Oil & Gas Prices - Mar 14

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - Mar 14

Post by dan_s »

Opening Prices:
> WTI is down $1.48 to $73.32/bbl, and Brent is down $1.34 to $79.43/bbl. (As of 7:47 AM CDT)
> Natural gas is up 0.9c to $2.615/MMBtu.

AEGIS Notes with my comments in blue
Oil

Oil extends losses as US inflation modestly cools in February but still remains well above Fed targets
April ’23 WTI lost $1.48 this morning to trade around $73.32/Bbl

US inflation slowed to 6% in February, matching expectations and down from 6.4% in January but still well above targets (WSJ)
This decline might ease the pressure for aggressive rate hikes from the Federal Reserve
The core CPI, which excludes food and energy prices, rose 0.5% last month and was up 5.5% from a year earlier, according to a Labor Department report on Tuesday
"Fear of the Fed" will continue to be the #1 "noise" keeping pressure on oil prices.

Crude remains under pressure amid economic concerns following the failure of Silicon Valley Bank last week
The focus continues to be on concerns about tightening monetary policy ahead of the FOMC meeting next week < Kind of sad that fear of what our own government (idiots in DC) will do next is our primary concern.

Russia’s oil exports rebound as India buys more cargoes (BBG)
Russia's seaborne crude exports recovered 40% of the last week's loss, rising to 3.3 MMBbl/d for the week ending March 10
India has become the largest buyer of Russian seaborne crude since November, surpassing China, and has consistently bought more than China ever since
Despite the Kremlin's announcement of a retaliatory 0.5 MMBbl/d output cut in March, vessel tracking data monitored by Bloomberg shows no indication of any impact on the oil flows

Natural Gas

Natural gas prices are steady after climbing more than 7% yesterday
The Summer ’23 seasonal strip is trading around $3.02, and the Winter ‘23/’24 strip is trading near $3.88 < Thank the Lord for Winter Storm Sage!
Weather forecasts shifted colder, with the Lower 48 forecast cooling by 6.9 °F

LNG expansion could lower global gas prices after 2027 (Reuters) and raise U.S. gas prices
Proposed LNG export facilities are posed to increase global LNG supply by 67% by 2030
Renewables will increasingly compete with gas as wind, solar, and nuclear-powered generation increases over the next decade
Many analysts believe that global gas prices will remain strong until 2027 when the majority of planned LNG facilities will be online
High prices in 2022 curbed medium-term demand, with China decreasing LNG purchases by 20% along with reductions by other Asian buyers
MY TAKE: Last year LNG prices spiked in Asia and Europe to over $50/Mmbtu at the height of the Bidding War. Looking at my screen this morning, gas prices in Asia (JKM index) are $14.25 and $15.62 in Europe (TTF Index). Under normal conditions, global natural gas prices stay around the energy equivalent price of 1/6th the price of crude oil. So if Brent is $80/bbl, gas prices outside of the U.S. should be $13-$14. U.S. LNG export capacity is on-track to increase by 8 Bcfpd by 2027 to over 22 Bcfpd. Domestic demand for U.S. natural gas is also increasing each year. More export capacity should move U.S. gas prices toward international gas prices. Wind and Solar have more impact on coal demand.

Venture Global moving forward with phase 2 of the Plaquemines LNG terminal (Reuters)
Venture Global CEO Mike Sabel said, “Venture Global is proud to announce a positive FID for phase two of Plaquemines LNG, less than 10 months after sanctioning phase one,”
The company said that this FID completes $21 billion in total project financing, the most ever done in the LNG space
Phase 1 is expected to be online in 2024, while phase 2 will be operational in 2025
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Mar 14

Post by dan_s »

Notes from OilPrice.com

The collapse of Silicon Valley Bank and the risks of seeing other U.S. banks going down the drain have shaken the oil markets, sending WTI below $75 per barrel and Brent below the $80 per barrel mark. The oil narrative has been almost completely taken over by macro news, as even the relatively few newsworthy stories did not provide any surprises – OPEC oil demand growth is still 2.3 million b/d and U.S. oil inventories seem to be relatively stagnant.

OPEC Upbeat on Chinese Demand. In its latest Monthly Oil Market Report, OPEC increased its 2023 oil demand growth forecast for China to a 0.71 million b/d year-on-year hike thanks to strong diesel and jet fuel increases, with the Asian powerhouse accounting for a third of global growth this year.
MY TAKE: Increasing Chinese demand should combine with the seasonal demand for crude oil (+1.5 to 2.5 million bpd each year from end of February to end of May), turning a balanced global oil market into a shortage.

- The 50-day implied volatility rate of oil jumped some 16% amidst the ongoing chaos surrounding the collapse of SVB and Signature Bank, the most since the beginning of the Russia-Ukraine war.

- With U.S. headline CPI coming in at 6% in February, the balancing act of the Federal Reserve might render the oil markets more volatile again as higher inflation for longer undermines demand growth but also cuts into supply prospects.

- In just one day of trading on March 13, the open interest held in ICE Brent contracts decreased by almost 35,000 lots (equivalent to 35 million barrels) whilst the response in WTI NYMEX was much more subdued.

- As both WTI and Brent shed almost $5 per barrel week-on-week, it is the Middle Eastern benchmark Dubai that has come out of the chaos relatively unscathed, being already on par with Brent and showing the resilience of Asian markets.
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As you probably realize by now, I have very little confidence in our government. However, I do know they all want to keep their high paying / do nothing jobs, so I do think they will do whatever it takes to contain these bank failures. Team Biden is expert at printing more money.
Dan Steffens
Energy Prospectus Group
Fraser921
Posts: 2954
Joined: Mon Mar 22, 2021 11:48 am

Re: Oil & Gas Prices - Mar 14

Post by Fraser921 »

4 months of the future curve fell below 70 bucks today.

I wonder if Biden will lock in oil by buying some futures and fulfilling his promise or will he want front month spot to fall below 70

april which expires in 7 days is $ 71
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Mar 14

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Apr 23) was down $-3.47 on the day, to settle at $71.33
> Prompt-Month Henry Hub (Apr 23) was down $-0.033 on the day, to settle at $2.573
Dan Steffens
Energy Prospectus Group
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