Oil & Gas Prices - May 18

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dan_s
Posts: 34908
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - May 18

Post by dan_s »

AEGIS' Energy Markets Webcast is today at 2PM CT. If you have not registered send me an email (dmsteffens@comcast.net) and I will send you the registration link.
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Opening Prices:
> WTI is down $0.39 to $72.44/bbl, and Brent is down $0.45 to $76.51/bbl.
> Natural gas is up 5.3c to $2.418/MMBtu.

AEGIS Notes
Oil

Oil trades lower despite optimism about progress in U.S. debt ceiling talks
June ’23 WTI lost 39c this morning to trade around $72.44/Bbl
Crude is down almost 10% this year as global economic headwinds remain a significant concern
President Biden and key congressional leaders are negotiating to raise the debt ceiling before the June 1 deadline (Reuters)
Last week’s 5 MMBbl build in inventories and the near two-month high of the U.S. dollar are weighing on prices

Alberta wildfires escalate, threatening oil production (BBG)
Persistent wildfires in Alberta endanger nearly 2.7 MMBbl/d of oil-sands production, with approximately 0.3 MMBbl/d currently halted, according to Rystad Energy
The number of active wildfires in Alberta rose to 91 on Wednesday, up from 86 just a day earlier
Despite improved weather, conditions are expected to worsen; 12,000 residents remain evacuated

India mulls refilling Strategic Reserve; Russian imports under consideration (BBG)
India may join the U.S. in the process of restocking depleted oil reserves, contemplating a massive refill of their strategic oil reserve
Potential import of 9.2 MMBbl by India is under discussion, with Russia as a possible supplier

Natural Gas

Natural gas prices are trading higher, around $2.41, extending gains from yesterday
The Winter ‘23/’24 strip is trading at $3.57, and the Summer ’24 strip is at $3.33
Lower 48 wind generation has fallen to a three-year low, which should lead to higher levels of natural gas usage by the power sector

Platts begins publishing renewable natural gas prices (WSJ)
Renewable natural gas, or biogas, is produced from landfills or dairy farms and is then injected into the gas pipeline system
Buyers in most of the US have been paying $25.25/MMBtu above Henry Hub, while buyers in California have been paying $28.40/MMBtu on average due to additional tax credits in the state
While production of biogas has grown sharply in recent years, it only accounts for 0.2% of all gas produced in the US

U.S. power grids vulnerable to extreme heat this summer (Reuters)
NERC released its summer outlook on Wednesday, stating that the US West, Midwest, Southeast, Texas, and New England are at risk of generation shortages under certain weather conditions
Heat waves, low wind output, and dependency on imported power are the biggest risks
Tight power supplies would likely lead to natural gas peaker plants running more than normal
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34908
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - May 18

Post by dan_s »

Bloomberg is reporting that the total number of active wildfires in Alberta climbed to 91 as
of Wednesday afternoon from 86 a day earlier and the number of out-of-control blazes rose
to 27 from 24, according to provincial data. Rystad Energy said that the equivalent of at least
240,000 Bopd and possibly more than 300,000 Bopd of oil output already is shut-in.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34908
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - May 18

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Jun 23) was down $-0.97 on the day, to settle at $71.86
> Prompt-Month Henry Hub (Jun 23) was up $0.227 on the day, to settle at $2.592

Today is a classic example of how quickly the futures market for natural gas can change. All we had today was a slightly lower storage build than expected (still higher than the 5-year average) and because it occurred in the back half of the month, the paper traders that were short gas panicked. A few automated trades can trigger a big short covering rally in gas futures.

I have no idea if the price will hold up, but we may be just one heat wave away from $3.00 gas this summer.
Dan Steffens
Energy Prospectus Group
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