Oil & Gas Prices - Mar 2

[dan_s]

Opening Prices:
> WTI is up $7.51 to $110.92/bbl, and Brent is up $7.55 to $112.52/bbl.
> Natural gas is up 21.1c to $4.784/MMBtu.

AEGIS Notes:
Oil

Oil topped $112/Bbl Tuesday morning, the highest since 2011
> The oil market’s structure has moved into “super-backwardation,” indicating extreme scarcity
> Russian oil and oil products are struggling to find buyers

Russia’s flagship crude oil was for sale at a record discount (Bloomberg)
> Oil trading firm Trafigura Group tried to sell a cargo on Tuesday of Russian Urals at a discount of $18.60/Bbl to Brent
> The company received no buyers despite the reduced price
> Tanker owners are avoiding Russian crude on concerns that their vessels will be caught up in future sanctions

The oil futures curve is at levels of strength not seen this century (Bloomberg)
> The May Brent futures contract was trading more than $4/Bbl above the next month – a near-unprecedented level
> WTI’s twelve-month times spread is currently at 39% backwardated. For reference, 10-13% backward is historically a high level
> Traders are willing to pay huge premiums to secure a more-immediate supply

MY TAKE: It is going to get very bad in Ukraine. OPEC+ production will not come anywhere close to their official quota anytime soon, probably not all year. There is no near-term solution to the supply shortage and oil demand will go up in Q4.

Natural Gas

European gas prices tests record-highs as EU threatens additional sanctions (Reuters) < Likely staying over $100/MMBtu for awhile.
> The European Parliament on Tuesday called for the EU to close its ports to Russian ships or ships going to or from Russia
> Although the Parliament does not set sanctions and its vote on Tuesday was non-binding, traders said it showed the direction of travel for possible tightening of measures against Russia which supplies around 40% of the bloc’s natural gas. < Time to crank up the windmills?

Gas prices are slightly up this morning, trading near $4.784
> Lower-48 dry gas production has risen to around 93.5 Bcf/d, according to this morning’s pipeline nominations
> LNG feedgas demand is at around 11.8 Bcf/d, and flows at Sabine Pass are still down for their second consecutive day
> Weather forecasts worsened with the March gas-weighted heating degree day forecast decreased by 10.4 HDDs to 586 HDDs

[dan_s]

Closing Prices:

Prompt-Month WTI (Apr 22) was up $7.19 on the day, to settle at $110.60 & moving higher after hours.

Prompt-Month Henry Hub (Apr 22) was up $0.189 on the day, to settle at $4.762

[KGardiner]

It seems to me European LNG demand will steadily rise over the next few years. Germany is seriously looking at two or three new import terminals. I have not seen any similar news regarding other EU Members.