Oil & Gas Prices - Mar 6

[dan_s]

Opening Prices:
> WTI is down $0.99 to $78.69/bbl, and Brent is down $1.06 to $84.77/bbl.
> Natural gas is down -37.0c to $2.639/MMBtu. < Profit taking after last weeks big run up.

AEGIS Notes with my comments in blue
Oil

Oil reverses some of last week’s gains amid China’s modest growth forecast
April ’23 WTI lost nearly $1 this morning to trade around $78.70/Bbl
The rebound in Chinese demand remains top of mind despite global economies continuing to contract
China’s government announced a GDP growth target of 5% for 2023 at the National People's Congress meeting
The target is lower than some economists' forecasts and lower than 2022’s 5.5% growth target despite the nation abandoning its Covid-zero policy

Additionally, the market will be watching Fed Chair Powell's remarks tomorrow as well as Friday's US Non-farm payroll data for indications about Fed's future rate-hike plans

Saudi Arabia raises oil prices for Asia and Europe in April (BBG)
Amin Nasser, CEO of Saudi Aramco, indicated that the kingdom is seeing an increase in oil demand and added, "the demand from China is quite high," and it's "excellent" in both Europe and the US
The company's main Arab Light grade was raised to $2.50/Bbl over the Oman/Dubai regional benchmark, 50c higher than March’s selling prices
AEGIS notes that the price hike comes as several new refineries in Saudi Arabia are set to begin operating soon, and this could limit the amount of oil available for exports
Oil demand is seasonal and the lowest demand period is Q1 each year. Numerous U.S. refineries are running at much less than design capacity because they are doing annual maintenance (called "Turnarounds"). U.S. crude oil demand will ramp up sharply by mid-Q2.

Natural Gas

Natural gas prices are down 12.5% to $2.63
The Summer ’23 strip is lower by 35c to $3.02, and the Winter ‘23/’24 strip is down 27c to $3.90

Weather forecasts have warmed significantly
The Lower 48 forecast has warmed by 39.2 °F cumulatively
The South Central regions forecast warmed by 35.3 °F in the 1-5 day period and 74.8 °F in the 6-10 day period

Biden Administration looks to advance certified natural gas (Reuters)
The administration is holding talks with energy companies and foreign officials to create standards for certified natural gas, which is gas that has had its emissions offset or reduced in some way
The lack of unified standards for measuring emissions across the natural gas supply chain has held back the growth of certified natural gas
Certified gas is marketed at a premium, usually by third-party certifiers who prove that an emissions reduction has occurred
Just more costs that will be passed on the consumers.

Chinese LNG buyers returning to market (BBG)
Beijing Gas purchased a spot LNG cargo for April delivery, making it the first Chinese spot purchase by a non-state-affiliated importer since the summer of 2021
Chinese LNG imports fell about 20% in 2022 as high prices pushed cost-sensitive buyers out of the spot market
Gas demand from China is expected to grow this year as the country’s covid-zero policy ends, potentially tightening the global LNG market
The Japan/Korea Marker (JKM Index price) for LNG was $14.59 on Friday and the Dutch TTF index price was $14.60. I expect the Bidding War for LNG to ramp up again this summer.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Apr 23) was up $0.78 on the day, to settle at $80.46
> Prompt-Month Henry Hub (Apr 23) was down $-0.437 on the day, to settle at $2.572 < The volatility will continue because the hedge funds control the price for now.