutive days with no new COVID-19 cases outside quarantine zones.

The market also saw support from rising supply concerns. Russian crude output in April fell by nearly 9% from the previous month, an internal OPEC+ report showed on Tuesday, as Western sanctions on Moscow following its invasion of Ukraine hit the top oil producer.

What Role Can Oil Prices Play in Causing a Recession?
The price rise is being capped by reports that the U.S. is planning to relax sanctions against Venezuela and allow Chevron Corp to negotiate oil licences with Venezuela's national producer.

"Though this will bring little relief to the market in the short term, it would nonetheless be a first step towards ensuring that more oil could reach the market in future from currently sanctioned countries," Commerzbank analyst Barbara Lambrecht said. < The global oil market needs every drop of heavy oil that it can get. We must get more diesel or we will have a serious recession and lots of supply chain problems.

The European Union's failure to persuade Hungary to lift its veto on a proposed embargo on Russian oil is adding price pressure, although some diplomats expect agreement on a phased ban at a summit at the end of May.

And the European Commission will on Wednesday unveil a 210 billion euro plan for how Europe can end its reliance on Russian fossil fuels by 2027.

"In the meantime, the oil market will likely take its cues from today’s EIA update concerning US oil stocks," PVM analyst Stephen Brennock said.

U.S. crude and gasoline stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday.

For the economic outlook, U.S. Federal Reserve Chairman Jerome Powell on Tuesday said the central bank would ratchet up interest rates as high as needed to stifle inflation that he said threatened the foundation of the economy.
Dan Steffens
Energy Prospectus Group
Post Reply