Oil & Gas Prices - May 8

[dan_s]

Trading Economics
Crude Oil
Oil prices rebounded on Wednesday, with WTI crude futures climbing back above $78 per barrel after dropping below $77 earlier in the day as EIA data showed a draw in US crude oil stocks. Government data showed crude oil inventories in the US fell by 1.361 million barrels last week, less than market expectations of a 1.43 million barrel decline and compared with API data on Tuesday showing a 509-thousand barrel rise. Furthermore, inventories at the Cushing, Oklahoma delivery hub saw a rise, along with unexpected increases in gasoline and distillate fuel inventories. The oil market has faced downward pressure recently, experiencing approximately an 8% decrease over the last month due to hopes for a ceasefire in Gaza. Additionally, there are cautious expectations regarding potential supply cuts from OPEC+ as they head into a policy meeting scheduled for June 1.
MY TAKE: Chance of sustainable peace in the Middle East is slim and none. High probability that OPEC+ will extend supply cuts to year-end.

Natural Gas
US natural gas futures rose to $2.2/MMBtu, the highest level in nearly four months, driven by a decrease in production and an increase in feedgas to LNG export facilities. Gas flows to major LNG export plants have increased from April to May, with the return of the Freeport plant in Texas contributing to the rise. Gas flow to Freeport was steady at a two-month high of 1.4 bcfd for the third consecutive day on Tuesday, a notable increase from April's average of 0.4 bcfd. Furthermore, US gas production has dropped by 11% in 2024, as a result of energy companies such as EQT and Chesapeake Energy cutting back on drilling activities and delaying well completions following a drop in prices earlier in the year. Looking ahead, meteorologists anticipate above-average temperatures across the US from May 15-22, following a period of mostly normal conditions through May 14.
MY TAKE: Market forces are at work to rebalance the U.S. ngas market, but still a lot of work to do. We need a Hot Summer and three more large LNG export facilities online to push HH gas over $3.00. Beyond 2024 the outlook for U.S. natural gas prices is bullish.

[Fraser921]

>Chance of sustainable peace in the Middle East is slim and none

And Slim lives in Texas!