Oil & Gas Prices - Mar 19

[dan_s]

Opening Prices:
> WTI is down 27c to $59.73/Bbl, and Brent is down 35c to $62.93/Bbl.
> Natural gas is down 0.1c to $2.480/MMBtu.

MY TAKE: WTI prices got ahead of the fundamentals, so they were due for a pullback. OECD oil & refined product inventories are falling and will go below 30 days of supply within 3 to 4 months. That is when we should see a strong move higher (maybe to $80/bbl) in Q3.

AEGIS notes
Crude Oil

Goldman Sachs sees oil buying opportunity after yesterday’s “transient pullback.” Despite the sharp move, a rapid rebalancing of the oil market is expected in the coming months, with vaccinations driving an increase in travel, according to GIR.
The market has remained in a large 2.5 MMBbl/d deficit since February, despite Iranian oil exports rising by 700 MBbl/d year-to-date

Slow comeback for U.S. refiners is starting to weigh on crude prices (Bloomberg)
Crude processing rates in the region are still at about 80% of the levels seen before the winter storm < Refinery utilization needs to move over 90% soon to avoid transportation fuel shortages this summer.
The NYMEX WTI-3-2-1 crack spread is at $19.12, its highest since the beginning of the pandemic
Physical oil prices are being pressured lower at a time when demand for crude is rising in the gulf coast, creating turmoil in the market

Natural Gas

U.S. natural gas storage decreased by 11 Bcf, to 1.782 Tcf, for the week ended March 12, as reported by the EIA on March 18
Nymex Henry Hub futures have continued to slide as the heating season rapidly diminishes. Prompt-month natural gas has fallen 30c to $2.49 so far this month
The gas withdrawal was weaker than the 18 Bcf draw expected in the Bloomberg survey of economist
The draw was also less than the 15 Bcf draw reported last year and lower than the five-year average withdrawal of 59 Bcf, according to EIA data
MY TAKE: Very mild weather for the two weeks ending March 12 has lowered my expectations for end of season storage levels, but the draw from storage for the week ending March 19 should be higher. After March, LNG exports that are much larger than a year ago should slow refilling of storage and the deficit to the 5-year average should grow.

FERC sends “message” to Rover and Midship, on compliance
The new Federal Energy Regulatory Commission (FERC) chairman and his colleagues are sending what they are saying is a “clear message” to natural gas pipeline companies that the commission will “will not look the other way” when companies fail to meet responsibilities (Platts)
The commission ordered Cheniere’s Midship Pipeline to remedy outstanding restoration issues on certain tracts of land and encouraged the company to enter dispute resolution to help address remaining damage that occurred during construction
FERC also ordered Energy Transfer Partners and Rover Pipeline to show why they should not pay a proposed $20.2 million civil penalty around the destruction of an Ohio farmhouse during the application process for the 3.25 Bcf/d Rover project
The new FERC chairman Richard Glick says FERC has several options and “revocation of the certificate itself, must be on the table” for projects that fail to meet responsibilities

[dan_s]

Closing Prices:
> WTI prompt month (APR 21) was up $1.42 on the day, to settle at $61.42/Bbl.
> NG prompt month (APR 21) was up $0.054 on the day, to settle at $2.535/MMBtu.

WTI rebounded today because Goldman Sachs said it was oversold yesterday. GS is one of the "Alpha Dogs" and when they say something the Wall Street "Herd" listens and changes direction quickly.