Oil & Gas Prices - March 8

[dan_s]

Opening Prices
> WTI is down 4c to $66.05/Bbl, and Brent is down 11c to $69.25/Bbl.
> Natural gas is down 5.9c to $2.642/MMBtu.

AEGIS Morning Notes
Crude Oil

Tensions rise after Houthi missiles hit important Saudi Arabian oil infrastructure (AEGIS OPEC Watch)
Explosions rocked the city of Dhahran, Saudi Arabia, where Aramco is headquartered, according to witnesses. The Saudi Energy Ministry said key oil infrastructure at Ras Tanura was hit during the attack, but that its facilities and oil output was unaffected. Loadings in the Ras Tanura area were continuing on Monday, according to the Ministry
On Sunday, March 7, Saudi Arabia was attacked by missiles and drones that briefly sent oil prices higher
The attacks were claimed by Iran-backed Houthi rebels, according to Bloomberg. The initial scare and possible threat to supply resulted in Brent crude reaching $71.37/Bbl and WTI touching nearly $68

Iran slips record amount of oil into China as U.S.-President Joe Biden has sought to revive talks with Iran < The are testing "Old Joe"
Indian state refiners have added Iranian fuel to their annual import plans under the assumption that sanction by the U.S. will be eased
Geneva-based tanker tracker Petro-Logistics said Iranian oil loadings in January exceeded 600,000 MBbl/d for the first time since May 2019, per Reuters

Possible regulations stymie Permian production growth – Dallas Fed
In January, federal agencies placed a temporary halt on new leasing and permitting on federal and Indian lands, which according to the Dallas Fed, has the potential to remove up to 490 MBbl/d of output growth in the basin
In New Mexico, half of the Permian production was from wells on federal lands, while most Texas Permian production is on private lands

Natural Gas

The prompt-month gas contract has fallen by 28c since February 22, to trade near $2.64
The quick return of gas production coupled with the return to normal demand conditions has pressured gas prices. U.S. dry gas production has recovered from a low of 75.1 Bcf/d (2/16) to 92.5 Bcf/d (03/08), while total demand fell from a high of 146 Bcf/d to 96.5 Bcf/d (Platts)
Last week’s weak draw corroborated the weaker-than-expected fundamentals present in the freeze’s wake. Still, it exposed market tightness, and the U.S. is expected to finish the injection storage season somewhere around 1.5 Tcf < MY WAG is that natural gas in storage on April 30 will be at least 400 BCF below the 5-year average. Mid-March weather will get colder than normal and high LNG exports will cause draws from storage well into April.

LNG exports fully recovered after disruptions from freeze-offs in February
Cargo exports topped 11 Bcf on Friday, nearing record levels after falling to 1 Bcf in mid-February after being disrupted by the Artic storm that thrashed Texas
LNG exports have “fully recovered from freeze-off disruptions in February and remain priced to operate near capacity throughout 2021 and beyond” according to Goldman Sachs

[dan_s]

Closing Prices:
> WTI prompt month (APR 21) was down $1.04 on the day, to settle at $65.05/Bbl
> NG prompt month (APR 21) was down $0.037 on the day, to settle at $2.664/MMBtu. < Weather for the week ending March 19 should give us one more triple digit draw from storage before the draws tapper off into spring.