Oil & Gas Prices - May 11

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dan_s
Posts: 34467
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - May 11

Post by dan_s »

Opening Prices:
> WTI is down $0.74 to $71.82/bbl, and Brent is down $0.73 to $75.68/bbl.
> Natural gas is down -1.2c to $2.179/MMBtu.

AEGIS Notes
Oil

Oil prices wavered between positive and negative territory Thursday morning as investors weighed supply disruptions and improving inflation
> Janet Yellen signaled that the U.S. intends to crack down on Russia’s ability to skirt sanctions
> On the supply side, crude production in Canada continues to be impacted by wildfires, and Iraq is still waiting for Turkey to restart exports through Ceyhan port

Treasury Secretary Janet Yellen outlined plans for tougher sanctions enforcement in 2023 at G-7 gathering (BBG)
> Yellen said Washington intends to crackdown on Russia’s ability to circumvent sanctions imposed by the U.S. and its allies
> “Because these sanctions are having an impact, Russia is trying to get around them,” Yellen said at the conference
> “This year, a central piece of our strategy is to take further actions to disrupt Russia’s attempts to evade our sanctions.”
> AEGIS notes that Russia’s ability to find homes for its crude oil in the face of sanctions has helped keep the global crude market well supplied
Russian production is supposed to be reduced by 500 MBbl/d as part of the OPEC+ deal agreed to back in April
MY TAKE continues to be that Russia's oil production will go on decline due to lack of oilfield services.

Natural Gas

Natural gas prices are trading lower, extending losses from yesterday < Up $0.04 to $2.23 at the time of this post.
> Temperatures are forecasted to stay around the 10-year average of about 67 °F for the next two weeks, which should equal about 65 Bcf/d of natural gas demand < This does not include exports of about 20 Bcfpd.
> Lower 48 gas production remains lower around 100.5 Bcf/d, off the highs of 102 Bcf/d set in April

Natural gas use by the power sector at multi-year highs (BBG)
> The share of the power stack occupied by natural gas has held at a five-year high in April, coming in at 72% of the thermal stack as coal is displaced by cheaper gas generation
> Despite higher levels of gas demand from the power sector, the storage surplus has not tightened
> Average coal generation fell by 19 GW in April, while average gas generation increased by 19 GW
> Bloomberg calculates 473 Bcf of weather-related storage variability for this summer

China’s LNG demand remains muted (BBG)
> Capacity booked at Chinese import terminals remains reduced, and several cancellations were reported in April
> Mild weather in Asia, increased Russian pipeline imports, and higher coal generation has led to a reduction in Chinese LNG imports this year
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34467
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - May 11

Post by dan_s »

Closing Prices
> Prompt-Month WTI (Jun 23) was down $-1.69 on the day, to settle at $70.87
> Prompt-Month Henry Hub (Jun 23) was down $-0.001 on the day, to settle at $2.190

Trading Economics
"WTI crude futures fell more than 1.5% to below $72 per barrel on Thursday, following a 1.6% loss in the previous session amid persistent demand concerns and as EIA data showed an unexpected increase in US inventories. Crude oil stocks rose by nearly 3 million bbls on the week ending May 5th, according to data from the EIA, defying expectations of a 900 thousand barrel decline and consistent with a previous report from the API. Elsewhere, trade data from China showed that crude oil imports fell 16% annually to 10.6 million barrels per day in April, adding to fears of an economic slowdown in Asia’s largest economy."

"US natural gas futures rose 2% mid-day to above $2.2/MMBtu due to a decrease in output and projections of higher demand over the next two weeks. Preliminary data showed gas output fell to a three-week low of 100.8 billion cubic feet per day on Thursday. At the same time, gas demand is expected to increase from 91.3 bcfd this week to 91.6 bcfd next week as warmer weather is making more people turn on their air conditioners. Meanwhile, the latest EIA report showed a slightly larger-than-expected storage build as gas flows to the seven big US LNG export plants decreased so far in May."
Dan Steffens
Energy Prospectus Group
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