Oil & Gas Prices - April 6

[dan_s]

Opening Prices:
> WTI is up $1.17 to $59.82/Bbl, and Brent is up $1.13 to $63.28/Bbl.
> Natural gas is up 4.6c to $2.557/MMBtu.

AEGIS notes
Oil

COVID-19 resurgence in India reduces the country’s appetite for Saudi oil
Refiners in the world’s third-largest importer have sought to reduce May imports by a third, on new demand concerns
India has been a vocal critic of OPEC+’s hawkish stance on oil markets, and its moves to support oil prices in the last few months

Oil market’s focus shifts to Iran after OPEC+ decision – Goldman Research
Iran and other world powers will begin their most legitimate talks to revive the nuclear deal today (JCPOA)
According to Goldman Research, a full recovery in Iranian exports will not happen until the summer of 2022. The bank says a recovery in Iran exports before the end of 2021 would add $5 of downside risk, while the lack of an agreement would create around $10 of upside risk
Citi sees tighter oil market following OPEC+ decision to gradually return output

Global oil inventories are forecasted to drop by 700 MBbl/d more than previously estimated due to Saudi’s move to return production in monthly increments
The bank had expected Saudi Arabia to fully reverse its supplementary 1 MMBbl/d cuts in May
Markets should tighten even more than previously expected as seasonal product demand is expected to ramp up over the next 45 days, before any increase in OPEC+ output – Citi

Natural gas

Waha gas prices for summer are trading at multiyear highs on lower production and more competition for the region’s gas (Platts)
Peak-summer months of June, July, and August, for Waha are averaging only 8c behind Henry Hub
In January, Kinder Morgan’s Permian Highway Pipeline opened a new eastbound corridor for Permian gas, increasing an Eastbound (Gulf Coast) versus Westbound competition for the basin’s supply
Gas production in the Permian has averaged about 11.6 Bcf/d this year, about 1.2 Bcf/d lower than a year ago, according to S&P data

The early read on April weather is it will be one of the warmest in the past 20 years
The typical amount of demand expected in April is 341 heating degree days (HDDs) for the 10-year climate normal
To start the month, April was forecast to record about 317 HDDs, according to Commodity Weather Group
AEGIS notes that April is typically a low-demand month and commands slightly more heating demand than cooling demand on average. In other words, a “hot” or “Cool” April typically means less than it would for other calendar months for gas prices

[dan_s]

Closing Prices:
> WTI prompt month (MAY 21) was up $0.68 on the day, to settle at $59.33/Bbl.
> In contrast, NG prompt month (MAY 21) was down $0.055 on the day, to settle at $2.456/MMBtu

OPEC+ bets on demand. The loosening of OPEC+ production cuts shows the group believes demand will continue to rise.

Oil bounces on stronger economic outlook. The IMF upgraded its 2021 GDP forecast for the second time in three months, noting the speed of the vaccine rollout. The U.S. is now becoming the focus and engine of global economic recovery with a fast vaccine rollout and substantial fiscal stimulus. “We’ve had these wild moves for the better part of the past ten days,” Bob Yawger, head of the futures division at Mizuho Securities, told Bloomberg. “There’s a recovering economic picture, with an improving vaccine situation in the U.S., on one side of the equation. It’s supply versus demand here for control of the market.”