Oil & Gas Prices - May 19
Posted: Thu May 19, 2022 8:59 am
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
> 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