Oil & Gas Prices - May 31

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

Oil & Gas Prices - May 31

Post by dan_s »

MY TAKE: Yesterday's oil price dip is related to the debt ceiling debate in Washington. Our Federal government is "broken" and the oil price selloff is just "risk off" sellers moving into cash until something is settled. OPEC+ meets on June 4th and they can and they will defend the price of oil. They need Brent over $80/bbl. In the "Real World" oil supply/demand is tight and demand will soon outstrip supply.

Opening Prices:
> WTI is down $2.20 to $67.26/bbl, and Brent is down $1.84 to $71.70/bbl. < WTI is back to $68.93 at the time of this post.
> Natural gas is up 1.5c to $2.342/MMBtu. < HH JUL23 is up $0.04 to $2.36 at the time of this post.

AEGIS Notes
Oil

Oil plummets as weak Chinese economic data stokes demand uncertainty
July ’23 WTI lost $2.22 this morning to trade around $67.26/Bbl

China's manufacturing activity contracted faster than expected in May, indicating a post-Covid recovery slowdown
Additionally, the U.S. dollar rose to its highest in over two months, making dollar-denominated commodities expensive for holders of other currencies

The debt-ceiling deal backed by President Biden and Speaker McCarthy is set for a House vote on Wednesday to avoid U.S. default
A bill temporarily halting the U.S. borrowing limit and capping federal spending was advanced by the House Rules Committee on Tuesday

Market remains apprehensive about the upcoming OPEC+ meeting (June 3-4) due to contrasting output policy views between Saudi Arabia and Russia

Drones strike Russian oil refineries amid escalating Russia-Ukraine tensions (WSJ)
The Afipsky refinery suffered significant damage, possibly drone-induced, while the Ilyinsky refinery sustained minimal damage
Drone strikes on Russian military and infrastructural targets have surged recently, attributed to Ukraine by Moscow, potentially paving the way for a wider Ukrainian counterattack
Ukraine and allies plan an international summit, barring Russia, to consolidate support for Kyiv's peace terms, scheduled before NATO's July 11 annual meet

Natural Gas

Natural gas prices are trading higher, reversing some of yesterday’s losses
The Winter ‘23/’24 strip is higher by 4c to $3.46, and the Summer ’24 strip is up 2c to $3.27

Weather forecasts shifted warmer by 8.8 °F in the Northeast and 5.9 °F in the Midwest over the 6-15 day period

Enterprise completes Haynesville pipeline expansion (BBG)
Enterprise Products has expanded the capacity of the Acadian Haynesville extension from 0.4 Bcf/d to 2.5 Bcf/d by adding additional compression
Additional takeaway capacity is needed to meet increasing industrial demand in the Mississippi River corridor and LNG export growth

New nuclear plant in Georgia reaches full capacity
According to Georgia Power, the Vogtle Unit 3 nuclear reactor has reached its peak capacity of 1,100 MW
The Vogtle plant will serve the growing demand for electricity in the US Southeast and displace some natural gas generation by providing baseload power
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - May 31

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Jul 23) was down $-1.37 on the day, to settle at $68.09
> Prompt-Month Henry Hub (Jul 23) was down $-0.061 on the day, to settle at $2.266

Let's hope the House approves the debt limit deal, so we can focus on the FEAR of recession.

What OPEC+ does this weekend will be interesting.
Dan Steffens
Energy Prospectus Group
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