The American Petroleum Institute (API) said on Tuesday that crude stocks fell by 4 million barrels last week, versus analysts' expectations in a Reuters poll for a draw of 2.9 million barrels. It also showed falls in gasoline and distillate stocks. EIA's weekly petroleum report comes out at 9:30 AM CT with details in the afternoon.
Opening Prices:
> WTI is up 91c to $42.52/Bbl, and Brent is up 85c to $45.35/Bbl.
> Natural gas is down 3.2c to $2.139/MMBtu.
Oil & Gas Prices - August 12
Oil & Gas Prices - August 12
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - August 12
Closing Prices:
> WTI prompt month (SEP 20) was up $1.06 on the day, to settle at $42.67/Bbl.
> NG prompt month (SEP 20) was down $0.019 on the day, to settle at $2.152/MMBtu.
Bullish storage reports by API last night and then confirmed by EIA this morning started the oil price rally. EIA also ESTIMATED that U.S. oil production declined by 300,000 barrels per day from week to week. In reality it probably didn't drop that much in one week, but EIA is now aware that they grossly over-estimated U.S. oil production in May (by 1.5 million barrels per day), so they are adjusting their "equations". All of the companies that I follow have restored most of their April & May shut-ins during June and July, but some shut-ins will never come back. Starting in August we are just beginning to see the steady decline as a result of a record low number of drilling rigs and completion crews. There will not be a significant increase in drilling or completions this year no matter what oil & gas prices do. Capex budgets are now set in stone until 2021. There might be a few more DUC wells completed in November & December just to get then in the year end reserve reports. U.S. oil production ends the year under 9 million BOPD and might go down to 8 million.
For gas we will remain in the refill season until mid-November, then the fun really begins.
I updated my forecast/valuation models for LPI, MGY and REI today. They are all going to survive and be in good shape heading into 2021. LPI really looks grossly undervalued to me. For a company with over 94,000 Boepd in Q2, it sure doesn't have many analysts following it. MGY paid the price for not having a hedging program, but it has a strong balance sheet and plenty of liquidity. REI won't drill another new well this year, but the stock price should get a nice bounce when they close their Delaware sale by mid-October (it may close earlier because the Buyer is close to getting their funding lined up). Some analysts were worried that it wouldn't close, but the Buyer has given Ring a $4.5 million NON-REFUNDABLE payment so it will close soon. If not, others are interested. Ring is using free cash flow to pay down debt.
> WTI prompt month (SEP 20) was up $1.06 on the day, to settle at $42.67/Bbl.
> NG prompt month (SEP 20) was down $0.019 on the day, to settle at $2.152/MMBtu.
Bullish storage reports by API last night and then confirmed by EIA this morning started the oil price rally. EIA also ESTIMATED that U.S. oil production declined by 300,000 barrels per day from week to week. In reality it probably didn't drop that much in one week, but EIA is now aware that they grossly over-estimated U.S. oil production in May (by 1.5 million barrels per day), so they are adjusting their "equations". All of the companies that I follow have restored most of their April & May shut-ins during June and July, but some shut-ins will never come back. Starting in August we are just beginning to see the steady decline as a result of a record low number of drilling rigs and completion crews. There will not be a significant increase in drilling or completions this year no matter what oil & gas prices do. Capex budgets are now set in stone until 2021. There might be a few more DUC wells completed in November & December just to get then in the year end reserve reports. U.S. oil production ends the year under 9 million BOPD and might go down to 8 million.
For gas we will remain in the refill season until mid-November, then the fun really begins.
I updated my forecast/valuation models for LPI, MGY and REI today. They are all going to survive and be in good shape heading into 2021. LPI really looks grossly undervalued to me. For a company with over 94,000 Boepd in Q2, it sure doesn't have many analysts following it. MGY paid the price for not having a hedging program, but it has a strong balance sheet and plenty of liquidity. REI won't drill another new well this year, but the stock price should get a nice bounce when they close their Delaware sale by mid-October (it may close earlier because the Buyer is close to getting their funding lined up). Some analysts were worried that it wouldn't close, but the Buyer has given Ring a $4.5 million NON-REFUNDABLE payment so it will close soon. If not, others are interested. Ring is using free cash flow to pay down debt.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group