Energy Prospectus

Opening Prices:
> WTI is down $0.56 to $105.46/bbl, and Brent is down $0.79 to $108.54/bbl.
> Natural gas is up 7.9c to $4.71/MMBtu.

AEGIS Notes
Oil

West Texas Intermediate has swung the most this week since turning negative in 2020 and was trading near $110/Bbl early Friday
> Russia’s war on Ukraine continued to rattle markets, and Iranian nuclear deal talks stalled
> “Extreme intraday volatility perhaps says something about several things: degree of uncertainty, the nature of the news flow, the spillover from some chaotic spot markets and the relatively low liquidity levels at some points,” said Paul Horsnell, head of commodities research at Standard Chartered

Russian oil has problems finding a home in the Far East
> Zero bidders. That was the outcome of a recent attempt to sell crude favored by Asian buyers (Bloomberg)
> Not all buyers across Asia are likely to be averse to Russian crude
> Buyers in India and China may still be open to buying, but only if they can secure the letters of credit and ships needed for transport, according to traders
> Citigroup said this week that it could still take four to six months for Russian production to decline, assuming exports fall by 2 MMBbl/d

Talks between world powers and Iran were suspended as a nuclear deal remains elusive (BBG)
> A pause in the Vienna talks was required due to “external factors,” European Union foreign policy chief Josep Borrell said on Twitter
> Iran’s Foreign Ministry spokesman Saeed Khatibzadeh said the pause wasn’t necessarily the end of the road and could provide momentum to resolve the outstanding issues
MY TAKE (actually my HOPE) is that Team Biden is following the "Political Science" (the polls) and they know that deals with the dictators & allies of Russia in Iran and Venezuela will cost them even more voters. IMO American politicians are all short sighted, only interested in the next election. We NEED a long-term energy policy that includes ALL FORMS of energy so we are not dependent on imports. Europe is showing us the downside of depending on Russia and moving too quickly to get rid of oil, gas and coal.

Natural Gas

The prompt-month (Apr' 22) Henry Hub contract is up by 7.9c, near $4.71
> Lower-48 dry gas production is down by another 1.2 Bcf/d this morning, near 91.6 Bcf/d, its lowest level in weeks < Freeze Offs with more coming.
> Flows at Calcasieu Pass are around 0.64 Bcf/d, its highest mark yet
> Weather forecasts worsened throughout the week, with the March gas-weighted heating degree day forecast losing 38 HDDs on the week to 545 HDDs

Coal prices could top $500/tonne in 2022 – Rystad Energy
> Soaring gas prices, particularly in Asia and Europe, could lead countries to turn to coal for power generation
> The company said the threat of additional demand and lack of available supply is moving the market
> The possibility of more sanctions on Russia is also supporting prices. Russia provides the EU with more than 40% of its natural gas, more than 25% of its oil imports, and almost 50% of its coal < The European economy cannot survive very long if they are totally cut off from this much energy for long.

Biden's Team should walk away from the talks with Iran. IMO it is insane to give Iran $Billion and allow them to sell more oil. Lots of the money will go to Russia and Iran will not abide by any deal.

Iran Nuke Deal Stalls as Russia Demands Sanctions Relief for Itself

While Republicans have denounced Russia leading the talks with Iran for a new nuclear deal, it is being reported Russia's demand for sanctions protections has put talks on the verge of collapse.

Just days after reports a deal was close, diplomats are now signaling talks for a rewritten Iran nuclear deal have stalled due to Russia's demand for sanctions protections amid the world response to Vladimir Putin's invasion of Ukraine, Politico reported Thursday night.

"The talks seem to have stalled, primarily because of Russian demands," International Crisis Group analyst Ali Vaez told Politico.

With its economy struggling under sanctions, Russian negotiators have sought an 11th-hour exemption for Russian business with Iran from European Union and United States sanctions against the war.

Russia is leading talks with Iran, along with diplomats from China, France, Germany, the U.K., and the U.S., but those other parties are balking at the demand for sanctions relief, according to Politico.

An official from the West parties told Politico the accommodation cannot be made in talks that were designed to pull the U.S. and Iran back into the deal — not to give Russia more trade leverage.

"We've made it very clear," U.S. State Department spokesman Ned Price told reporters Thursday, "that the new Russia-related sanctions are wholly unrelated to the JCPOA [Joint Comprehensive Plan of Action]."

"We also have no intention of offering Russia anything new or specific as it relates to the sanctions."

The old Iran nuclear deal was called the Joint Comprehensive Plan of Action under former President Barack Obama's administration when current President Joe Biden was vice president. Many of the Obama administration officials are now working in the Biden administration.

Former President Donald Trump had decertified the deal with Iran because Iran was merely supposed to have paused its development of nuclear capability; instead, Iran had kept up its enrichment of uranium and was moving closer to becoming a full nuclear power, according to the Trump administration.

Closing Prices:
> Prompt-Month Henry Hub (Apr 22) was up $0.094 on the day, to settle at $4.725
> Prompt-Month WTI (Apr 22) was up $3.31 on the day, to settle at $109.33

Winter Storm Quinlan will drive natural gas storage more than 300 Bcf below the 5-year average this weekend and storage at the end of March now looks like it will be 350 Bcf below the 5-year average on April 1. Demand for natural gas is usually low in April/May, but if storage is still below the 5-year average at the end of May, we may see HH gas over $5.00 for the rest of the year.

Quinlan will also burn up a lot of distillates, which are already at dangerously low inventory levels. Diesel shortages may cause rationing soon.

We have a full-blown global energy crisis that will not be easy to fix.