Oil & Gas Prices - Feb 11

[dan_s]

Opening Prices:
> WTI is down 25c to $58.43/Bbl, and Brent is down 28c to $61.19/Bbl.
> Natural gas is up 9.6c to $3.007/MMBtu.

AEGIS Morning Notes
Crude Oil

WTI is trading slightly lower this morning, after eight consecutive days of gains
Yesterday, the EIA reported a draw of -6645 MBbls in U.S. crude-oil inventories for the week ending 2/5/2021, in contrasts with the average estimate of -177 MBbls, as reported by Bloomberg
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Crude prices spike in the Bakken region as DAPL’s future remains uncertain, and freeze-offs cause production to be shut-in
Crude prices in North Dakota’s Bakken shale region have spiked as weather causes supply shut-ins, and uncertainty surrounds the fate of the Dakota Access Pipeline (Reuters)
North Dakota is the second-largest oil-producing state in the U.S., with an average output rate of around 1.2 MMBbl/d. Still, production in the state is down around 20% from its high of 1.5 MMBbl/d reached in 2019

Crude prices have been impacted by weather as freeze-offs have forced producers to halt activity, reducing supply, and supporting price regional prices

Though Biden has not taken an official stance or position on the Dakota Access Pipeline. If the pipeline is taken out of service, crude would still find its way out of the region through other more expensive (and more polluting) forms of transportation, most-likely crude-by-rail. If more crude is moved by rail then Bakken differentials would likely tighten (and Warren Buffet's income will increase).
Global oil supply capacity still outpaces demand due to persistent COVID-19 lockdowns and the spread of variants, according to the IEA < BUT CURRENT PRODUCTION IS BELOW DEMAND, WHICH IS WHY GLOBAL INVENTORIES ARE ON STEADY AND STEEP DECLINE.
The agency said, “With demand forecast to rise strongly and still modest growth in non-OPEC supply expected, a rapid stock draw is anticipated during the second half of the year.”
A more optimistic outlook for global GDP by the International Monetary Fund, and a more robust recovery in the united states helped offset the relatively slow rollout of the vaccine in Europe

Natural Gas

Natural gas prices moved higher Thursday morning as potent cold remains on track
Commodity Weather Group showed an increase of 5.8 HDDs (~10 bcf) for the past 24-hours as weather models increased the amount of cold through the next two weeks
This month is now forecast to be the third coldest February in the past 20 years and the 8th coldest of all-time in terms of gas weighted HDDs (CWG) < Great news for those of you that FEAR Global Warming.

Permian and Rockies spot gas prices soar on weather induced supply competition
Opal settled at $4.45 on Wednesday while Waha reached $4.32 – both at record spot market highs since January 2018 (Bloomberg data) < This is extremely good news for all of our Permian Basin companies.
Platts observed gas was redirected to the Midwest and away from the Pacific Northwest and California
The combination of shifting gas flows because of the cold and lower production has elevated price
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SOMETHING TO KEEP IN MIND: All long-range weather forecasts have a bias to warmer weather. Just two weeks ago The Weather Channels' U.S. forecast was that February would be warmer than normal. My Take is that all official weather forecasting agencies are under pressure to support the fear of Global Warming.

[dan_s]

Closing Prices:
> WTI prompt month (MAR 21) was down $0.44 on the day, to settle at $58.24/Bbl.
> NG prompt month (MAR 21) was down $0.043 on the day, to settle at $2.868/MMBtu.

We are going to get BIG DRAWS from natural gas storage for the next two weeks. My guess of a draw of 260 Bcf for the week ending Feb 12 might be too low.