Energy Prospectus

Opening Prices:
> WTI is up 60c to $60.30/Bbl, and Brent is up 67c to $63.95/Bbl.
> Natural gas is up 1.9c to $2.580/MMBtu.

AEGIS Notes
Oil

OPEC forecasts diminishing stockpiles, despite 2 MMBbl/d output hike expected in the next three months
The group raised its global demand forecast for 2021 by 190 MBbl/d to an average of 96.46 MMBbl/d. The group did lower its 2Q2021 forecast by 0.5 MMBbl/d, but an increase in 4Q2021 offset this change
The group will still be holding back nearly 5.8 MMBbl/d, or around 6% of global output, which it can bring back if demand warrants it

Oil in floating storage fell by over 14 MMBbls during the week ending April 4 – its most significant drop in nine months (IHS)
Floating storage levels are now at around 55.56 MMBbls, its lowest total in over a year
The largest floating crude oil storage volumes remain in Northeast Asia, where tankers are carrying an estimated 23.2 MMBbls or around 41.7% of the global total

Unconventional oil production in the US for May will increase 11.65 MBbl/d to 7.611 MMBbl/d, according to the US Energy Information Administration (EIA)
The Permian is expected to lead US production increases, climbing 52 MBbl/d to 4.466 MMBbl/d
“The 914 [monthly production figures, lagging by two months] in January were higher than expected, and the combination of that and better than expected Permian wells, led us to revise our forecast upwards for May.”, the EIA’s DPR analyst Jozef Lieskovsky said
Production in other basins is expected to decline

Natural Gas

The Nov21-Mar22 strip has seen some minor improvements over the last week, rising from a low of 2.850/MMBtu to 2.984/MMBtu
The Apr22-Oct22 strip has also improved during this time period, rising from 2.470/MMBtu to 2.535/MMBtu
AEGIS notes price action has been consistent with the implied supply & demand balance from last week’s storage report. The stat showed a tightening balance as the after-effects of Winter Storm Uri fade

The 10-day weather forecast shows about half of the U.S. still needs to turn on the furnace at night. After the EIA's ngas storage report for the week ending April 9, we should see the storage deficit to the 5-year average growing again. The 5-year average builds for the last two weeks of April are 64 BCF and 78 BCF.

Closing Prices;
> WTI prompt month (MAY 21) was up $0.48 on the day, to settle at $60.18/Bbl.
> NG prompt month (MAY 21) was up $0.058 on the day, to settle at $2.619/MMBtu.

Eventually, we will escape from "Pandemic World". When that day arrives, demand for oil based products will quickly exceed supply and inventories will fall. Now that U.S. refineries have fully recovered from the late February power outage we should see a steady decline in U.S. crude oil inventories. OECD inventories should move below 30 days of consumption this quarter.

The lockdowns in Europe are having a minor impact on demand because Europe "ain't what it used to be" as a global power.

From Trading Economics website:
"WTI crude futures traded slightly above $60 a barrel on Tuesday, after closing below that level in the last six sessions, as traders were upbeat following robust China data. Crude oil imports into China surged 21% in the month from a low base of comparison a year earlier as refiners ramped up operations. Renewed tensions in the Middle East also lifted sentiment, with the Houthi movement saying it fired missiles on Saudi oil sites. However, the near-term demand outlook remains clouded by rising coronavirus cases, particularly in Europe and Asia, and obstacles to the vaccination campaigns. Investors also look forward to news flow from talks over a US-Iran nuclear deal, expected to resume in Vienna Wednesday. Meanwhile, the latest API data showed crude inventories in the United States fell by 3.6 million barrels last week."