Oil & Gas Prices - May 27

Oil & Gas Prices - May 27

Postby dan_s » Fri May 27, 2022 9:05 am

Opening Prices:
> WTI is down $0.90 to $113.19/bbl, and Brent is down $0.41 to $116.99/bbl.
> Natural gas is down -41.3c to $8.495/MMBtu. < Longs taking profits before the holiday weekend.

AEGIS Notes
Oil

More Russian oil is being shipped to China and India than ever before (BBG) < Here's an idea: Cut off the $billions we send to India.
> Nearly 79 MMBbls of Russian oil were in transit and floating storage over the past week, which is more than double the 27 MMBbls in transit and floating storage immediately before the February invasion of Ukraine, according to Kpler
> Asia surpassed Europe as the largest buyer for the first time last month, and the gap is expected to widen in May

The EU is considering delaying a pipeline ban to give Hungary more time and keep the Russian crude embargo deal alive
> Oil shipments over the Druzhba pipeline may be exempt for a limited time
> Last year, Russia exported around 720,000 Bbls/d of crude to European refineries via the Druzhba pipeline, compared to 1.57 MMBbls/d by sea
> However, the majority of pipeline deliveries are going to Germany and Poland, who have said they will wean themselves off Russian supplies regardless of EU action

The Biden administration is reaching out to the oil industry to inquire about the possibility of reopening shutdown refineries, as the White House tries to address the nation's record-high fuel prices < I would love to be able to listen in on the White House meetings just to witness the ignorance in the room.
> The average price of a gallon of regular unleaded gasoline hit a new high of $4.60/gal on Wednesday, just as the summer driving season is about to start
> U.S.’s oil refining capacity has been reduced by more than 1 MMBbls/d, or around 5% of total capacity, since the beginning of the pandemic.

Natural Gas

Natural gas prices were down Friday morning by about 5%, a continuation of yesterday's late-day sell-off
> The June last day (LD) contract expired on Thursday, but not before touching $9.401 in the AM, and subsequently settling at $8.90
> Despite the bullish EIA storage report released yesterday, gas prices came under pressure as weather model runs turned more bearish < MY TAKE: There is no fundamental reason for ngas prices to move lower. This is just JUL22 becoming the front month NYMEX contract and lack of buyers before a holiday weekend.

The EIA reported an 80 Bcf build in underground storage for the week ended May 20
> An 80 Bcf build was slightly under analysts’ consensus estimate of 88 Bcf < Pushing the deficit to the 5-year average higher.
> AEGIS notes that on a weather-adjusted basis, natural gas returned to being tight last week, or undersupplied relative to the five-year average
---------------------------------------------
Raymond James updated HH natural gas price forecasts
$3.89 = 2021 Actual. $2.73 in Q1 ramp up to $5.83 in Q4
2022
$4.48 = Q1 Actual
$8.45 = Q2 Forecast
$9.00 = Q3 Forecast
$9.25 = Q4 Forecast
2023
$8.75 = Q1 Forecast
$7.75 = Q2 Forecast
$7.00 = Q3 Forecast
$8.50 = Q4 Forecast
Dan Steffens
Energy Prospectus Group
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Re: Oil & Gas Prices - May 27

Postby dan_s » Fri May 27, 2022 9:23 am

Just received this new report from Raymond James

US RESEARCH PUBLISHED BY RAYMOND JAMES & ASSOCIATES
May 26, 2022

Raymond James Natural Gas Industry Update

The EIA reported an injection of 80 Bcf for the week ended May 20. This is below the consensus estimate of a 91 Bcf injection (bullish), bringing total storage to 1,812 Bcf and increasing the year-over-year deficit by 35Bcf to 403 Bcf. Following this week’s reported injection, working gas now sits 327 Bcf below the five-year storage average. Prior to the release, natural gas was up $0.15 to $9.13; immediately after the release, natural gas traded up $0.26 to $9.39. As of May 26, 2022, front month gas prices are up ~147% YTD, with June-December 2022 futures sitting near $9.00/Mcf.
---------------------------------
This quarter's surge in natural gas prices is directly related to the fact (a BIG Paradigm Shift) that there is no way that the U.S. can maintain LNG shipments to Europe at maximum capacity and refill storage prior to the next winter heating season. Adding to the problem are high coal prices and the limited (~1Bcf per day) amount of gas-to-coal fuel switching the U.S. utilities can do this summer.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 29296
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Re: Oil & Gas Prices - May 27

Postby dan_s » Fri May 27, 2022 2:31 pm

OilPrice.com
Friday, May 27th, 2022

Oil prices have been edging higher this week as improving demand signals highlight the lack of supply options in oil markets if there is a drastic contraction in Russian production, a likely outcome if the European Union bans Russian oil. With both US crude and gasoline inventories continuing their decline, whilst recent altercations between the United States and Iran have rendered any JCPOA breakthrough largely impossible, analysts are anticipating another surge towards the $130-140 per barrel range this summer.

EU Pins Hopes for Next Week Summit on Russian Sanctions. The European Union hopes to reach a deal on Russian oil sanctions at next week’s leader summit on May 30-31, with media reports suggesting Brussels will split the embargo into pipeline and seaborne deliveries, allowing more phasing-out time for the former.

US Seizes Two Allegedly Iranian Cargoes in the Mediterranean. The US-Iran antagonism is set to increase further after US authorities seized two laden oil tankers in the Mediterranean, anchored in Croatia’s and Greece’s territorial waters, for allegedly smuggling oil for Iran’s Revolutionary Guard Corps.

G7 Vows to Quit Coal, Fails to Fix Deadline. Ministers from the Group of Seven (G7) agreed to work to phase out coal-powered energy, though the commitment was tangibly watered down from the initial draft of the communique as the 2030 deadline of ending “unabated” coal power did not make it in.

UK Slaps Windfall Tax on North Sea Producers. The UK government will impose a 25% windfall tax on profits of oil and gas companies until the end of 2025 at the latest, stating that the surcharge might be removed when prices return to “historically more normal levels”, without specifying what they are. < MY TAKE: This stupidity will cause supply shortages and the tax will be passed on to consumer.

Kurdish Minister Departure Bad Omen for Erbil. The natural resources minister of Iraqi Kurdistan Kamal al-Atroshi stepped down due to poor health, a bad sign for Erbil as the federal authorities in Baghdad have intensified pressure on the breakaway region to bring its operations under control.

US Refinery Capacity Lags Behind Production Rise. US refinery intake surpassed the 16 million b/d mark for the first time since August 2021 and product cracks remain at record levels. US refinery expansions will only total 350,000 b/d by end-2023, leaving most of the 1 million b/d capacity that shut down after the pandemic unsubstituted.

Nigeria Might Soon Be on the Brink. Whilst Davos talks usually focus on grand strategy, Nigeria’s finance minister Zainab Ahmed stated that the country’s production is so low (at 1.5 million b/d in Q1) that it is barely able to cover the cost of imported petrol, blaming the shortfalls on theft and infrastructure attacks.
Dan Steffens
Energy Prospectus Group
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