Oil & Gas Prices - Mar 2

[dan_s]

Opening Prices:
> WTI is up $0.13 to $77.82/bbl, and Brent is up $0.09 to $84.40/bbl.
> Natural gas is up 0.1c to $2.812/MMBtu. < Gas rallies for a seventh-consecutive day, up 73.9c or 35.6% over the past seven days

AEGIS Notes
Oil

Oil continues to trade higher amid optimism over the revival of Chinese demand
April ’23 WTI gained 13c this morning to trade around $77.82/Bbl
Market continues to weigh inflationary concerns with Chinese demand recovery

China's manufacturing activity expanded at the fastest pace in more than a decade in February, signaling a further recovery in Chinese demand
Meanwhile, this week's inflation data for Spain, France, and Germany came in stronger than expected, raising the possibility that the ECB will continue rate hikes < In this "Upside Down World" good economic news is bad news.
Yesterday, the EIA reported that U.S. crude exports hit a record high of 5.63 MMBbl/d for the week ending February 25
Also weighing on prices this week was a strong US dollar which makes oil expensive for holders of other currencies

Chevron CEO backs bullish oil outlook amid Chinese demand optimism (BBG)
China's reopening would lead to a "steady" demand rise throughout this year, and there isn't much supply outside of OPEC to match it, said Chevron’s CEO Mike Wirth
He added, “the world’s pretty tight right now,” and “as we get into the second half of this year, the risks to the upside begin to accumulate”
Also, he noted that the US shale production growth is slowing as a result of rising equipment costs, a labor shortage, and investor demands for funds to be utilized for buybacks and dividends rather than new drilling

Natural Gas

Natural gas rises for the seventh day in a row, trading around $2.81
The EIA will release its weekly natural gas storage report today
The median analyst expectation, according to a Bloomberg survey, is for a withdrawal of -75 Bcf, while the survey ranges from -66 to -81 Bcf
The five-year average withdrawal for this report week is -172 Bcf

Simple-cycle gas generators operated at record highs last summer (EIA)
Simple-cycle gas turbines are less efficient than combined-cycle gas turbines and require more fuel per unit of output
Because grid operators often use SCGT to respond quickly to fluctuations in demand, their use reached a record high in the summer of 2022 during periods of weak wind and solar generation
As intermittent renewables continue to become a larger share of the generation mix, quick-ramping gas generators will become more necessary to fill gaps in power generation

US regulator seeking public input on gas stoves (BBG)
The Consumer Product Safety Commission is moving to investigate potential health hazards associated with indoor gas stoves
The commission called attention to indoor emissions in January, leading to backlash from lawmakers
A spokesperson for the commission has said that while they are not looking to ban gas stoves, they are looking at solutions to “remediate such hazards”