Oil & Gas Prices - May 28

[dan_s]

Opening Prices:
> WTI is up 60c to $67.45/Bbl, and Brent is up 42c to $69.88/Bbl.
> Natural gas is up 7.3c to $3.031/MMBtu.

AEGIS Notes
Crude Oil

Oil price moves higher as improving demand is outweighing concern that Iranian supplies will rise, should sanctions on exports be lifted
> WTI is currently trading at its strongest level since October 2018
> Price has been stuck and trading within a $10 band since March
> Brent’s 2nd-month volatility has dropped, falling to its lowest level since August as the market grinds higher

Gasoline prices in the US will be the highest in seven years this Memorial Day Weekend (Reuters)
> The nationwide average gas price is about $3.05/gal, the most expensive since 2014 (AAA)
> US gasoline demand has returned to March 2020 levels at about 9.48 MMBbl/d
> AEGIS notes that the recovery in fuel demand has been strong, but the return of jet fuel demand to pre-covid levels will take additional time

Natural Gas

Warm weather forecasts help Asian spot LNG prices this week
> Buyers are stocking up in anticipation of a warmer-than-usual summer that will spur demand for air-conditioning units and power
The average LNG price for July delivery into Northeast Asia LNG-AS was estimated at $10.30/MMBtu, up 70 cents from the previous week, according to Reuters
> LNG feed levels have been down by more than 1 Bcf/d from April’s record rate. Still, U.S. spot differentials have remained strong and support increased exports as the differential between JKM and Henry Hub is over $6 in the money

U.S. LNG developer Tellurian Inc said It signed a 10-year agreement with commodity trader Gunvor for 393 MMcf/d
> Despite record-high LNG rates, three North American projects stopped development in the past few months, as customers are hesitant to sign long-term offtake contracts needed to finance the projects
> In addition, the company delayed its FID on the Louisiana project until 2022

The EIA reported a 115-Bcf build for the week ending May 21; the injection was slightly more than the 105-Bcf build analysts expected
Total stocks now stand at 2.215 Tcf, which is 381 Bcf below the five-year average
The end-of-season storage number settle on ice was at 3.6 Tcf following the latest injection report < This is VERY BULLISH. Prior to the beginning of the previous winter (November 13, 2020) the U.S. had 3,958 Bcf in storage, which was 223 Bcf ABOVE the 5-year average and we end the winter heating season with gas in storage below the 5-year average. If storage is at 3,600 Bcf in mid-November, 2021 we may see $4.00 ngas prices in Q4.
> According to Platts, last week's injection is forecast to be the largest of the season and the only triple-digit build this year

[dan_s]

Closing Prices:
> WTI prompt month (JUL 21) was down $0.53 on the day, to settle at $66.32/Bbl.
> NG prompt month (JUL 21) was up $0.028 on the day, to settle at $2.986/MMBtu.

WTI gains $2.74 on the week to settle at $66.32; Henry Hub also gained 8c to finish at $2.986

The summer driving season starts Memorial Day weekend. A high percentage of families will be hitting road this summer. Make sure you have enough gasoline before you hit the road because GasBuddy says they expect to see over 1,000 filling stations run out of gasoline.

From Trading Economics: "WTI crude futures traded around $67 a barrel Friday morning, not far from a two-year high of $68 hit in March as solid economic data for the US boosted prospects of strong fuel demand and as investors shrugged off concerns over more crude supply from Iran. The US benchmark climbed almost 5% this week, putting it on track for a monthly gain, the fourth out of five this year, as prospects of growing demand in the US, Europe, and China more than offset concerns over rising coronavirus cases in Asia."