Oil & Gas Prices - May 3

[dan_s]

Opening Prices
> WTI is down $0.88 to $104.29/bbl, and Brent is down $0.81 to $106.77/bbl.
> Natural gas is up 48.2c to $7.957/MMBtu.

AEGIS Notes: "Diesel hits all-time high | Gas tops $8/MMBtu"

Crude Oil

Oil and equity futures were down Tuesday morning as investors brace for the largest U.S. rate hike since 2000
> China’s COVID-19 lockdowns persist and have been weighing on crude demand in the world’s largest oil importer
> The European Commission’s plan to ban purchases of Russian oil by the end of the year has helped offset bearish sentiment from China

The Nymex diesel crack jumped to its highest level on record in data since 1986
> Retail diesel prices rose to $5.321/gal on Sunday, the highest on record, according to AAA data
> Ultra-low sulfur diesel stocks are at their lowest level since 2014 and 25 MMBbl below the five-year average of 125 MMBbl
MY TAKE: The shortage of diesel will result in rationing this summer. This country runs on diesel. Farmers and Truckers must be given priority or we will see food shortages. I just hope Mayor Pete has a clue, but I doubt it.

Natura Gas

The prompt-month (Jun' 22) gas contract is up by 48.2c this morning, near $7.957 < Up to $8.10 at the time of this post.
> Lower-48 dry gas production is back down to 92 Bcf/d and has been struggling as of late
> LNG feedgas demand is at around 12.4 Bcf/d. Freeport LNG feedgas flows are finally recovering after being reduced since April 5 because of maintenance
> Calcasieu Pass feedgas volumes are holding near their record-high of 1 Bcf/d
> Weather forecasts tilted warmer, with the U.S. expected to switch from HDDs to CDDs on May 10, according to Criterion Research
> Long-term LNG demand picks up as the Russia-Ukraine invasion leaves buyers seeking alternative sources of supply

Energy Transfer LP, and NextDecade Corp both announced new LNG supply agreements or long-term offtake contracts on Monday for customers in both Asia and Europe
> The U.S. has committed to delivering additional natural gas to Europe to help the country slash its imports from Russia over the next ten years
> Energy Transfer reached its agreement to supply Gunvor Group Ltd. (Singapore unit) with 0.262 Bcf/d of gas from its Lake Charles, LA LNG project beginning in 2026 and lasting a term of 20 years
> NextDecade signed a 15-year supply agreement for 0.23 Bcf/d of gas from its RioGrandeLNG facility in Brownsville, TX beginning in 2026
> Both agreements were indexed to the Henry Hub benchmark plus a fixed liquefaction charge
MY TAKE: Europe went all in on Wind and Solar and now American consumers will pay the bill. Stay Overweight on the "gassers" because this "Bidding War" is just getting started.

[dan_s]

OPEC+ is now out of spare capacity:
OilPrice.com
"Whilst OPEC+ is widely expected to agree to another monthly increase of 432,000 b/d, the widening gap between the oil group’s stated objectives and reality is becoming too glaring to ignore. For March, the last month for which official OPEC+ data is available, the discrepancy added up to 1.45 million b/d and is set to only increase in April as Russia’s production went downhill."

Saudi Arabia and UAE may have some additional production that they can ramp up, but it will not offset a dozen cartel members + Russia that are on decline. The "cheap and easy" spare capacity is all back on-line.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Jun 22) was down $-2.76 on the day, to settle at $102.41
> Prompt-Month Henry Hub (Jun 22) was up $0.479 on the day, to settle at $7.954 < Continues to amaze me. This is the first week of May, not November.