Oil & Gas Prices - Feb 23

[dan_s]

Opening Prices:
> WTI is up $1.01 to $74.96/bbl, and Brent is up $0.94 to $81.54/bbl. < APR23 is now the front month WTI contact
> Natural gas is up 8.9c to $2.263/MMBtu. < MAR23 is still the front month. I expect the APR23 contract to drift over $2.50 before it expires at the end of March because (as I have posted here many times) the paper traders that loaded up on Q1 ngas contracts have a lot fewer contracts to get rid of after MAR23. The recent decline in natural gas prices was primarily the result of the utilities moving out of the futures market.

AEGIS Notes
Oil

Oil reverses some of yesterday’s losses after posting six consecutive days of declines
April ’23 WTI gained nearly $1 this morning to trade around $75/Bbl
Crude extended losses yesterday after Fed minutes showed concerns about inflation staying high, hinting that rate hikes might continue
Oil prices were further pressured with the U.S. dollar strengthening to a nine-week high
Although recessionary concerns continue to weigh on prices, the market continues to watch Chinese demand recovery and Russian supply risk
Additionally, crude loadings have resumed at the CPC oil terminal on the Black Sea coast as the weather improved

India’s oil ministry forecasts demand for refined oil products to hit a record over the next year (BBG)
According to government projections, consumption of oil products is set to rise by 4.9% to 233.8 million tons (approximately 4.8 MMBbl/d) in the 12 months following April, with demand for diesel rising by 4%, gasoline by 8%, and jet fuel by 16%
IEA, in its recent monthly report, sees fuel demand to average 5.35 MMBbl/d in 2023, up by 0.2 MMBbl/d
The expected increase coincides with China's recovering demand, while India has emerged as one of the top buyers of Russian crude
The ministry added that the government-owned Indian Oil Corp. is increasing capacity by 25 million tons to meet the country's growing demand

Natural Gas

Natural gas prices are higher by nearly 2% to $2.26
The EIA will release its weekly natural gas storage report today
The median analyst estimate is for a withdrawal of -62 Bcf, according to the Bloomberg survey
The five-year average withdrawal for this week is -172 Bcf
Tomorrow the March Henry Hub contract will expire, making April the prompt month contract

Chesapeake Energy set to reduce drilling activity (Reuters)
Chesapeake said on Wednesday that they would drop two rigs in the Haynesville region and scale back drilling and completing wells in 2023, as natural gas prices have collapsed
CEO Nick Dell’Osso said that “We certainly see that it's prudent to pull back capital, and we think we're seeing others do the same,”
On Tuesday, Chesapeake announced plans to sell assets in South Texas to chemical producer INEOS for $1.4 billion

Cheniere seeks permit for Sabine Pass expansion (Reuters)
The LNG exporter initiated the process to obtain an expansion permit from federal regulators on Thursday
The Sabine Pass Stage 5 expansion will have a capacity of 2.67 Bcf/d or 20 million tons per year

[dan_s]

Closing Prices:
> Prompt-Month WTI (Apr 23) was up $1.44 on the day, to settle at $75.39
> Prompt-Month Henry Hub (Mar 23) was up $0.140 on the day, to settle at $2.314 < The APR23 contract closed at $2.47