Oil & Gas Prices - Feb 18

[dan_s]

Opening Prices:
> WTI is up 51c to $61.65/Bbl, and Brent is up 42c to $64.77/Bbl. < EIA weekly reports come out this morning because of holiday on Monday.
> Natural gas is down 3.8c to $3.181/MMBtu.

AEGIS Morning Notes:
Crude Oil

Texas freeze knocks out 4 MMBbl/d (40%) of the nation’s crude production
Initially, production was only expected to be offline for a few days. As the situation has worsened, analysts now are saying that it could take a few weeks for a full resumption
Nearly 16 MMBbls will be lost through early March, according to Citigroup. Other estimates say the total could be as high as 32 MMBbls

Iraq’s crude oil exports jumped during the first half of February, despite the pledge to cut output further
Industry officials are still claiming they will adhere to the self-imposed quota of 3.6 MMBbl/d, though the current pace of exports suggests otherwise
AEGIS notes Iraq is one of the cartel’s member countries that frequently falls short of complying with the group’s quotas. While this may not immediately impact price, it gives OPEC, and in particular Saudi Arabia, more reason to increase production during the groups next meeting < I believe that Iran is exporting oil through Iraq. Iran controls Iraq.

EIA weekly data is due at 9:30 am CST. Here are the estimates:
U.S. Crude Inventories: – 2,425 MBbls (Avg. Bloomberg surveys)
U.S. Gasoline Inventories: + 1,323 MBbls
U.S. Distillate Inventories: – 1,768 MBbls
U.S. Refinery Utilization: – 0.29% change

Natural Gas

Texas Governor Greg Abbott ordered gas companies to restrict out-of-state sales amid shortages (Bloomberg)
The order, which is being reviewed by state regulators, interferes with Constitution’s commerce clause, where states are prohibited from interfering in interstate trade
Abbott used a disaster declaration he issued on Feb. 12 to clamp down on cross-state border sales
Republican lawyer Jared Woodfill said Abbotts banning of out-of-state sales was “an abuse of the Texas Disaster Act”

The historic amount of well freeze-offs in Texas and the Midcontinent continued on Wednesday, sending Henry Hub prices higher with reduced gas production in the Permian, Haynesville, and the Eagle Ford
U.S. natural gas production hit an estimated 72.1 Bcf/d – a 20%, or nearly 18 Bcf/d drop in output over the past week, according to Platts data

Single-digit temperatures in Midland, Texas, helped send West Texas gas production to 6.9 Bcf/d, down about 42% over the past week
Haynesville production has fallen by over 4 Bcf/d to around 8.2 Bcf/d since the weekend according to Platts

[dan_s]

Closing Prices:
> WTI prompt month (MAR 21) was down $0.62 on the day, to settle at $60.52/Bbl.
> NG prompt month (MAR 21) was down $0.137 on the day, to settle at $3.082/MMBtu.

As month end approaches the "paper traders" must close out their long positions. Lot of profit taking and rolling positions forward this week.

From EIA's detailed report
Days of Supply
31.8 for Crude Oil
32.5 for Gasoline
38.8 for Distillates
36.6 for Jet Fuel
28.8 for Propane < Dangerously low in some regions that depend on propane for space heating.

EIA also shows a decline in U.S. oil production of 200,000 BOPD during the week ending Feb 12 (before the super cold weather hit Texas).