Oil & Gas Prices - March 25

[dan_s]

Opening Prices:
> WTI is down $2.87 to $109.47/bbl, and Brent is down $2.73 to $116.30/bbl.
> Natural gas is up 12.7c to $5.528/MMBtu.

AEGIS Notes:
Oil

Oil traded lower Friday morning as the European Union held off on banning Russian crude imports
> The U.S. and EU announced an agreement to cut reliance on Russian fuel (BBG)
> Oil is still set to end the week higher and has rallied over 20% this month

Germany has said it plans to wean itself off Russian fossil fuels quickly
> An embargo is not possible because of the damage it would cause to Europe’s biggest economy < Putin knows this and he may decide to use it as a weapon against NATO countries.
> Oil and coal purchases could broadly end this year, Germany’s economic and climate minister said < How the hell is the "Climate Minister" going to make this happen???
> Gas imports could be wound down by the middle of 2024

Oil demand destruction has begun (JPMorgan)
> JPM cut its second-quarter demand forecast by 1.1 MMBbl/d and reduced the outlook for both two remaining quarters by about 500 MMBbl/d (Bloomberg)
> The bank cites the Omicron spread in China as an additional demand destruction factor besides high oil prices

Natural Gas

U.S. gas futures are up this morning, with the prompt contract gaining 12.7c to around $5.528
> The EIA reported a draw of 51 Bcf for the week ending March 18
> The draw brought inventories to 1,389 Bcf, which is 293 Bcf, or 17.4% below the five-year average < This is a really BIG DEAL that has not quite understood by the Wall Street Gang. Gas Traders do get it, which is why U.S. natural gas prices are likely to stay over $5.00 all year.
> AEGIS notes the pull was slightly below what analysts were expecting

E.U., U.S. strike LNG deal to replace Russian gas
> The U.S. plans to supply the European Union with 15 bcm (529.5 Bcf) this year
> The E.U. is aiming to cut its dependency on Russian gas by two-thirds this year and end all Russian fossil fuel imports by 2027
> Analysts question whether the U.S. could reach its goals outlined.
> Russia currently supplies around 40% of Europe’s natural gas or around 155 Bcm (5,425 Bcf) in 2021
MY TAKE: Old Joe Biden does not own any gassers or LNG export facilities, so how can he make a promise like this??? This is just a political stunt! The companies that control where LNG gets delivered are going to take it to the country that will pay the highest price.

[dan_s]

Closing Prices:
> Prompt-Month WTI (May 22) was up $1.56 on the day, to settle at $113.90
> Prompt-Month Henry Hub (Apr 22) was up $0.170 on the day, to settle at $5.571

MY TAKE: WTI will be over $130/bbl by the end of April unless peace breaks out in Ukraine. Regardless, WTI will stay over $100/bbl all year. Natural gas price is likely to firm up over $5/MMBtu. If we see draws from storage during the first two weeks of April it may firm up over $6/MMBtu. La Nina winters are very bullish for natural gas.

[Fraser921]

If we get 5 more days of $ 110 EWI, we will avg $ 95 for Q1