Oil & Gas Prices - April 21

[dan_s]

Opening Prices:
> WTI is down $1.65 to $61.02/Bbl, and Brent is down $1.48 to $65.09/Bbl. < Part of yesterday's decline was because it was the last day of trading for the MAY21 NYMEX contract. "Paper Traders" had to close all of their long positions."
> Natural gas is down 4.2c to $2.685/MMBtu.

AEGIS Notes
Crude Oil

Air travel rebound boosts bullish sentiment around U.S. jet fuel market (Bloomberg)
The U.S. west coast brought in three cargoes of jet fuel from Asia, as air travel has reached a post-pandemic high. According to United Airlines CEO Scott Kirby, the Los Angeles International Airport (LAX) has seen eight of its ten busiest days in the last year this month
The rebound in air travel bodes well for a constructive demand outlook this year, as jet fuel demand was widely assumed to be the primary petroleum product lagging
West Coast jet fuel inventories are at their lowest seasonal level in the last nine years, according to the EIA

Global demand for oil may eclipse 100 MMBbl/d by year-end, according to Standard Chartered
The bank also noted that demand is on track to reach 98 MMBbl/d in 3Q2021 < Keep in mind that non-OPEC+ production is down ~4 MMbpd.
They also pointed out that half of the incremental demand required to reach the 100 MMBbl/d mark will come from the following eight countries: The U.S., China, Mexico, Germany, Saudi Arabia, Canada, the U.K., and Italy

EIA weekly data is due at 9:30 am CST
U.S. Crude Inventories: – 3,265 MBbls (Avg. Bloomberg surveys)
U.S. Gasoline Inventories: + 947 MBbls
U.S. Distillate Inventories: – 1,278 MBbls
U.S. Refinery Utilization: + 0.59% change < This is the KEY STAT. Refiners need to ramp up to 90% of utilization to rebuild gasoline inventories which are well below 30 days of supply.

Natural Gas

A survey of analysts expect a 37 Bcf Injection for the week ended April 16, in line with the five-year average < The 5-yr average builds for the next two weeks ending April 23 and April 30 are 64 Bcf and 78 Bcf. The current cold wave should make reported builds much lower, so April should end with storage at more than a 50 Bcf deficit to the 5-year average.
The remaining Summer 21 strip (May-Oct) has gained 30c over the past month, increasing the likelihood of gas-to-coal switching in the power sector, according to Platts
The EIA’s weekly storage report will be issued the morning of April 22

US regulators give ANR Pipeline go-ahead to begin service of its Grand Chenier Xpress project that will provide up to 400,000 Dt/d of firm transportation service to Venture Global LNG’s Calcasieu Pass terminal in Louisiana (S&P Global)
The Venture Global facility is ahead of schedule and could start taking gas in early Q4 2021
TC Energy, ANR’s owner, still lists Grand Chenier Xpress’ in-service target as January 2022.
The timeline could presumably be moved up depending on the Calcasieu Pass construction progress

LNG exports remaining high all summer is key to my forecast that natural gas prices will move higher this summer. The Europe LNG market looks good.

[dan_s]

Closing Prices:
> WTI prompt month (JUN 21) was down $1.32 on the day, to settle at $61.35/Bbl.
> NG prompt month (MAY 21) was down $0.035 on the day, to settle at $2.692/MMBtu