Oil & Gas Prices - May 5

[dan_s]

Oil and gas price volatility will be with us until the "noise" level declines a bit. Fear of Recession is "Click Bait" for the media, so expect their Gloom & Doom predictions to continue. In the physical world there is no sign of an oil surplus anywhere. In the U.S. crude oil inventories are 2% below the 5-year average, gasoline inventories are 6% below normal and distillate inventories are 12% below normal. China is still increasing imports and OPEC+ is cutting production.

Trading Economic:
"WTI crude futures rose more than 4% to above $71 per barrel on Friday but were still on track to lose about 7% this week, weighed down by persistent concerns that higher interest rates could slow the global economy and hurt energy demand. Both the Federal Reserve and the European Central Bank raised their policy rates by 25 basis points this week, fueling fears that tightening financial conditions will push major economies into a recession. A surprise contraction in Chinese manufacturing activity amid weakening global demand also clouded the outlook for the world's top crude importer. On the supply side, Russian crude shipments jumped above 4 million barrels a day last week despite the country's pledge to reduce production. This prompted speculations that Russia could be ramping up oil exports to maximize income for its beleaguered economy."

"US natural gas futures fell to below $2.2/MMBtu, following a 2.4% gain in April due to a rise in domestic gas output and reduced heating demand. While the average gas output in the US Lower 48 states has hit a new high of 101.7 billion cubic feet per day (bcfd) in May, gas demand, including exports, is set to decline from 95.4 bcfd this week to 91.1 bcfd next week, primarily due to the warmer weather conditions. According to meteorologists, the Lower 48 states will transition from colder-than-normal conditions to near or warmer-than-normal conditions between May 6-17. Additionally, gas flows to the seven major US LNG export plants have declined to 13.5 bcfd so far in May, compared to the record-high of 14.0 bcfd in April, primarily due to minor reductions at Cheniere Energy Inc's Sabine Pass and Venture Global LNG's Calcasieu Pass in Louisiana."

[dan_s]

Closing Prices:
> Prompt-Month WTI (Jun 23) was up $2.78 on the day, to settle at $71.34
> Prompt-Month Henry Hub (Jun 23) was up $0.036 on the day, to settle at $2.137

Just my observation, but all this talk of a recession seems way overblown to me. We have near full employment and demand for all forms of energy seem high. All petroleum inventories are below normal for this time of year.

I spent four hours on interstate 10 between Houston and Lake Charles, Louisiana this week. The number of trucks on the highway seems very high, which points to a healthy economy.