Oil & Gas Prices - Mar 27

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

Oil & Gas Prices - Mar 27

Post by dan_s »

Opening Prices:
> WTI is up $1.42 to $70.68/bbl, and Brent is up $1.40 to $76.39/bbl.
> Natural gas is down -10.2c to $2.114/MMBtu. (As of 07:46 AM CDT )

AEGIS Notes with my comments in blue
Oil

Oil extends weekly gains amid Kurdistan oil export halts
May ’23 WTI gains $1.42 this morning to trade around $70.68/Bbl
Equities and futures rose slightly after news of First Citizens Bank acquiring part of SVB's assets, slightly easing concerns about the banking sector
Kurdistan’s 0.4 MMBbl/d oil exports remain shut-In as talks with Iraq fail
Exports were suspended after Iraq won a long-running case against Turkey, which required Turkey to now pay $1.5 billion to Iraq
NATO authorities criticized Russia's decision to announce the placement of nuclear weapons in Belarus on Saturday

Iraqi officials fail to agree on restarting oil exports from Turkey (BBG)
Kurdistan's crude exports (nearly 0.4 MMBbl/d) from Ceyhan port remain halted for a fourth day as talks between the northern Iraqi region and Baghdad failed to resolve the issue
Iraqi and Kurdish officials met on Sunday in Baghdad and didn’t achieve a breakthrough on restarting flows, according to two people familiar with the matter
In a long-running dispute that began in 2014, the International Chamber of Commerce ruled in favor of Iraq
At the time, Iraq claimed that Turkey had broken a joint agreement by permitting the Kurdistan Regional Government to export oil to the Turkish port of Ceyhan

Putin announces Russia will station nuclear weapons in Belarus (Reuters)
In reaction to NATO's military backing of Ukraine, Russian President Vladimir Putin announced on Saturday that he will station nuclear weapons in Belarus
Putin said that the placement of the weapons would not go against the nuclear non-proliferation treaties
NATO criticized Russia for deploying the weapons on Sunday, with spokesperson Oana Lungescu saying that " Russia has consistently broken its arms control commitments"
IMO there is not enough of a geopolitical premium in the price of oil.

Natural Gas

Natural gas prices fall nearly 5.5% to $2.11, the lowest level since February
The Summer ’23 strip is down 7c to $2.57, and the Winter ‘23/’24 strip is lower by 6c to $3.63
Weather forecasts have moderated over the weekend, with the Lower 48 forecast warming by 23 °F in the 1-15 day period
The Northeast regions forecast warmed by 37.5 °F, and the South Central by 44.1 °F
Gas inventories near the end of winter with a large surplus (Reuters)

Despite some short-lived winter storms, this winter was materially warmer than average, with the December-February period being the seventh warmest on record
Lower 48 gas inventories have gone from a deficit of 427 Bcf on September 9 to a surplus of 242 Bcf on March 17
The surplus of gas supply has pressured prices lower, with prices falling from $9.92/MMBtu on August 22 to their current level of around $2.00/MMBtu

European gas and power prices rise due to French strikes (BBG)
The ongoing strikes have impacted LNG import terminals and power plants at a time when Europe is experiencing cooler-than-normal weather
Nuclear reactor availability has fallen 57% since the strikes began, boosting electricity prices
European LNG buyers are also monitoring the progress of the Freeport LNG restart, as the facility has resumed operations but canceled a cargo loading last week due to a technical issue
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Mar 27

Post by dan_s »

Trading Economics
Oil
"WTI crude futures climbed toward $71 per barrel on Monday, building on gains from last week as assurances from US regulators allayed investors’ fears of a broader financial crisis. US authorities are contemplating an expanded emergency lending facility for the banking sector, though traders remain wary of further market volatility. Expectations that the Federal Reserve would end its tightening campaign soon and optimism around China’s demand recovery supported bullish sentiment. Still, the US oil benchmark traded close to its lowest levels since December 2021 as growing fears of a US recession and resilient Russian supply weighed on the market. JPMorgan Chase & Co. is forecasting Brent to break below $60 per barrel in the near term, as reported by Bloomberg." < I've not seen any other member of the Wall Street Gang forecasting a significant drop in oil prices. In fact, most of them are predicting much higher oil prices in 2H 2023.

Natural Gas
"US natural gas futures were trading around the $2.1/MMBtu mark, the lowest since September 2020, pressured by persistently weak demand due to above-normal temperatures and ample inventories. Working stocks in underground storage amounted to 1,900 billion cubic feet on March 17, according to the EIA, the highest for the time of year since 2020. Meanwhile, natural gas flows to LNG export plants have been on track to hit record highs after Freeport LNG's export plant in Texas became operational again. Still, Freeport LNG unexpectedly canceled some cargoes due to issues with one of the plant's three liquefaction trains, sparking some worries that it could take longer than the company expects to return to full service." < IMO the small surplus to the 5-year average in the natural gas storage level is the only fundamental reason for today's oil prices. The hedge funds ("Paper Traders") are still finding it difficult to find buyers for their long positions at the front of the strip. Eventually, that will be resolved. The strip remains in steep contango with DEC23 trading at $3.71 at the time of this post.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Mar 27

Post by dan_s »

Today looks like a short covering rally for WTI to me. We might also be seeing oil traders waking up to geopolitical risk of the global oil market.

Natural gas prices are not going to stay this low. There is an imbalance in the NYMEX futures market that needs to be worked off.

Just remember that the oil and gas prices you see are the front month futures contracts. MAY23 is now the front month.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Mar 27

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (May 23) was up $3.55 on the day, to settle at $72.81
> Prompt-Month Henry Hub (Apr 23) was down $-0.128 on the day, to settle at $2.088

Oil finishes at a two-week high | Gas plunges to lowest in five-weeks

MY TAKE: For WTI this was a short covering rally. Natural gas makes little sense. It seems grossly oversold to me because we should get at least two more draws from storage that are well above the 5-year average. Still seems like the hedge funds went long on gas futures contracts and the utilities remain on the sidelines, so sellers exceed the buyers of physical gas.
Dan Steffens
Energy Prospectus Group
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