Oil & Gas Prices - Feb 17

[dan_s]

Opening Prices:
> WTI is down $0.63 to $93.03/bbl, and Brent is down $0.74 to $94.07/bbl.
> Natural gas is down -2.4c to $4.693/MMBtu.

AEGIS Notes
Oil

Volatility in oil prices has been high as the market is tight and traders battle geopolitical news
> The world’s most important physical oil price, Dated Brent, traded above $100/Bbl for the first time since 2014 yesterday (Bloomberg)
> “The strength in Dated Brent clearly suggest refiners are out procuring short-haul barrels,” Energy Aspects analyst Amrita Sen wrote to clients this week
Sen went on to say, “The only way to balance this market over the medium term remains high oil prices to slow demand growth.”

In the U.S., oil inventories at Cushing, Oklahoma, where WTI is priced, sunk to their lowest since 2018
> Stocks at Cushing fell 1.9 MMBbl to 25.8 MMBbl < I have been told that if oil inventories fall much below 20 million barrels the nation's largest and most important hub may have difficulty keeping refineries supplied with crude oil. This is a "supply chain" that must run smoothly.
> Overall, U.S. crude inventories rose last week by 1.1 MMBbl to 411.5 MMBbl, according to the EIA

A positive statement from Iran yesterday knocked oil prices off their highs
> WTI fell from $94/Bbl to $90/Bbl just before market close yesterday around the time Iran’s Ali Bagheri Kani tweeted that restoring his country’s nuclear deal with world powers is “closer than ever,” < whatever that means.

Natural Gas

The prompt-month Henry Hub contract is nearly unchanged this morning and is trading near $4.693
> Wind-powered electricity generation is back near its record highs of 77-GWs, threatening gas’s share of the power stack
> The February gas-weighted heating degree day forecast lost 2 HDDs to 766 HDDs

The EIA is expected to report a 194-Bcf draw for the week ending February 11
> The draw would mark the first draw below 200 Bcf in five weeks
> The deficit to the five-year average currently sits at 215 Bcf and has been widening since the start of January
> If a 194-Bcf draw is reported, total gas in inventories will reach 1,907 Bcf
The ICE end-of-season storage estimate, a proxy for where traders see gas inventories as the end of the withdrawal season, is around 1,350 Bcf, or 307 Bcf below the five-year average < End of season storage this low would be very bullish for natural gas prices.

[SergioSays]

I'm surprised the arb to export crude is still open at those Cushing levels.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Mar 22) was down $-1.90 on the day, to settle at $91.76
> Prompt-Month Henry Hub (Mar 22) was down $-0.231 on the day, to settle at $4.486

Commodity prices are still way over what I am using in my models, $85/bbl WTI and $3.75/MMBtu for HH gas.