Oil & Gas Prices - Mar 16
Posted: Wed Mar 16, 2022 9:17 am
The Roller Coaster ride continues.
Opening Prices:
> WTI is up $2.21 to $98.65/bbl, and Brent is up $1.52 to $101.43/bbl.
> Natural gas is up 14.0c to $4.708/MMBtu
AEGIS Notes
Oil
Oil prices pared early morning gains after Russia said a neutral Ukraine with its own army is a possible compromise option (BBG)
> The IEA warns of a supply shock unless OPEC boost production
> High oil volatility is reducing liquidity (higher margin requirements)
Disruptions to Russian oil exports threaten a supply shock that will further tighten the energy market unless OPEC boosts output, according to the IEA (WSJ)
> The Paris-based IEA warned on Wednesday that the energy markets are facing the biggest supply crisis in decades
> Many oil consumers are shunning Russian oil purchases that could mean 3 MMBbl/d of supply effectively cut off from the global markets starting next month, the IEA said
> The agency cut its forecast for global oil supply by 2 MBMbl/d to 99.5 MBMbl/d, based on what OPEC has currently agreed to pump
Oil’s wild price swings have removed market participants (BBG)
> Brent crude has slumped $40/Bbl in a little over two weeks
> Speculators and traders rushed to close out their profitable long positions amid Brent’s run up, causing Bren’t aggregate open interest to slip under two million contracts for the first time since 2015, according to Bloomberg
> Managed money bets on rising crude on ICE plunged by the most since 2011 in the week ended March 8
These are CYA comments from fund managers that caught on the wrong side of the oil price moves
> “The market is un-tradable, given the volatility,” said Gary Ross, an oil consultant, turned hedge fund manager at Black Gold Investors LLC
> “Volatility is so tremendous that it is forcing everyone to reduce their position size and forcing this liquidation.”
Natural Gas
U.S. gas futures are up this morning, with the prompt contract gaining 14c to around $4.708
> Overnight weather forecasts showed promise, with the March gas-weighted heating degree day forecast posting a 9.4 HDD gain, its largest increase yet, to bring the total to 549
> The cooler weather is supposed to affect the Northeast and Midwest U.S. regions, which bodes well for gas demand
> The increase was primarily focused in the 7-14 day range and is forecasted to increase demand in the last week of March by an average of around 10 Bcf/d
> Lower-48 dry gas production has struggled as of late and is hovering near 92.1 Bcf/d, nearly 4 Bcf/d removed from its record-high of 96.1 Bcf/d in December
Permian oil, gas output to hit record-highs in April -EIA
> Total natural gas output in the big shale basins will increase 0.6 Bcf/d to a record 92.3 Bcf/d in April, EIA forecast
> Output in the Appalachian region will rise about 0.2 Bcf/d to a record 36.5 Bcf/d in April
> Gas production in the Permian and the Haynesville in Texas, Louisiana, and Arkansas will also rise to record highs of 20.3 Bcf/d and 14.6 Bcf/d in April, respectively
Opening Prices:
> WTI is up $2.21 to $98.65/bbl, and Brent is up $1.52 to $101.43/bbl.
> Natural gas is up 14.0c to $4.708/MMBtu
AEGIS Notes
Oil
Oil prices pared early morning gains after Russia said a neutral Ukraine with its own army is a possible compromise option (BBG)
> The IEA warns of a supply shock unless OPEC boost production
> High oil volatility is reducing liquidity (higher margin requirements)
Disruptions to Russian oil exports threaten a supply shock that will further tighten the energy market unless OPEC boosts output, according to the IEA (WSJ)
> The Paris-based IEA warned on Wednesday that the energy markets are facing the biggest supply crisis in decades
> Many oil consumers are shunning Russian oil purchases that could mean 3 MMBbl/d of supply effectively cut off from the global markets starting next month, the IEA said
> The agency cut its forecast for global oil supply by 2 MBMbl/d to 99.5 MBMbl/d, based on what OPEC has currently agreed to pump
Oil’s wild price swings have removed market participants (BBG)
> Brent crude has slumped $40/Bbl in a little over two weeks
> Speculators and traders rushed to close out their profitable long positions amid Brent’s run up, causing Bren’t aggregate open interest to slip under two million contracts for the first time since 2015, according to Bloomberg
> Managed money bets on rising crude on ICE plunged by the most since 2011 in the week ended March 8
These are CYA comments from fund managers that caught on the wrong side of the oil price moves
> “The market is un-tradable, given the volatility,” said Gary Ross, an oil consultant, turned hedge fund manager at Black Gold Investors LLC
> “Volatility is so tremendous that it is forcing everyone to reduce their position size and forcing this liquidation.”
Natural Gas
U.S. gas futures are up this morning, with the prompt contract gaining 14c to around $4.708
> Overnight weather forecasts showed promise, with the March gas-weighted heating degree day forecast posting a 9.4 HDD gain, its largest increase yet, to bring the total to 549
> The cooler weather is supposed to affect the Northeast and Midwest U.S. regions, which bodes well for gas demand
> The increase was primarily focused in the 7-14 day range and is forecasted to increase demand in the last week of March by an average of around 10 Bcf/d
> Lower-48 dry gas production has struggled as of late and is hovering near 92.1 Bcf/d, nearly 4 Bcf/d removed from its record-high of 96.1 Bcf/d in December
Permian oil, gas output to hit record-highs in April -EIA
> Total natural gas output in the big shale basins will increase 0.6 Bcf/d to a record 92.3 Bcf/d in April, EIA forecast
> Output in the Appalachian region will rise about 0.2 Bcf/d to a record 36.5 Bcf/d in April
> Gas production in the Permian and the Haynesville in Texas, Louisiana, and Arkansas will also rise to record highs of 20.3 Bcf/d and 14.6 Bcf/d in April, respectively