Oil & Gas Prices - April 22

[dan_s]

Opening Prices:
> WTI is down $0.86 to $102.93/bbl, and Brent is down $0.93 to $107.40/bbl.
> Natural gas is down -17.7c to $6.78/MMBtu.

AEGIS Notes
Oil

Oil is on pace for its third decline in four weeks as China lockdowns linger
> Fuel consumption in China, the globe’s largest oil importer, is expected to drop 20% in April from a year ago (BBG)
> Shanghai has been the center of China’s latest Covid-19 clampdown, causing a drop in fuel demand is the equivalent to a decline of 1.2 MMBbl/d

Morgan Stanley (MS) boosted its Brent price forecast for the three-and fourth quarter by $10 as the bank expects a greater supply deficit
> The bank raised its 3Q estimate to $130/Bbl
> The oil market will see a supply deficit of about 1 MMBbl/d persisting throughout the year, according to a note dated April 1
> MS also increased its forecast for daily Russian oil output production losses to 2 MMBbl/d , up from 1 MMBbl/d
MY TAKE: All of the "noise" about China's lockdowns and Russia/Ukraine does not change the fundamental reason for triple digit oil prices. The global market is "short oil". U.S. and OECD petroleum inventories are "dangerously low", especially diesel. The oil side of this Global Energy Crisis will get worse in Q3 and Morgan Stanley's $130/bbl forecast may prove to be too conservative.

Natural Gas

U.S. natural gas futures are down by 17.7c, near $6.78 this morning
> According to Criterion Research, lower-48 dry gas production is on track to average 94 Bcf/d, its highest since December < When the summer heat arrives and LNG exports stay near capacity, US demand for dry gas will be at or above 94 Bcfpd.
> LNG feedgas demand is at around 12.46 MMcf/d.
> Flows to LNG facilities have been under 13 Bcf/d, as Freeport LNG capacity has been down by around 650 MMcf/d since April 3. The job was supposed to be completed by April 21
> AEGIS notes that there will likely be more maintenance in the coming weeks that will limit LNG feedgas demand

The EIA also reported a 53-Bcf injection for the week ending April 15
> The inventory build was well above analysts' expectations and represented a looser supply-demand balance when taking out the effect of weather for the second-consecutive week.

Gazprom may lose a third of its gas exports to Europe in 2022 – Reuters
> Analysts said that the Kremlin-controlled Gazprom could fall by 30% as LNG competes directly with its gas, and plans to switch to Rouble payments could impact flows further
> If the conflict in Ukraine prevents pipeline operations from continuing safely, flows could be disrupted further
> Top consumers of Gazprom's gas in Europe in 2021 were Germany, which took 45.8 bcm (4.4 Bcf/d), Italy, taking 20.8 bcm (2.0 Bcf/d), and Austria, which received 13.2 bcm (1.3 Bcf/d)

[dan_s]

Bullish Case for Natural Gas Prices (triple digit gas price could be coming withing six months)

http://blog.gorozen.com/blog/the-global ... e=hs_email