Oil & Gas Prices - Mar 16

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Oil & Gas Prices - Mar 16

Post by dan_s »

Opening Prices;
> WTI is down $0.30 to $67.31/bbl, and Brent is down $0.20 to $73.49/bbl.
> Natural gas is up 3.1c to $2.47/MMBtu. (As of 08:11 AM CDT)

Obviously, oil prices need to stabilize at some point for me to determine how they will impact the stock prices of our three model portfolios' companies. I do believe that the selloff of the front month NYMEX futures contract for WTI oil (APR23) is based on FEAR more than supply and demand fundamentals. The oil price quoted above is the APR23 contract. The hedge funds have once again been caught with too many long positions, which they must now discount to attract buyers.
The global oil market is adequately supplied TODAY, BUT the supply/demand fundamentals point to a shortage of oil within six months. Per IEA and OPEC monthly reports.
OilPrice.com: "Global inventories of crude and oil products increased by 101.9 million barrels to an 11-month high. Yet, stocks (total Petroleum Inventories) remained 304 million barrels below the five-year average, according to the JODI data." < JODI is the Joint Organizations Data
Natural Gas prices seem to have found support around $2.50, the Henry Hub price that I am using in my forecast/valuation models. The NYMEX futures market for HH gas seems to be back in balance. The NYMEX strip prices for Q2 through Q4 for HH gas are now above the gas prices that I am using in my forecasts. IF HH gas stays near where the strip is today, all of our gassers will have another good year.
Today's EIA natural gas storage report shows a draw for the week ending March 10 were 58 Bcf, 10 Bcf higher than the 5-year average. The draw for the week ending March 17 should be much larger than the 5-year average thanks to Winter Storm Sage.


Oil hovers near a 15-month low after plunging $9.07, or 12%, over the past three days
April ’23 WTI lost 30c this morning to trade at $67.31/Bbl

Last week’s collapse of SVB, in addition to turmoil at Credit Suisse, continues to weigh on market sentiment
Concerns with the banking system have eclipsed bullish expectations for a revival in Chinese demand

A wave of technical selling and options coverage also accelerated the three-day selloff < Key note

A relatively stronger U.S. dollar has also been adding pressure to prices. This makes oil more expensive for buyers holding other currencies

Crude futures were largely unaffected following the EIA storage data, which showed increases in crude stocks along with oil-based refined product draws

Oil’s downturn raises the prospect that the U.S. would try to refill the SPR (BBG)
Falling crude prices have raised expectations that the U.S. may attempt to replenish the SPR once again
The Biden administration laid out plans to refill the SPR if crude prices trade around $70/Bbl
WTI tumbled to nearly $66/Bbl on Wednesday

The SPR is currently at 371.6 MMBbl, the lowest level since the 1980s, as a result of the 180 MMBbl release last year to tame gasoline prices
Additionally, the deliveries that followed the sale of 26 MMBbl from the DOE's reserves (in the SPR) have not yet been completed. These deliveries are scheduled to take place from April to June

Natural Gas

Natural gas prices are higher today after falling 13c yesterday
The EIA will release its weekly natural gas storage report today
The median analyst expectation is for a withdrawal of -61 Bcf, according to the Bloomberg survey
The five-year average withdrawal for this report week is -77 Bcf < My source shows the 5-year average draw was 48 Bcf

Osaka gas to increase LNG purchases in 2023 and 2024 (Reuters)
The company is one of Japan’s largest gas importers
The President of Osaka Gas said, "Still, we see a risk of the prices surging again sometime in the next financial year amid tight global supply as Europe moves further away from Russian gas,"
In the past, the company would procure fewer LNG cargoes on a contract basis and purchase additional cargoes in the spot market when needed, but will now be taking advantage of a contract clause allowing them to increase contracted volumes by 5-10%

San Francisco bans some gas appliances from new constructions (BBG)
Regulators approved on Wednesday a ban on furnaces and water heaters that use natural gas to take effect in multiple stages from 2027-2031
The ban will not affect existing installed appliances or gas stoves
Dan Steffens
Energy Prospectus Group
Posts: 31663
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Mar 16

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Apr 23) was up $0.74 on the day, to settle at $68.35
> Prompt-Month Henry Hub (Apr 23) was up $0.075 on the day, to settle at $2.514

Everyone say a little prayer that we have set the low for this Fear Driven selloff for oil.
Dan Steffens
Energy Prospectus Group
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