Oil & Gas Prices - Mar 10
Posted: Wed Mar 10, 2021 9:17 am
Opening Prices:
> WTI is up 73c to $64.74/Bbl, and Brent is up 65c to $68.17/Bbl.
> Natural gas is down 3.5c to $2.627/MMBtu.
Happy No More Masks Requirement Day!
AEGIS Morning Notes
Crude Oil
Overnight trading for WTI was choppy with over a dollar in range in pre-market action
The American Petroleum Institute (API) reported on Tuesday a 12.8 MMBbl rise in crude inventories for the week ended March 5 < This is still being cause by the weather in February that shut down a lot of U.S. refining capacity. Some of it is still not back on-line. I expect EIA to report big declines in refined product inventories this morning.
More closely followed U.S. government data is due out later this morning
The continuation of OPEC+ cuts have hit the oil waterborne shipping business in the pocketbook
As producers enjoy higher oil prices due to the global restriction of supply some shippers are experiencing losses for supertanker rates on a benchmark Middle East-to-China route as rates deepened to -$6,779 a day on Tuesday (Bloomberg)
That is the biggest loss in at least the past three years and effectively means vessel owners would be subsidizing the transport of oil on that route
For reference, the same route in September made a positive $25k/day and about $15k/day in January
The EIA increased its U.S. crude production estimates for 2021 and 2022 because of expected higher crude prices
Domestic oil production will average 11.15 MMBbl/d this year, up by more than 1% from the previous forecast of 11.02 MMBbl/d, according to the agency’s Short-Term Energy Outlook (STEO)
Crude production in 2022 will average about 12.02 MMBbl/d, up about 4% from the prior month’s STEO
The agency estimates that WTI will average $57.24/Bbl this year and $54.75 in 2022, up from 14% and 6% respectively
Natural Gas
Natural gas is down 3.5c to $2.627/MMBtu
Prompt-month natural gas has declined over 0.40/MMBtu over the last month or so
The summer ’21 strip has declined from a high of $3.08 to $2.74, while the winter 2021-2022 strip declined from a high of $3.22 to $2.95 over the same time period
Part of the reason for this decline is due to the weather moderating after the deep freeze that hit the central U.S. several weeks ago
EIA expects gas and power consumption to rise in it’s March Short-Term Energy Outlook (STEO)
The agency projects gas production will rise to 91.4 Bcf/d in 2021, which is 0.9 Bcf/d more than the February STEO forecast and 92.83 Bcf/d in 2022, up from 91.34 Bcf/d in 2020 and below the 2019 all-time high of 93.06 Bcf/d
The agency also raised its forecast for U.S. electricity consumption for the year by 2.1%, driven by colder temperatures in the first quarter compared with the 2020 season
Gas consumption was also projected to fall to 82.5 Bcf/d in 2021 and 81.6 Bcf/d in 2022 from 83.25 Bcf/d in 2020. The agency cites gas prices rising compared to the previous year as the reason for the decline < This does not include exports, which are currently close to 15 Bcf per day.
Per EIA: Henry Hub spot prices will average $3.14/MMBtu in 2021, up from the $2.03/MMBtu in 2020, and $3.16/MMBtu in 2022
> WTI is up 73c to $64.74/Bbl, and Brent is up 65c to $68.17/Bbl.
> Natural gas is down 3.5c to $2.627/MMBtu.
Happy No More Masks Requirement Day!
AEGIS Morning Notes
Crude Oil
Overnight trading for WTI was choppy with over a dollar in range in pre-market action
The American Petroleum Institute (API) reported on Tuesday a 12.8 MMBbl rise in crude inventories for the week ended March 5 < This is still being cause by the weather in February that shut down a lot of U.S. refining capacity. Some of it is still not back on-line. I expect EIA to report big declines in refined product inventories this morning.
More closely followed U.S. government data is due out later this morning
The continuation of OPEC+ cuts have hit the oil waterborne shipping business in the pocketbook
As producers enjoy higher oil prices due to the global restriction of supply some shippers are experiencing losses for supertanker rates on a benchmark Middle East-to-China route as rates deepened to -$6,779 a day on Tuesday (Bloomberg)
That is the biggest loss in at least the past three years and effectively means vessel owners would be subsidizing the transport of oil on that route
For reference, the same route in September made a positive $25k/day and about $15k/day in January
The EIA increased its U.S. crude production estimates for 2021 and 2022 because of expected higher crude prices
Domestic oil production will average 11.15 MMBbl/d this year, up by more than 1% from the previous forecast of 11.02 MMBbl/d, according to the agency’s Short-Term Energy Outlook (STEO)
Crude production in 2022 will average about 12.02 MMBbl/d, up about 4% from the prior month’s STEO
The agency estimates that WTI will average $57.24/Bbl this year and $54.75 in 2022, up from 14% and 6% respectively
Natural Gas
Natural gas is down 3.5c to $2.627/MMBtu
Prompt-month natural gas has declined over 0.40/MMBtu over the last month or so
The summer ’21 strip has declined from a high of $3.08 to $2.74, while the winter 2021-2022 strip declined from a high of $3.22 to $2.95 over the same time period
Part of the reason for this decline is due to the weather moderating after the deep freeze that hit the central U.S. several weeks ago
EIA expects gas and power consumption to rise in it’s March Short-Term Energy Outlook (STEO)
The agency projects gas production will rise to 91.4 Bcf/d in 2021, which is 0.9 Bcf/d more than the February STEO forecast and 92.83 Bcf/d in 2022, up from 91.34 Bcf/d in 2020 and below the 2019 all-time high of 93.06 Bcf/d
The agency also raised its forecast for U.S. electricity consumption for the year by 2.1%, driven by colder temperatures in the first quarter compared with the 2020 season
Gas consumption was also projected to fall to 82.5 Bcf/d in 2021 and 81.6 Bcf/d in 2022 from 83.25 Bcf/d in 2020. The agency cites gas prices rising compared to the previous year as the reason for the decline < This does not include exports, which are currently close to 15 Bcf per day.
Per EIA: Henry Hub spot prices will average $3.14/MMBtu in 2021, up from the $2.03/MMBtu in 2020, and $3.16/MMBtu in 2022