Oil & Gas Prices - May 27
Posted: 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
> 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