Oil & Gas Prices - Feb 3

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - Feb 3

Post by dan_s »

Opening Prices
> WTI is up $0.03 to $75.91/bbl, and Brent is up $0.06 to $82.23/bbl.
> Natural gas is up 2.8c to $2.484/MMBtu.

AEGIS Notes
Oil


Oil heads for a second-consecutive weekly loss ahead of EU’s Russian fuel ban and price cap
March ’23 WTI lost 3c this morning to trade around $76/Bbl

An EU ban on Russian refined goods is set to go into effect on February 5, potentially tightening the global fuel supply
It is unclear how the price cap is going to affect Russian fuel exports, as the cap on Russian crude didn’t cause any major disruptions

This week, OPEC’s technical committee met to discuss crude production levels; the committee made no recommendation to change the group's existing production policy

Additionally, Fed Chairman Powell announced a further rate hike of 25 basis points on Wednesday and suggested a 'couple' more hikes are coming (Reuters)

Despite bans, Russia has no plans to reduce its fuel production (Bloomberg)
Russia sees no cause for a substantial reduction in its oil refinery operations and fuel production when an EU import ban goes into effect on Sunday, according to the Russian news agency Tass
The ban will be imposed in addition to a price-cap mechanism that will permit flows to non-European buyers as long as the cargoes are bought for less than a yet-to-be-agreed price
Additionally, according to Russian Prime Minister Novak, the nation's oil production and exports remain stable, and every effort is being made to " find new supply chains, markets, and transportation " for their crude

The US Energy Department wants to halt additional oil reserve sales (Bloomberg)
The US DOE requested Congress to stop selling an additional 26 MMBbl of the country's emergency oil supply that is required for this fiscal year in order to replenish the SPR < This is bullish for oil prices as it will make a tight market even tighter in 2H 2023.
According to Deputy Energy Secretary David Turk, the request is still pending before Congress, and " It’s legislatively mandated, so the ball is in their court, and Oil cannot be put back in if it is being removed”

Natural Gas

Natural gas prices are trading around $2.48, heading for a weekly loss of more than 20%
Yesterday the EIA reported a storage withdrawal of 151 Bcf, which expanded the storage surplus to 163 Bcf above the five-year average
Weather forecasts are mostly unchanged but cooler in the Southeast and South Central regions for the 11-15 day period

Senator Joe Manchin leading effort to prevent gas stove ban (Bluefield Telegraph)
Manchin, Chairman of the Natural Resources Committee, said on Thursday that he is leading two legislative efforts to prevent the Biden administration from implementing a ban on gas stoves
In January, Manchin released a statement opposing the recommendations made by the Consumer Product Safety Commission regarding gas stoves
35% of US households use natural gas for cooking

Freeport requests authorization to begin loading cargoes (Reuters)
Freeports filing with FERC said that "reinstatement of Dock 1 LNG loading services will allow Freeport to recommence normal LNG ship dockage and loading operations"
The company said that loading LNG onto ships will free up space in their storage tanks in anticipation of the facility resuming commercial operations
One of Freeports largest customers, Japan’s JERA, said this week that they do not believe they will take delivery of any LNG cargoes from the plant before the end of March
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Feb 3

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Mar 23) was down $-2.49 on the day, to settle at $73.39
> Prompt-Month Henry Hub (Mar 23) was down $-0.046 on the day, to settle at $2.410

MY TAKE on the oil price pullback is that traders are worried (rightfully so) that the EU sanctions and price caps against Russia are not and will not take oil off the market. Europe is loosing the "Sanctions War". FEAR of recession still runs high.

Today's natural gas price you see above (MAR23 NYMEX contract) is way down from the $6.30 it averaged in Q4 because the utilities are out of the futures market. There are simply more sellers (Paper Traders) than there are buyers. Market forces will balance the U.S. natural gas market this summer and more realistic gas prices will return. Getting Freeport back online will be a big help.
Dan Steffens
Energy Prospectus Group
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