Oil & Gas Prices - Mar 2

[dan_s]

Opening Prices:
> WTI is up 8c to $60.72/Bbl, and Brent is down 1c to $63.68/Bbl.
> Natural gas is up 3.7c to $2.814/MMBtu.

AEGIS Morning Notes
Crude Oil

OPEC output fell by 920 MBbl/d last month, its largest drop in the last eight months
OPEC production was at around 24.87 MMBbl/d in February, according to Bloomberg
The coalition will meet on Thursday to decide its supply quotas moving forward.
It is widely accepted that the group will continue with its planned 500 MBbl/d hike, while the Saudi’s will confirm the expiry of their supplementary cuts of 1 MMBbl/d

Global oil stockpiles remain on track to draw on inventories even if 2.4 MMBbl/d of OPEC output is restored by June (Bloomberg)
Oil inventories in OECD are expected to drop below their 2015-2019 average in August, according to the JTC data
Projections assume OPEC raises output from 24.9 MMBbl/d in Feb. to 26.8 MMBbl/d in June, which would allow Saudi Arabia to reverse its supplementary cuts of 1 MMBbl/d

U.S. oil exports from the Louisiana Offshore Oil Port plunged to zero
The large drop in exports is surprising, considering the port set a record for crude exports in January of 15 MMBbls. February was the first time the facility was without any exported cargoes since 2019
The platform sources its crude using medium-heavy sour grades produced in the U.S. GOM, competing with oil from OPEC countries to supply Asian refineries, according to Bloomberg. As Asian inventories peak, buyers have reduced purchases

Natural Gas

Construction remains ahead of schedule for Cheniere Energy’s ninth and final liquefaction train (Cheniere)
At the CERAWeek energy conference, CEO Jack Fusco said that as Sabine Pass Train 6 goes into service at the end of this year and begins commercial service in 1H 2022, the company will have completed all its LNG infrastructure currently sanctioned
Looking forward, Cheniere hopes to garner enough commercial support for up to 10 mt/year mid-scale train expansion at its Corpus Christi facility
Referring to China’s five-year energy plan, Fusco said, “if they are successful, that could support three more Cheniere’s,”

Regional storage deficits to the five-year average increase bullish sentiment with bid-week prices for Henry Hub and surrounded basis rising as a result (Platts)
The second week of February cold decreased storage inventories drastically in parts of the country. South Central inventories fell 156 bcf to 670 Bcf for the week ended February 19, according to the EIA. At 670 Bcf, storage is 19.5% below year-ago levels and 17.4% lower than the five-year average
The bid-week price for Houston Ship Channel settled at $2.90/MMBtu, 3c higher than Henry Hub. This is 13c higher than last month and $1.10/MMBtu higher than March 2020
Bidweek prices are the result of trading done on the last five business days of the month for gas to be delivered on each day of the coming month

[dan_s]

Closing Prices;
> WTI prompt month (APR 21) was down $0.89 on the day, to settle at $59.75/Bbl.
> In contrast, NG prompt month (APR 21) was up $0.062 on the day, to settle at $2.839/MMBtu.

I expect natural gas in storage to be 500 Bcf below the 5-year average at the end of April. Much higher exports will keep storage falling through April this year.