Opening Prices:
> WTI is up $1.72 to $88.33/Bbl, and Brent is up $1.71 to $91.05/Bbl.
> Natural gas is up 33.9c to $4.622/MMBtu.
AEGIS Notes
Oil
Oil is set for a sixth straight weekly gain as prices trade near highest since 2014
> Measures of oil demand have been strong, and the global oil S&D is tighter than what many were expecting
> In a signal of market strength, prices remain heavily backwardated. Brent’s prompt timespread was at $1.34/Bbl in backwardation on Friday, up from 41c to start the year (BBG)
OPEC+ is expected to confirm its increase of 400 MBbl/d of production for March next week (BBG)
> OPEC and its allies have continued to raise their allowed pro-rata production amounts, but several nations have been unable to reach their production quotas
> The group was pumping about 600-700 MBbl/d less than their quota as of December
Natural Gas
The rolling prompt contract is technically down this morning by $1.74, but the new prompt contract (March '22) is trading 33.9c higher near $4.622
> Yesterday, as the February ’22 contract headed into expiry, it surged by around 72% to finish $1.988 higher at $6.265. The move was the most dramatic since the Henry Hub contract began trading in 1990
> Many analysts are chalking the price surge to a short squeeze that was exacerbated by low liquidity. The U.S. CFTC, which oversees natural gas futures trading, will likely look into signs of market manipulation
> The rally was primarily focused on the February ’22 contract, but the March ’22 contract gained 24.7c to $4.283. The March-April spread increased by 7c to $13.3c
> The February gas-weighted heating degree day forecast gained 20 HDDs to 787 HDDs, its highest mark yet
The EIA reported a 219-Bcf withdrawal for the week ending January 21, its largest of the heating season so far
> U.S. natural gas storage inventories decreased to 2.591 Tcf, and storage volumes now stand 308 Bcf below last year’s level and 25-Bcf deficit to the five-year average of 2.616 Tcf
> The draw was slightly above analysts’ expectations, and prices picked up some steam following the announcement
> The ICE end-of-season number being traded on ICE settled 65 Bcf lower at 1.375 Tcf < This would put storage 287 Bcf below the 5-year average (1,662 Bcf) at the beginning of the refill season. This would be very bullish for natural gas prices all summer or at least until storage catches back up to the 5-year average. Refilling storage is part of demand each summer.
Oil & Gas Prices - Jan 28
Oil & Gas Prices - Jan 28
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Jan 28
Trading Economics:
"WTI crude futures jumped around 2% to above $88 a barrel on Friday morning, holding at levels not seen since 2014 and are on track for a sixth straight week of gains, amid tight supply and prospects of strong demand. Worries over supply disruptions due to geopolitical risks in Ukraine also helped to support the oil market. Meanwhile, the OPEC+ meeting next week will be in the spotlight. The group is expected to ratify another modest production increase of 400,000 bpd in March although the cartel has been struggling to accomplish with the output rise. On the demand side, China’s crude oil imports could rebound by 6-7% this year as buyers step up purchases for new refining units and to replenish low inventories, according to a Reuters report."
"WTI crude futures jumped around 2% to above $88 a barrel on Friday morning, holding at levels not seen since 2014 and are on track for a sixth straight week of gains, amid tight supply and prospects of strong demand. Worries over supply disruptions due to geopolitical risks in Ukraine also helped to support the oil market. Meanwhile, the OPEC+ meeting next week will be in the spotlight. The group is expected to ratify another modest production increase of 400,000 bpd in March although the cartel has been struggling to accomplish with the output rise. On the demand side, China’s crude oil imports could rebound by 6-7% this year as buyers step up purchases for new refining units and to replenish low inventories, according to a Reuters report."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Jan 28
OilPrice.com
For the first time in seven years, Brent prices surged past $90 per barrel this week, buoyed by a series of bullish factors. First, low inventories remain the number one reason underlying investment banks’ $100 per barrel short-term forecasts. The fact that US commercial stocks just fell for the third time in a row has not helped that. Second, with much of Europe captivated by the prolonged Russia-Ukraine standoff, speculation that Russian oil might be embargoed from the market added another geopolitical premium to prices. Simultaneously, supply scarcity remains a global worry as corroborated by steep backwardation – the Brent six-month market structure was almost at $7 per barrel this week – with very little indication that OPEC+ would be willing to churn out more than it is supposed to under the terms of its agreement. Things are looking very bullish for oil markets indeed.
US Natgas Prices See Record One-Day Spike. With the weather forecast indicating colder weather to come, Henry Hub gas futures saw their sharpest one-day climb this week just as the February contract was about to expire, surging from $4.50 to $7 per mmBtu at the peak of trading, only to settle at $6.3 per mmBtu.
For the first time in seven years, Brent prices surged past $90 per barrel this week, buoyed by a series of bullish factors. First, low inventories remain the number one reason underlying investment banks’ $100 per barrel short-term forecasts. The fact that US commercial stocks just fell for the third time in a row has not helped that. Second, with much of Europe captivated by the prolonged Russia-Ukraine standoff, speculation that Russian oil might be embargoed from the market added another geopolitical premium to prices. Simultaneously, supply scarcity remains a global worry as corroborated by steep backwardation – the Brent six-month market structure was almost at $7 per barrel this week – with very little indication that OPEC+ would be willing to churn out more than it is supposed to under the terms of its agreement. Things are looking very bullish for oil markets indeed.
US Natgas Prices See Record One-Day Spike. With the weather forecast indicating colder weather to come, Henry Hub gas futures saw their sharpest one-day climb this week just as the February contract was about to expire, surging from $4.50 to $7 per mmBtu at the peak of trading, only to settle at $6.3 per mmBtu.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group