Opening Prices:
> WTI is down 26c to $24.96/Bbl, and Brent is up 11c to $28.58/Bbl.
> Natural gas is up 2.0c to $1.674/MMBtu.
Oil & Gas Prices - Mar 20
Oil & Gas Prices - Mar 20
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Mar 20
Trump says he will enter Saudi-Russia oil fray at appropriate time . Reuters .
US President Donald Trump on Thursday said he would get involved in the oil price war between Saudi Arabia and Russia at the appropriate time, saying low gasoline prices were good for US consumers even as they were hurting the industry. Saudi Arabia and Russia have been fighting over oil market share after their three-year agreement to hold back production collapsed this month. Their pumping of oil flat out during a time of severely reduced global demand due to the spread of the coronavirus has pushed crude prices to near 20-year lows this week. "We are trying to find some kind of a medium ground," Trump told reporters at a White House news conference, adding that he had spoken to several people about the dispute. "It's very devastating to Russia because when you look at it, their whole economy is based on that and we have the lowest oil prices in decades so it's very devastating to Russia. I would say it is very bad for Saudi Arabia but they're in a fight, they're in a fight on price, they're in a fight on output. At the appropriate time I'll get involved," he said. Trump talked about oil markets with Saudi's Crown Prince Mohammed bin Salman in a call on March 9. In addition, the US ambassador to Saudi Arabia, John Abizaid, spoke with the Saudi energy minister last Thursday about oil markets, the State Department said. There have been few details about those conversations.
US President Donald Trump on Thursday said he would get involved in the oil price war between Saudi Arabia and Russia at the appropriate time, saying low gasoline prices were good for US consumers even as they were hurting the industry. Saudi Arabia and Russia have been fighting over oil market share after their three-year agreement to hold back production collapsed this month. Their pumping of oil flat out during a time of severely reduced global demand due to the spread of the coronavirus has pushed crude prices to near 20-year lows this week. "We are trying to find some kind of a medium ground," Trump told reporters at a White House news conference, adding that he had spoken to several people about the dispute. "It's very devastating to Russia because when you look at it, their whole economy is based on that and we have the lowest oil prices in decades so it's very devastating to Russia. I would say it is very bad for Saudi Arabia but they're in a fight, they're in a fight on price, they're in a fight on output. At the appropriate time I'll get involved," he said. Trump talked about oil markets with Saudi's Crown Prince Mohammed bin Salman in a call on March 9. In addition, the US ambassador to Saudi Arabia, John Abizaid, spoke with the Saudi energy minister last Thursday about oil markets, the State Department said. There have been few details about those conversations.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Mar 20
Comments below from Raymond James Energy Sector Team
This week's petroleum inventories update was bullish relative to consensus. "Big Three" petroleum inventories (crude, gasoline, distillates — including SPR) drew by 7.2 MMBbls, versus consensus estimates calling for a draw of 1.6 MMBbls and a seasonal build of 1.3 MMBbls. Turning to crude, total inventories built 2.0 MMBbls, versus consensus calling for a build of 3.1 MMBbls and a normal seasonal build of 5.4 MMBbls. Refinery utilization was flat to 86.4% from 86.4% last week, while gasoline inventories declined by 6.2M barrels with demand up 4% y/y. Total petroleum imports were 8.9 MMBbls per day, up from last week’s 8.7 MMBbls per day. Total petroleum product demand was decreased 1.8% after last week’s 2.8% increase. On a four-week moving average basis, there is a 0.3% y/y increase in total demand.
The oil market is currently facing an unprecedented one-two punch: Worldwide demand disruptions due to COVID-19, compounded by a price war between Saudi Arabia and Russia. Assuming the demand impact peaks in 2Q, for the year we are modeling global demand down 1.5 million bpd, steeper than the declines from 2008 and 2009 combined. Needless to say, the timing of improvement in demand, enabled by the easing of travel bans and other restrictions, will largely be a function of medical and public health developments vis-a-vis the virus. As it relates to the price war, an important (but somewhat below-the-radar) date we are watching is April 22, Russia’s constitutional referendum. Assuming that Putin wins the referendum, we anticipate that the Kremlin’s current nationalistic fervor will subside, opening the door to a deal with Saudi in the May/June timeframe, followed by normalization of Saudi output. Also worth noting: the Saudi economy needs $70/Bbl Brent to balance its fiscal requirements, and moreover there is the political sensitivity of watching Aramco shares trading below the IPO price. Following the epic sell-off, the 12-month futures strip ($30.89/Bbl for WTI and $34.93/Bbl for Brent) is showing meaningful contango. Several key question marks remain: 1) on the bullish side, the possibility of supply disruptions above and beyond the current ones, including but not limited to Iran, and 2) on the bearish side, the massive uncertainties surrounding the virus’s demand impact.
This week's petroleum inventories update was bullish relative to consensus. "Big Three" petroleum inventories (crude, gasoline, distillates — including SPR) drew by 7.2 MMBbls, versus consensus estimates calling for a draw of 1.6 MMBbls and a seasonal build of 1.3 MMBbls. Turning to crude, total inventories built 2.0 MMBbls, versus consensus calling for a build of 3.1 MMBbls and a normal seasonal build of 5.4 MMBbls. Refinery utilization was flat to 86.4% from 86.4% last week, while gasoline inventories declined by 6.2M barrels with demand up 4% y/y. Total petroleum imports were 8.9 MMBbls per day, up from last week’s 8.7 MMBbls per day. Total petroleum product demand was decreased 1.8% after last week’s 2.8% increase. On a four-week moving average basis, there is a 0.3% y/y increase in total demand.
The oil market is currently facing an unprecedented one-two punch: Worldwide demand disruptions due to COVID-19, compounded by a price war between Saudi Arabia and Russia. Assuming the demand impact peaks in 2Q, for the year we are modeling global demand down 1.5 million bpd, steeper than the declines from 2008 and 2009 combined. Needless to say, the timing of improvement in demand, enabled by the easing of travel bans and other restrictions, will largely be a function of medical and public health developments vis-a-vis the virus. As it relates to the price war, an important (but somewhat below-the-radar) date we are watching is April 22, Russia’s constitutional referendum. Assuming that Putin wins the referendum, we anticipate that the Kremlin’s current nationalistic fervor will subside, opening the door to a deal with Saudi in the May/June timeframe, followed by normalization of Saudi output. Also worth noting: the Saudi economy needs $70/Bbl Brent to balance its fiscal requirements, and moreover there is the political sensitivity of watching Aramco shares trading below the IPO price. Following the epic sell-off, the 12-month futures strip ($30.89/Bbl for WTI and $34.93/Bbl for Brent) is showing meaningful contango. Several key question marks remain: 1) on the bullish side, the possibility of supply disruptions above and beyond the current ones, including but not limited to Iran, and 2) on the bearish side, the massive uncertainties surrounding the virus’s demand impact.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group