Oil & Gas Prices - May 27

[dan_s]

Opening Prices:
> WTI is down 47c to $65.74/Bbl, and Brent is down 52c to $68.35/Bbl.
> Natural gas is down 2.8c to $2.999/MMBtu.

AEGIS Notes
Crude Oil

OPEC+ is expected to reaffirm plans to boost oil production when they meet next week
Twenty of 24 analysts and traders surveyed by Bloomberg predict that OPEC+ will confirm and agree on an increase of 840 MBbl/d scheduled for July, completing a three-part process to increase output by 2 MMBbl/d
Bloomberg reported several of the OPEC+ delegates who asked not to be identified said the same
In a May 26 report, Citigroup said OPEC+ might rethink their planned rise in supply for July amid the Iran nuclear talks

Oil prices regained early morning losses on Wednesday after the EIA reported a crude and product draw for the week ended May 21
The EIA reported a 1.66 MMBbl withdrawal in US crude inventories, a similar amount to the previous day’s API estimate
Stocks at Cushing fell 1.0 MMBbl < A year ago there was FEAR that the tanks at Cushing would overflow, now they are on steady decline and U.S. crude oil in storage is below the 5-year average as we head into the peak demand period for transportation fuels. What a difference a year makes!
US gasoline stocks dipped by 1.7 MBbl to 232.5 MMBbl – close to the lowest level in the past five years for the same week
Refinery utilization rose 0.7% to 87% nationally
Utilization is underperforming versus previous years, excluding 2020. A more normal utilization percent for the same week is closer to 92% or 1.5 MMBbl/d higher inputs < As I have been telling you in my weekly podcasts, refiners MUST RAMP UP GASOLINE PRODUCTION because days of supply are too low and we could see regional shortages if a hurricane takes refining capacity offline this summer.

Natural Gas

The EIA is expected to report a 107-Bcf injection for the week ending May 21, which would be more than the 105-Bcf build in the corresponding week of last year. Analysts estimates ranged from a build of 94 Bcf to 112 Bcf
A build within this range would bring total stocks near 2.207 Tcf and the deficit to the five-year average near 71 Bcf
The current end-of-season storage number settled at 3.6 Tcf on ICE

Strong Asian LNG demand helps absorb cargo diversion from India amid COVID-19 resurgence (Platts)
LNG sellers have been able to divert cargoes and avoid force-majeure notices due to high LNG spot prices in Asia, with JKM trading at around $10.625/MMBtu
According to Platts, India has been importing around 3 Bcf/d of LNG in recent months, with 2.6 Bcf/d believed to be under contract. Cutting 0.5 Bcf/d of LNG imports may only amount to 15-Bcf

[dan_s]

Bloomberg: Lowest gasoline inventories in 30 years await U.S. motorists this June
Gasoline demand in the world’s largest economy is heading into one of its traditional peak seasons with some of the lowest stockpiles in almost three decades.
Read More: https://www.worldoil.com//news/2021/5/2 ... -this-june

[dan_s]

Closing Prices:
> WTI prompt month (JUL 21) was up $0.64 on the day, to settle at $66.85/Bbl.
> NG prompt month (JUL 21) was down $0.069 on the day, to settle at $2.958/MMBtu.

May is always a tough month for natural gas because it is the largest storage builds each year. Hang tough on the gassers because a HOT SUMMER and Hurricane Season will tighten up the U.S. gas market.

Keep in mind that all of my Q2 forecasts are based on average prices of $62/bbl for WTI and $2.80/mcf of natural gas. Q2 results are going to be very good.