Oil & Gas Prices - April 23

[dan_s]

Opening Prices:
> WTI is up 3c to $61.46/Bbl, and Brent is down 9c to $65.31/Bbl.
> Natural gas is down 0.7c to $2.742/MMBtu.

All of my forecast valuation models are based on $60/Bbl WTI and $2.75/mcf HH gas, adjusted for regional differentials and each company's hedges.

AEGIS Notes
Crude Oil

Oil demand buckles in India as COVID surge wreaks havoc on fuels consumption (Bloomberg)
Combined consumption of diesel and gasoline in India is set to plunge by as much as 20% from March levels
FGE sees gasoline demand declining by 100 MBbl/d this month and 170 MBbl/d in May, while diesel is expected to see declines of 220 MBbl/d and 400 MBbl/d, respectively

OPEC+ is expected to hold a full ministerial meeting on April 28
OPEC is encouraging its members to engage with the U.S. administration over its NOPEC bill that threatens U.S. interests abroad
AEGIS notes that the demand outlook for 2Q2021 has weakened since the groups last meeting, as India has imposed lockdowns in certain regions, and an outright national lockdown may follow

Schlumberger sees “robust” oil growth over the next few years
Chief Executive Officer Olivier Le Peuch sees international revenue growing by double digits in 2H2021 and expects 80% of its revenue to come from overseas
The executive also said that he expects the international market to experience multiple years of growth

Natural Gas

Gas in underground storage added 38 Bcf, 8 Bcf lower than the average estimate, for the week ended April 16 (EIA, Bloomberg)
Natural gas prices quickly rallied 6c to about $2.76 immediately following the bullish government statistic on Thursday morning. The early morning strength was carried throughout the day as the May contract settled at $2.749/MMBtu
The 38 Bcf increase in inventories brought the total to 1.883 Tcf, 259 Bcf less than the year-ago level of 2.134 Tcf and 12 Bcf more than the five-year average of 1.871 Tcf < I am expecting the build for the week ending April 23 to be much less than the 5-year average of 64 Bcf; pushing storage below the 5-year average.

There is the potential for upside price risk for Socal Gas this coming winter due to summer maintenance (Platts)
SoCal Gas is scheduled to begin major maintenance work on its L-4000 line in the Northern Zone at the Needles Topock border receipt area
The maintenance will run through September 30 and reduce capacity in the Northern Zone by about 720 MMcf/d, or about 45%, from its usual operating capacity of 1.59 Bcf/d, according to Platts
The July-August-September gas prices at Socal have rallied more than 90c since late March. The peak winter season from December to February has only rallied 65c.
According to Platts, current Winter 2021-2022 strip pricing could be significantly undervalued, considering the potential of this summer’s maintenance on SoCal Gas storage
AEGIS notes that higher West Coast pricing could have knock-on effects for connected regions

[dan_s]

Reuters

Oil edged higher early on Friday, as Libyan production drops due to a
financial crisis, countering demand concerns as India suffers through record
new infections and deaths from a new wave of Covid-19.

Reuters reported Libyan production fell to about one-million barrel per day
from 1.3 million bpd as the country's central bank refuses to pay out money
for oil sales, with reports saying the country's government is seeking greater
political control of the National Oil Company.

The drop in Libyan output is offsetting worries over demand as India, the
world's No.2 oil importer, endures record new coronavirus infections and Japan
puts new lockdown measures in place.

"India yesterday reported a new record of 330,000 new coronavirus infections
in one day. The energy consultant firm FGE estimates that the coronavirus
outbreak in India will negatively impact fuel demand in India to the tune of a
good 300,000 barrels per day in April and around 550,000 barrels per day in
May," Commerzbank analyst Carsten Fritsch said in a release.

[dan_s]

Closing Prices:
> WTI prompt month (JUN 21) was up $0.71 on the day, to settle at $62.14/Bbl.
> In contrast, NG prompt month (MAY 21) was down $0.019 on the day, to settle at $2.730/MMBtu.

Trading Economics
"Oil futures regained ground on Friday, with WTI crude settling above the $62 a barrel level after upbeat economic data for the US, including PMIs and new homes sales, lifted hopes of a fast recovery in fuel demand. In Europe, flash PMIs also pointed to economic recovery, and some countries, including France, start to ease restrictions. Still, rising coronavirus infections in some parts of Asia capped gains. Pressuring prices further this week were EIA data showing a surprise US inventory build. As a result, the US benchmark finished the week almost 2% lower while Brent ended it down 1%."