Oil & Gas Prices - Mar 11

[dan_s]

Opening Prices:
> WTI is up 90c to $65.34/Bbl, and Brent is up 99c to $68.89/Bbl.
> Natural gas is down 3.1c to $2.661/MMBtu.

AEGIS Morning Notes
Crude Oil

Iranian oil exports clog Chinese ports as the country ramps up despite U.S. sanctions
Chinese imports of Iranian crude will total 856 MBbl/d in March, its most in over two years, according to Bloomberg
AEGIS notes that returning Iran exports pose one of the largest downside risks for oil prices
MY TAKE: Biden won't do anything that gets in the way of China.

The market received grim storage data reported by the EIA on Wednesday
The EIA reported a crude oil storage build of (+) 13,798 MBbls for the week ending March 5, well above the estimate of a (+) 333 MBbls draw
Oil inventories for the U.S. are now at a surplus of 54.284 MBbls to last year and a surplus of 29.96 MBbls to the five-year average
MY TAKE: Crude oil build will reverse once all the refineries are back online after the "Texas Freeze Off".

OPEC downgrades demand forecasts over the next two years
The cartel revised its demand forecast to reflect the group would need to pump 690 MBbl/d less crude in 2Q2021
Output from the group plunged by 647 MBbl/d last month to 24.84 MMBbl/d

Natural Gas

Analysts are expecting a below-average storage draw for the next few weeks
The EIA is expected to report at 78 Bcf withdrawal later this morning for the week ended March 5, according to Bloomberg economist survey
A 78 Bcf draw would be weaker than the five-year average draw of 89 Bcf, but larger than the 72 Bcf withdrawal reported last year
Softer demand and a quick production rebound following late February outages are contributing to the lower pulls on inventories

Propane was the U.S.’s top petroleum product export in 2020, barely eclipsing distillate fuel oil for the first time in at least the past 10 years, according to the EIA. MY TAKE: Propane prices are way up in Q1, which is great news for most of the gassers.
Exports of propane reached record levels, increasing 13%
Record propane exports were attributed to strong petrochemical and heating demand in Asia
OPEC+ oil curtailments also decreased the group’s NGL production. This allowed for the U.S. to pick up additional market share
AEGIS notes propane’s curve shape remains in steep backwardation which can make hedging further out the curve a more difficult choice
The AEGIS trade desk can discuss specific strategies to handle propane risk

[dan_s]

Closing Prices:
> WTI prompt month (APR 21) was up $1.58 on the day, to settle at $66.02/Bbl.
> NG prompt month (APR 21) was down $0.024 on the day, to settle at $2.668/MMBtu.

The U.S. has plenty of natural gas to make it through April and May, which is why the April and May NYMEX contracts drifts lower. This summer will expose how tight the U.S. natural gas market really is.