Oil & Gas Prices - May 18

[dan_s]

Opening Prices:
> WTI is up 31c to $66.58/Bbl, and Brent is up 43c to $69.89/Bbl.
> Natural gas is down 2.3c to $3.086/MMBtu.

AEGIS Notes
Crude Oil

U.S. travel rebound provides optimism of a strong jet fuel demand recovery this summer (Bloomberg)
According to United CEO Scott Kirby, the domestic leisure travel business has fully recovered to pre-pandemic levels
U.S. jet fuel demand has more than doubled from pandemic lows. Still, international and business travel has been a laggard thus far
The number of passengers checking in through security checkpoints surged to 1.85 MM people on Sunday, its highest since March 2020 or only about 30% lower than during the same time in 2019

Fuel exports soar from India as the country deals with dissipating demand due to its recent COVID wave
India's gasoline and diesel exports have increased by 85% and 65% month-over-month, according to Vortexa
Local lockdowns have caused road transport fuels demand to fall by nearly 20%, according to Bloomberg

EIA forecasts U.S. shale production increasing by 26 MBbl/d to 7.733 MMBbl/d in June
U.S. shale supply is still 1.4 MMBbl/d below March 2020 levels
The Perman is the only basin expected to see slight growth of 54 MBbl/d next month

Natural Gas

The June 2021 gas contract settled at $3.10/MMBtu on Monday amid warmer weather forecasts. This was the highest settle since June 2016 for the Jun 2021 contract
The balance of Summer 2021 strip eventually ended Monday at $3.16/MMBtu, up 13.9c from Friday’s close
Bal Summer 2021 and Winter 2021/2022 strips are now higher than both their October 30, 2020, and February 2021 peak

Spotty maintenance keeps US LNG facilities from reaching the full potential of almost 12 Bcf/d, but more extensive work likely deferred as liquefaction terminals take advantage of strong near-term fundamentals
For three days in June, Cheniere Energy’s Sabine Pass will see flow reduced as work takes place on the Creole Trail pipeline that feeds the facility (Cheniere, Platts)
Cheniere’s Corpus Christi facility has recently had volumes reduced due to work (Cheniere)
AEGIS notes that maintenance on compressors, feeder pipelines, and LNG facilities is expected. Strong LNG demand from Asia and Europe’s undersupply keep Global LNG markers elevated, incentivizing US LNG producers to produce as much as possible

MY TAKE: If LNG exports average more than 10 Bcfpd over the summer, there is very little chance that we can refill ngas storage back to the 5-year average before the beginning of winter 2021-2022. That should keep NYMEX strip prices over $3.00 for at least July to March. I expect the deficit to the 5-year average to grow. If so, we may see $4.00 ngas prices in a few months.

[dan_s]

Closing Prices:
> WTI prompt month (JUN 21) was down $0.78 on the day, to settle at $65.49/Bbl. < Big trading range today of $64.11 to $67.01.
> NG prompt month (JUN 21) was down $0.097 on the day, to settle at $3.012/MMBtu.