Oil & Gas Prices - May 21
Posted: Thu May 21, 2020 7:49 am
Opening Prices:
> WTI is up 88c to $34.37/Bbl, and Brent is up 91c to $36.66/Bbl.
> Natural gas is down 3.8c to $1.733/MMBtu.
Closing Prices:
> WTI prompt month (JUL 20) was up $0.43 on the day, to settle at $33.92/Bbl.
> NG prompt month (JUN 20) was down $0.061 on the day, to settle at $1.710/MMBtu.
Raymond James:
"Slowly and not very steadily, oil prices have been working their way from the epic trough set in mid-April. There are three key drivers for this bounce.
> First, the unprecedentedly large OPEC+Russia deal officially took effect May 1. Recent compliance has been stronger than expected, though we predict cuts will ultimately be less ambitious than what has been pledged.
> Second, price-related production shut-ins in the U.S. and elsewhere have also become much more needle-moving.
> Third, and most importantly, the COVID-related disruptions in transportation and economic activity have begun to subside. Having been tracking economic reopening policies in 80 countries, here is the key datapoint: of the 3.9 billion people who have been under a lockdown at some point since January, 3.7 billion (95%) already have some reopening, even if the vast majority is only partial (by sector or by region). This point is confirmed by traffic congestion data, as well as commentary by refiners. While it would not be realistic for demand to get back to pre-COVID levels until 2022, we think that the impact peaked in April, and it should continue to subside through the rest of 2Q and into the second half of the year.
With growing evidence that the worst of the demand shock is in the rearview, and also bearing in mind the nuances around contract expirations, the 12-month futures strip has improved substantially ($33.90/Bbl for WTI and $37.08/Bbl for Brent) but has moved from contango to a nearly flat profile."
> WTI is up 88c to $34.37/Bbl, and Brent is up 91c to $36.66/Bbl.
> Natural gas is down 3.8c to $1.733/MMBtu.
Closing Prices:
> WTI prompt month (JUL 20) was up $0.43 on the day, to settle at $33.92/Bbl.
> NG prompt month (JUN 20) was down $0.061 on the day, to settle at $1.710/MMBtu.
Raymond James:
"Slowly and not very steadily, oil prices have been working their way from the epic trough set in mid-April. There are three key drivers for this bounce.
> First, the unprecedentedly large OPEC+Russia deal officially took effect May 1. Recent compliance has been stronger than expected, though we predict cuts will ultimately be less ambitious than what has been pledged.
> Second, price-related production shut-ins in the U.S. and elsewhere have also become much more needle-moving.
> Third, and most importantly, the COVID-related disruptions in transportation and economic activity have begun to subside. Having been tracking economic reopening policies in 80 countries, here is the key datapoint: of the 3.9 billion people who have been under a lockdown at some point since January, 3.7 billion (95%) already have some reopening, even if the vast majority is only partial (by sector or by region). This point is confirmed by traffic congestion data, as well as commentary by refiners. While it would not be realistic for demand to get back to pre-COVID levels until 2022, we think that the impact peaked in April, and it should continue to subside through the rest of 2Q and into the second half of the year.
With growing evidence that the worst of the demand shock is in the rearview, and also bearing in mind the nuances around contract expirations, the 12-month futures strip has improved substantially ($33.90/Bbl for WTI and $37.08/Bbl for Brent) but has moved from contango to a nearly flat profile."