Energy Prospectus

Opening Prices:
> WTI is down 95c to $60.61/Bbl, and Brent is down 87c to $64.11/Bbl.
> Natural gas is up 0.3c to $2.656/MMBtu.

AEGIS Notes
Crude Oil

OPEC expects the global crude oil stocks surplus to be mostly depleted in the next three month -Bloomberg
The group expects oil inventories will stand 3 MMBbl/d above their five-year average by the end of June < Global demand is approaching 100 MMBbl/d.
According to OPEC’s calculations, stockpiles will be 35 MMBbl/d below the five-year average by July
Those estimates assume the OPEC+ alliance increases production by 1.4 MMBbl/d in May.
Still, the group is widely expected to maintain its output limits for another month

Traffic resumed through the Suez Canal on Monday, March 29, after the Ever Given vessel was successfully refloated
It may take four days for traffic to return to normal, according to Suez Canal authority officials
Around 90 tankers carrying oil, LNG, LPG, and other fuels are still stuck or delayed, according to Vortexa
AEGIS notes oil prices have retreated this morning as traffic has resumed. The closure was the longest since 1967

Iran exports to China reached a new high in March (Reuters) < Iran has no fear of Biden.
Nearly 1 MMBbl/d of Iranian crude could arrive in China this month, in contrast with previous monthly import rates of 490 MBbl/d in February and a record 797 MBbl/d in January
AEGIS notes the increase comes at a peculiar time when demand worries are mounting, and OPEC members are vying for output increases.
OPEC+ will meet to discuss its policy moving forward, and Iran will likely be a topic of discussion

Natural Gas

The Driftwood Pipeline expansion offers Haynesville enhanced destination access (Platts)
The company announced on March 29 the start of a binding open season for its proposed Line 200 and Line 300 expansion projects
The expansion is planned to connect with 12 existing interstate and intrastate pipelines
Phase 1 of the project would originate at a proposed interconnect with TETCO near Ragley, Louisiana, moving gas 37 miles southwest to a termination point at Carlyss, Louisiana.
The 42-inch pipe would transport up to 2.4 Bcf/d with service expected to begin September 2024

U.S lawmakers from North Dakota are urging FERC to authorize WBI Energy Transmission’s North Bakken Expansion project by the regulator’s next monthly meeting
The senators are contending the 60-mile, 250 MMcf/d project has the potential to cut methane emissions
If the project is approved, it will provide incremental firm capacity from six gas processing plants to a proposed interconnect with Northern Border Pipeline Company (S&P Global)
According to the North Dakota Industrial Commission, Bakken flaring averaged 170 MMcf/d from November 2020 through January 2021

OPEC+ meeting this week: MY TAKE is that they will extend their cuts thru May with just a small increase in the amount Russia can export. Demand does exceed oil supply today and OECD crude oil inventories are falling; should be down to 30 days of consumption by June.
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Saudi Arabia Ready To Extend Huge Oil Cuts Into June
By Irina Slav - Mar 30, 2021, 9:00 AM CDT

Saudi Arabia is reportedly ready to extend current OEPC+ production cuts over May and June and also keep cutting 1 million bpd in oil output unilaterally, according to an unnamed source who spoke to Reuters.

OPEC+ hasn't significantly eased oil production since January when the collective output was increased by 500,000 bpd from 7.2 million bpd in December to 7.7 million bpd. Considering the still weak global demand, OPEC+ decided in January to give Russia and Kazakhstan small increases for February and March, keeping overall production little changed.

Since then, the cartel has remained cautious with any production changes as exempt OPEC members Libya and Iran kept increasing their production rates while the pandemic situation in some key markets remained more dynamic than oil producers would have liked.

With some European countries tightening movement restrictions further amid yet another spike in infections and the United States also reporting higher new infection rates despite accelerating vaccinations, uncertainty about when oil demand will rebound has heightened. This is likely the primary factor determining Saudi Arabia's reported willingness to keep cutting at the present rate.

"They don't see demand as yet strong enough and want to prevent prices from falling," the Reuters source told the news agency.

Yesterday, Reuters cited another unnamed source as saying that Russia, too, was willing to back a further extension of the current cuts, but it also wanted to secure approval for a moderate increase in its own production to respond to higher seasonal demand at home.

The OPEC+ joint ministerial committee is meeting tomorrow to discuss production levels and the market situation ahead of the oil ministers' meeting on Friday. Even if the cartel ends up rolling over current cuts, prices may not be affected too much. According to some, traders have already priced in the roll-over.

By Irina Slav for Oilprice.com

Closing Prices:
> WTI prompt month (MAY 21) was down $1.01 on the day, to settle at $60.55/Bbl.
> NG prompt month (MAY 21) was down $0.030 on the day, to settle at $2.623/MMBtu.

Tomorrow's EIA petroleum report (refinery utilization, production, import, exports, storage, etc) will be the prime driver of oil prices.