Oil & Gas Prices - May 9

[dan_s]

Opening Prices:
> WTI is down $0.66 to $72.50/bbl, and Brent is down $0.65 to $76.36/bbl.
> Natural gas is up 2.2c to $2.26/MMBtu.

AEGIS Notes
Oil

Oil reverses some gains amid lackluster Chinese trade data
June ’23 WTI lost 66c this morning to trade around $72.50/Bbl
Equities and yields decline while the dollar strengthens today
The market closely watches the talks between President Biden and Speaker McCarthy on the approaching debt ceiling (Reuters)
Additionally, the market awaits the U.S. CPI print for April on Wednesday
April's Chinese crude imports fell by 16% to 10.36 MMBbl/d, hitting the lowest point since July 2022, due to refinery maintenance (BBG)

UAE downplays the necessity for additional short-term oil output cuts (BBG)
UAE energy minister, Suhail Al Mazrouei, downplayed the need for further OPEC+ cuts to balance supply and demand in the short-term
Suhail Al Mazrouei told reporters, “I’m not worried about the very, very short term”
He emphasized that a lack of investment in the coming years poses a more significant risk to supply < This is why there is significant risk of a supply shortage in Q4 2023 and 2024.

Oil supertanker rates plummet by 75% following OPEC+ production cuts (BBG)
OPEC+ supply cuts resulted in a 75% drop-in supertanker rates, from over $97,000/day on March 20 to under $24,000/day on May 5
The reduced number of cargoes following these cuts can change the market dynamics, with lower shipping costs expected to ease the movement of long-haul arbitrage cargoes

Natural Gas

Natural gas prices are trading higher, around $2.26, extending gains from yesterday
Weather forecasts shifted warmer, with the Lower 48 forecast warming by 5.6 °F over the two-week period
Gas demand over the next two weeks should be mostly stable, in a range between 60 Bcf/d and 70 Bcf/d

Canadian gas production falls due to wildfires (Reuters)
Wildfires in Western Canada have led to a reduction in gas output and forced several facilities offline
At least 0.234 MMBbl/d of oil and gas production were halted due to wildfires
Natural gas flows from Canada to the US fell to 6.7 Bcf/d yesterday, which is the lowest level since April 2021
Two of Pembina Pipeline Corp’s gas processing plants have been shut down, resulting in a loss of 443 MMcf/d of processing capacity
TC Energy has shut down three compressor stations on its NGTL system

Lawmakers question climate impact of LNG buildout (Reuters)
44 members of Congress have called on the Biden administration to consider the climate impacts of the expansion of the LNG industry and to “include greater scrutiny on the entire LNG supply chain"
The administration has so far taken a stance of supporting LNG projects, with the goal of aiding the energy security of Europe after the reduction of Russian pipeline flows

[dan_s]

Closing Prices:
> Prompt-Month WTI (Jun 23) was up $0.55 on the day, to settle at $73.71
> Prompt-Month Henry Hub (Jun 23) was up $0.029 on the day, to settle at $2.267

Keep in mind that all of my forecasts are based on WTI averaging $75/bbl and HH averaging $2.25/MMbtu in Q2. Q1 oil & gas prices came in above my forecast and I expect Q2 to do the same.