Last night API reported:
> crude inventories declined by 5.15 million barrels;
> Distillates inventories declined 5.62 million barrels;
> Gasoline inventories declined 3.30 million barrels;
> Cushing crude oil declined 1.17 million barrels.
Opening Prices:
> WTI is up 98c to $42.34/Bbl, and Brent is up 104c to $44.65/Bbl.
> Natural gas is up 0.9c to $2.958/MMBtu.
Closing Prices:
> WTI prompt month (DEC 20) was up $0.09 on the day, to settle at $41.45/Bbl.
> Also, NG prompt month (DEC 20) was up $0.082 on the day, to settle at $3.031/MMBtu.
If WTI holds over $41.50 this week, the next resistance level is the August high of $43.78
EIA weekly reports for oil and gas will both come out on Thursday because of holiday on Monday.
Oil & Gas Prices - Nov 11
Oil & Gas Prices - Nov 11
Last edited by dan_s on Wed Nov 11, 2020 7:15 pm, edited 3 times in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Nov 11
Mild weather in first half of November has caused pullback in the natural gas price, but U.S. gas market will continue to tighten.
The Energy Information Administration (EIA) marketed natural gas production estimates per EIA's November STEO report:
> U.S. marketed natural gas averaged 100.4 Bcf per day in 2019
> EIA's U.S. marketed gas production forecast for 4Q 2020 was raised by 0.51 Bcf/d to 96.99 Bcf/d
> EIA's U.S. marketed gas production forecast for Q1 2021 was increased by 1.06 Bcf/d to 95.1 Bcf/d < a 1.9 Bcfpd drop from Q4 to Q1
The pandemic had a much smaller impact on domestic natural gas demand than it did for liquid fuels demand. However, the pandemic did reduce demand for U.S. LNG exports in Q2 and Q3. Demand for LNG has snapped back and is now approaching maximum export capacity of 10 Bcf per day + we are exporting over 7 Bcfpd via pipelines to Mexico and Eastern Canada.
EIA now expects higher ngas prices and lack of supply to cause utilities to switch back to coal for power generation next summer to balance the market. What this means is that we have a "structural change" in the North American gas market, the "glut" is over and we will need consistently higher gas prices to restore supply growth.
The Energy Information Administration (EIA) marketed natural gas production estimates per EIA's November STEO report:
> U.S. marketed natural gas averaged 100.4 Bcf per day in 2019
> EIA's U.S. marketed gas production forecast for 4Q 2020 was raised by 0.51 Bcf/d to 96.99 Bcf/d
> EIA's U.S. marketed gas production forecast for Q1 2021 was increased by 1.06 Bcf/d to 95.1 Bcf/d < a 1.9 Bcfpd drop from Q4 to Q1
The pandemic had a much smaller impact on domestic natural gas demand than it did for liquid fuels demand. However, the pandemic did reduce demand for U.S. LNG exports in Q2 and Q3. Demand for LNG has snapped back and is now approaching maximum export capacity of 10 Bcf per day + we are exporting over 7 Bcfpd via pipelines to Mexico and Eastern Canada.
EIA now expects higher ngas prices and lack of supply to cause utilities to switch back to coal for power generation next summer to balance the market. What this means is that we have a "structural change" in the North American gas market, the "glut" is over and we will need consistently higher gas prices to restore supply growth.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Nov 11
This is extremely important for you to understand!
As I have mentioned several times in my recent weekly podcasts, OECD crude oil inventories have an inverse relationship to the price of oil. In other words, when OECD oil inventories fall the price of oil goes up. "Normal" is considered 30 days of supply. Today, OECD oil inventories are at 33 to 34 days of supply. The last time OECD oil inventories dipped to less than 28 days of supply was in Q3 2013 and WTI spiked to $110/bbl.
