$78/bbl is a very important support level for WTI. If it can hold above that with all the noise out of Washington this week, it could set the stage for a move back to $82-$85 range. Just IMHO of course. Lots of FEAR in this market to contend with.
Don't look now but natural gas is up to $2.70/mmbtu.
Morning Natural Gas Market Report
Mon 25 Jun 2012 08:21:00 CT
Related Keywords: Energy Share on emailShare on printShare on facebookShare on twitterShare on linkedin August natural gas prices broke out to their best level since May 25th in overnight and early morning action. The market seemed to garner support from Tropical Storm Debby and the closure of nearly 25% of Gulf of Mexico oil and gas operations. The market might have also found support from the latest rig count data from Baker Hughes, which showed its gas-directed rig count falling to the lowest level since August 1999. The Commitments of Traders Futures and Options report as of June 19th showed non-commercial traders were net short 115,441 contracts, an increase of 8,199. Non-commercial and nonreportable traders combined held a net short position of 93,204 contracts, for an increase of 2,119 during the report week.
Oil & Gas Prices
Oil & Gas Prices
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices
I just got this from the Citi Energy Research Group:
Lowering Oil Price Projections – Reflecting Citi’s Commodities Strategy Group’s reduction in its oil price forecast earlier this month – see their June 1st note titled: Energy Watch Monthly - Crude Oil to bounce near-term but lowering forecasts for 2013 – we are lowering our 2012 WTI and Brent oil price forecasts to $94.50/Bbl and $113/Bbl from $106/Bbl and $125/Bbl, respectively. For 2013, our respective forecasts drop to $85/Bbl and $99/Bbl from $113/Bbl and $120/Bbl, while there is no change to our 2014+ outlook (see Figure 1).
No Change To Natural Gas Price Outlook – There is no change to our full-year 2012 and 2013+ natural gas price forecasts, with our forecast for this year still $2.40/MMBtu while our outlook for 2013 remains $3.85/MMBtu (see our March 21st note titled: Natural Gas Winter Wrap-Up; Price Outlook - Lowering ‘12 Gas Price To $2.40/MMBtu; ’13 To $3.85/MMBtu ).
Overall, Valuations Remain Attractive – Year to date, our market-weighted E&P composite index is down ~14% versus a ~6% increase in the S&P. While the E&P sector had essentially remained a higher beta reflection of the broader markets up until about two months ago, it has since sharply underperformed the S&P alongside the 20% and 14% declines in WTI and Brent crude oil prices, respectively, from peaks of ~$119/Bbl and ~$124/Bb, respectively, around the end of April, and amidst fears of further downside. But at the same time, natural gas prices have gained ~17% and gathered momentum over the past two months. At this juncture, and based on historic mid-cycle EV/DACF multiples and NAVs, we believe our E&P coverage group currently reflects normalized prices of ~$78/Bbl (WTI) and ~$2.80/MMBtu. Thus, the upside to prices targets based on longer-term normalized prices of $90/Bbl and $4.50/MMBtu is 40%, although we do admit the group, on average, is unlikely to increase without a rebound in the broader markets and a concurrent increase or stabilization in oil prices.
Top Picks – Our top picks on a pure value basis are APA and APC even accounting for issues surrounding Egypt and Tronox, respectively, CNQ and CXO among the more oil-leveraged names and COG, RRC and SWN among the more gas-leveraged names.
Lowering Oil Price Projections – Reflecting Citi’s Commodities Strategy Group’s reduction in its oil price forecast earlier this month – see their June 1st note titled: Energy Watch Monthly - Crude Oil to bounce near-term but lowering forecasts for 2013 – we are lowering our 2012 WTI and Brent oil price forecasts to $94.50/Bbl and $113/Bbl from $106/Bbl and $125/Bbl, respectively. For 2013, our respective forecasts drop to $85/Bbl and $99/Bbl from $113/Bbl and $120/Bbl, while there is no change to our 2014+ outlook (see Figure 1).
No Change To Natural Gas Price Outlook – There is no change to our full-year 2012 and 2013+ natural gas price forecasts, with our forecast for this year still $2.40/MMBtu while our outlook for 2013 remains $3.85/MMBtu (see our March 21st note titled: Natural Gas Winter Wrap-Up; Price Outlook - Lowering ‘12 Gas Price To $2.40/MMBtu; ’13 To $3.85/MMBtu ).
Overall, Valuations Remain Attractive – Year to date, our market-weighted E&P composite index is down ~14% versus a ~6% increase in the S&P. While the E&P sector had essentially remained a higher beta reflection of the broader markets up until about two months ago, it has since sharply underperformed the S&P alongside the 20% and 14% declines in WTI and Brent crude oil prices, respectively, from peaks of ~$119/Bbl and ~$124/Bb, respectively, around the end of April, and amidst fears of further downside. But at the same time, natural gas prices have gained ~17% and gathered momentum over the past two months. At this juncture, and based on historic mid-cycle EV/DACF multiples and NAVs, we believe our E&P coverage group currently reflects normalized prices of ~$78/Bbl (WTI) and ~$2.80/MMBtu. Thus, the upside to prices targets based on longer-term normalized prices of $90/Bbl and $4.50/MMBtu is 40%, although we do admit the group, on average, is unlikely to increase without a rebound in the broader markets and a concurrent increase or stabilization in oil prices.
Top Picks – Our top picks on a pure value basis are APA and APC even accounting for issues surrounding Egypt and Tronox, respectively, CNQ and CXO among the more oil-leveraged names and COG, RRC and SWN among the more gas-leveraged names.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices
The crude oil complex traded higher ahead of this morning's EIA inventory data as outside market sentiment improved and US economic data came in better than expected. August crude oil traded up to a new four day high, but pared those gains in response to this morning's EIA inventory report. Crude stocks fell by 133,000 barrels last week, which was different than expectations for a draw of around 750,000 barrels. Crude oil imports for the week stood at 9.118 million barrels per day compared to 9.445 million barrels the previous week. The refinery operating rate was up 0.7% to 92.6%. August RBOB prices traded sharply lower in response to EIA reports of a much larger than expected build of 2.078 million barrels. Average total gasoline demand for the past four weeks was down 4.84% compared to last year. Meanwhile, August natural gas prices broke out above their May high, helped in part by ExxonMobil CEO's comment that 10-year low natural gas prices were unsustainable.
I will be adding two "gassers" to the Sweet 16 on July 1st.
I will be adding two "gassers" to the Sweet 16 on July 1st.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group