Oil & Gas Prices - May 19

Post Reply
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - May 19

Post by dan_s »

Opening Prices:
> WTI is down $3.76 to $105.83/bbl, and Brent is down $2.66 to $106.45/bbl.
> Natural gas is down -20.7c to $8.161/MMBtu.

AEGIS Notes
Oil

Russian oil production fell by roughly 1 MMBbl/d in April but recovered by 200 MBbl/d to 300 MBbl/d in May, with more volumes projected for June (BBG)
> According to Russian Deputy Prime Minister Alexander Novak, Europe receives roughly 4 MMBbl/d of Russian oil
> He added that Russia is willing to redirect those supplies to Asia and other regions, leaving Europe with more expensive crude from other sources
> Meanwhile, China is looking to replenish its strategic petroleum reserves with low-cost Russian oil

Permian oil average break-even price to rise by $10/Bbl to $40 - $45/Bbl after paying out dividends and fighting cost inflation, said Pioneer Natural Resources CEO Scott Sheffield
> Cost increases on drilling rig contracts, drill pipe, diesel, and frack sand is limiting U.S. shale production, he added
> Most public companies are planning to increase production by nearly 5% this year, in contrast to some oil majors that set targets of 15%-20% growth
> “I don’t think we’ll be able to continue to grow at 15% to 25% growth rates,” said Sheffield < The U.S. production growth rate was doing to slow no matter what was happening in the world. Every oilfield ever discovered eventually goes on decline and this fact is true for shale plays as well. We still have upside, but the "cheap oil" has all be harvested.

Yesterday, the EIA reported that the crude inventories fell by 3.4 MMBbls last week to 420.8 MMBbls
> The drop came despite a 5 MMBbls release from the SPR < We are "draining the savings account", which cannot continue without a significant national security risk. We really need much smarter people working on the U.S. overall energy plan beside AOC and the rest of the gang in Washington.
> Gasoline stocks fell by 4.8 MMBbls, and distillate stocks rose by 1.2 MMBbls last week < Diesel inventories are now 22% below the 5-year average.

Natural Gas

Natural gas futures are trading lower this morning, and the selloff is affecting further-dated tenors
> The Winter '22/'23, Summer '23, and Winter '23/'24 prices are all down by 12.6c, 8.9c, and 9.9c, respectively
> Weather forecasts cool down for most of the country with the total lower-48 pop-weighted temperature average (1-15 day range) falling 5.5°F. The 6-10 day range saw the most change, with the South Central region cooling by around 14.8°F
> Lower-48 dry gas production is steady at around 95.1 Bcf/d. Production is currently on track for a 450 MMcf/d weekly decline, thanks to changes in the South Central region < U.S. ngas production needs to be 97 Bcf per day to refill storage and keep LNG exports near capacity. We cannot do both at the current rate of production.
> LNG feedgas demand is back above 13 Bcf/d, or around 0.6 Bcf/d higher week-over-week
> U.S. LNG feedgas nominations have the potential to set new records once trains that are currently down for maintenance return

The EIA is expected to report an injection of 88 Bcf Bcf for the week ending May 6 (Platts)
< Responses to the survey ranged from 83 Bcf to 93 Bcf
> It would also contrast the five-year average injection of 87 Bcf, and the 71 Bcf addition reported during the corresponding week in 2021
> Aegis notes that the last several storage prints have suggested that the supply-demand balance may be loosening. We will continue to watch this trend, but until production shows up, this market will likely remain tight
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - May 19

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Jun 22) was up $2.62 on the day, to settle at $112.21
> Prompt-Month Henry Hub (Jun 22) was down $-0.060 on the day, to settle at $8.308

Weird day with oil down in the morning and rally up to $112 in the afternoon. Natural gas was up soon after the storage report came out and then pulled back. Both oil and gas charts look very bullish with shorter pullbacks.

Trading Economics:
"Crude oil prices settled more than 2% higher at above $112 per barrel on Thursday recovering from earlier losses as traders worried that easing of the COVID-related restrictions in China would limit the supply further. EIA data showed US crude inventories unexpectedly fell last week, as refiners ramped up output in response to tight product inventories and near-record exports. On the other side, Russia's Deputy Prime Minister Alexander Novak said oil production decreased by about 1 million bpd in April but increased by 200,000 bpd to 300,000 bpd in May. Meanwhile, the EU proposal on a total ban of oil imports from Russia in six months’ time has been delayed due to a holdout from some member states."

"US natural gas futures consolidated above the $8.4/MMBtu mark, a dramatic turnaround from an early slide to $7.9/MMBtu as investors shrugged off a broader market selloff to focus on the ongoing strengthening of market fundamentals. Prices have been supported by continued robust demand, partly due to Europe's calls for US exports in the wake of Russia's invasion of Ukraine. Additionally, Ukraine has shut down one of its two entry points, further pushing the EU to rely more on US LNG cargoes for its supplies. Domestically, EIA data showed utilities injected 89 bcf into storage last week, mostly in line with expectations but above the 5-year average build of 82 bcf." < My Take is that utilities are buying NYMEX futures to take physical delivery and put it into storage. LNG exporters are also needing more gas NOW to take advantage of the HUGE profit margins on LNG cargos. "Bidding Wars" are fun and this one is just starting. $10.00 gas is one heat wave away.
Dan Steffens
Energy Prospectus Group
Post Reply