Now read this:
"Global oil markets are now in structural deficit. Few people agreed with us when we argued
crude markets would begin dramatically tightening by mid-year despite the demand impacts
of COVID-19. Since our last quarterly letter, inventories are now drawing rapidly, suggesting
extreme tightness will soon emerge in physical crude balances. In the US (where the data is
the most real-time), inventories are falling at the fastest rate on record. Total petroleum
inventories in the US reached nearly 180 mm barrels above long-term seasonal averages in
July as of October 30 they stood at less than half that level. Since peaking, inventories have
drawn by nearly 920,000 b/d – nearly 30% faster than the previous record set in 2017. On
a global basis, the most recent data is for August and suggests OECD inventories fell by 1.4
m b/d relative to long-term seasonal averages. Given that US inventories make up the largest
component of the global total, more OECD draws are most likely coming in September
and October.
At this rate, inventory overhangs will be exhausted early next year. In the US, petroleum
stocks are now 80 mm bbl above their long-term seasonal averages and are drawing by ~ 1
mm b/d. At this rate, inventories will reach normal levels by January 2021. As of August,
OECD inventories were 335 mm bbl above long-term seasonal averages and were drawing
by 1.4 mm b/d suggesting they will normalize by May 2021. When we first made similar
estimates three months ago, we were by far the most optimistic in the industry. As of October,
our models appear to be correct." - Geohring & Rosencwajg Q3 newsletter dated 11-9-2020
PS - If the COVID-19 vaccine works, demand for oil will spike and OECD oil inventories will fall very fast in 1H 2021. "They call them cycles for a reason."
As I have mentioned several times in my recent weekly podcasts, OECD crude oil inventories have an inverse relationship to the price of oil. In other words, when OECD oil inventories fall the price of oil goes up. "Normal" is considered 30 days of supply. Today, OECD oil inventories are at 33 to 34 days of supply. The last time OECD oil inventories dipped to less than 28 days of supply was in Q3 2013 and WTI spiked to $110/bbl.
Now read this:
"Global oil markets are now in structural deficit. Few people agreed with us when we argued
crude markets would begin dramatically tightening by mid-year despite the demand impacts
of COVID-19. Since our last quarterly letter, inventories are now drawing rapidly, suggesting
extreme tightness will soon emerge in physical crude balances. In the US (where the data is
the most real-time), inventories are falling at the fastest rate on record. Total petroleum
inventories in the US reached nearly 180 mm barrels above long-term seasonal averages in
July as of October 30 they stood at less than half that level. Since peaking, inventories have
drawn by nearly 920,000 b/d – nearly 30% faster than the previous record set in 2017. On
a global basis, the most recent data is for August and suggests OECD inventories fell by 1.4
m b/d relative to long-term seasonal averages. Given that US inventories make up the largest
component of the global total, more OECD draws are most likely coming in September
and October.
At this rate, inventory overhangs will be exhausted early next year. In the US, petroleum
stocks are now 80 mm bbl above their long-term seasonal averages and are drawing by ~ 1
mm b/d. At this rate, inventories will reach normal levels by January 2021. As of August,
OECD inventories were 335 mm bbl above long-term seasonal averages and were drawing
by 1.4 mm b/d suggesting they will normalize by May 2021. When we first made similar
estimates three months ago, we were by far the most optimistic in the industry. As of October,
our models appear to be correct." - Geohring & Rosencwajg Q3 newsletter dated 11-9-2020
PS - If the COVID-19 vaccine works, demand for oil will spike and OECD oil inventories will fall very fast in 1H 2021. "They call them cycles for a reason."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Nov 11
WTI crude futures rose almost 1% to trade around $42 a barrel on Wednesday, having touched an over two-month high of $43.05 a barrel earlier in the session after the API reported a larger-than-expected draw in US crude oil inventories last week. At the same time, hopes of a coronavirus vaccine and comments from Saudi Arabia’s energy minister, who said that OPEC+ could tweak their supply cut pact if demand slumps before the vaccine is available supported prices.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group