From OilPrice.com: News impacting oil and gas prices this morning.
There have been four strikes in three days in the Red Sea as a result of the Houthi's renewed maritime offensive, with Rubymar potentially becoming the first tanker to sink in the Bab-el-Mandeb strait since the most recent disruptions started.
Combined with China’s record cut to its prime mortgage rate, a signal that Beijing is taking stimulus seriously, Brent’s current pricing range around $83 per barrel might test the mid-80s soon.
Houthis Sink UK-Linked Bulker. Escalating the Red Sea maritime warfare further, Houthi militias attacked a British-registered cargo vessel Rubymar carrying fertilizer in the Bab-el-Mandeb strait, prompting the crew to abandon the ship as it was at risk of sinking.
Saudi Aramco to Issue 2024 Bonds. Saudi Arabia’s national oil company Saudi Aramco (TADAWUL:2222) will most probably issue a bond this year, said the company’s CFO Ziad al-Murshed, with the bond duration expected to be 15 to 50 years.
Gas Price Slump Frightens Investors. As US natural gas prices declined to the lowest level in real terms since Henry Hub started trading in 1990, currently around $1.55 per mmBtu, hedge funds have been selling their gas exposure for four weeks, leading to a net short of 1,276 Bcf.
News impacting oil and gas prices - Feb 20
News impacting oil and gas prices - Feb 20
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: News impacting oil and gas prices - Feb 20
Notes below are from HFI Research.
For most of 2024, we have been saying that oil prices were too low relative to where fundamentals were. WTI should have been trading near $80/bbl as opposed to $71/$72 just a few weeks ago. But following the recent rally, we see the latest oil rally pausing for a bit. There are a few key reasons as to why:
Speculator positioning is starting to unwind from ultra bearish to slightly bearish.
Global crude balances are set to build in the incoming global refinery maintenance season.
Refining margins have not rallied in tandem with the latest crude rally. This signals that the market can't handle higher prices (at the expense of refining margins).
OPEC+ crude exports have not declined meaningfully. You can interpret this either way. For the bulls, the market is tight despite OPEC+ not cutting. For the bears, the cut is a mirage.
For us, the key for the first half of 2024 is dependent on demand. We know that global oil supplies will be lower than in Q4 2023, but if demand isn't as strong as we expect, then global oil balances will build.
Now keep in mind that in Q4 2023, we saw global oil inventory draws of ~400k b/d (according to the IEA). Coming into Q1 2024, global oil demand is normally at its seasonal low, so the drop in demand will have to be compensated via a decrease in supplies. This is why we are fixated on what global refining margins are doing. For us, this is the easiest way to gauge how demand is doing, so anytime we see refining margins pullback, we become a bit wary.
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MY TAKE: Demand for oil-based products, especially transportation fuels, is seasonal. Demand will start picking up after mid-March (spring break) and spike up in June. WTI looks like it will average more than my forecast of $75 for Q1 and I now have a high level of confidence that it will top my forecast of $80 in Q2.
For most of 2024, we have been saying that oil prices were too low relative to where fundamentals were. WTI should have been trading near $80/bbl as opposed to $71/$72 just a few weeks ago. But following the recent rally, we see the latest oil rally pausing for a bit. There are a few key reasons as to why:
Speculator positioning is starting to unwind from ultra bearish to slightly bearish.
Global crude balances are set to build in the incoming global refinery maintenance season.
Refining margins have not rallied in tandem with the latest crude rally. This signals that the market can't handle higher prices (at the expense of refining margins).
OPEC+ crude exports have not declined meaningfully. You can interpret this either way. For the bulls, the market is tight despite OPEC+ not cutting. For the bears, the cut is a mirage.
For us, the key for the first half of 2024 is dependent on demand. We know that global oil supplies will be lower than in Q4 2023, but if demand isn't as strong as we expect, then global oil balances will build.
Now keep in mind that in Q4 2023, we saw global oil inventory draws of ~400k b/d (according to the IEA). Coming into Q1 2024, global oil demand is normally at its seasonal low, so the drop in demand will have to be compensated via a decrease in supplies. This is why we are fixated on what global refining margins are doing. For us, this is the easiest way to gauge how demand is doing, so anytime we see refining margins pullback, we become a bit wary.
------------------------
MY TAKE: Demand for oil-based products, especially transportation fuels, is seasonal. Demand will start picking up after mid-March (spring break) and spike up in June. WTI looks like it will average more than my forecast of $75 for Q1 and I now have a high level of confidence that it will top my forecast of $80 in Q2.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group