Oil & Gas Prices - March 17
Posted: Thu Mar 17, 2022 9:08 am
Happy St. Patricks Day!
Opening Prices:
> WTI is up $5.58 to $100.62/bbl, and Brent is up $5.99 to $104.01/bbl.
> Natural gas is up 8.9c to $4.837/MMBtu.
AEGIS Notes
Oil
Oil futures were up 6% Thursday morning, after slumping for three days
> A Russian spokesman denied that Russia and Ukraine had made significant headway in their negotiations (BBG)
> The dollar retreated from a two-year high on Wednesday after the Federal Reserve raised interest rates for the first time since 2018
> The Fed also signaled six more such rate hikes are likely this year amid increasing risks to the economic recovery
For the week ending March 11th, the EIA recorded a 4.3 MMBbl crude build
> The build was larger than what many analysts were expecting
> Stocks at Cushing storage hub in Oklahoma rose by 1.8 MMBbl to 24 MMBbl
> U.S. crude output was unchanged at 11.6 MMBbl/d from the week prior, according to the EIA < There has been no increase in U.S. oil production since it peaked at 11,773,000 bpd in November, 2021. It is normal for U.S. oil production to peak in November because well completions normally slow down during the winter and major cold waves do causes some wells to freeze off. U.S. oil production was ~11.2 million bpd in March 2021, so it has only increased 0.4 million bpd despite a significant YOY increase in well completions over the last 12 months.
Natural Gas
U.S. natural gas futures are trading higher this morning, thanks in part to renewed weather volatility
> The March gas-weighted heating degree day forecast posted a 3.3 HDD gain to bring the total to 552
> The cooler weather is supposed to affect the South Central and Rockies U.S. regions and is focused in the 7-14 day range
The U.S. Energy Information Administration is expected to report a 70 Bcf withdrawal for the week ending March 11
> A 70 Bcf withdrawal would be more than the five-year average draw of 65 Bcf and more than quadruple the 16 Bcf pull reported during the corresponding week in 2021 < I checked and the average 5-year draw for the week ending March 11 is 43 bcf.
> The deficit to last year would increase to 335 Bcf. The deficit to the five-year average would climb to 295 Bcf
> If confirmed, the draw would bring inventories to 1,449 Bcf
> The ICE end-of-season inventory number, a proxy for where traders see season-end inventory levels, is at around 1,434 Bcf < Inventories will be much lower than this on April 1. The average storage level at the end of winter (~March 31) is 1,662 Bcf. My SWAG is that ngas inventories will be within the range of 1,300 to 1,350 bcf.
To see weekly draws and builds for the last five years go here: http://americanoilman.homestead.com/GasStorage.html
U.S. Gulf of Mexico is full of LNG tankers as exports rise
> LNG export terminals are running near full capacity, with U.S. exports in high demand amid Russia's invasion of Ukraine and Europe's drive to rebuild shrunken natural gas stocks
> 27 ships were on the way or near LNG terminals along the U.S. Gulf Coast on Wednesday, according to Refinitiv
> The peak number of tankers was reached on February 28, with 28 vessels, matching the record set on February 10 and November 11 of 27 and 28 vessels
Opening Prices:
> WTI is up $5.58 to $100.62/bbl, and Brent is up $5.99 to $104.01/bbl.
> Natural gas is up 8.9c to $4.837/MMBtu.
AEGIS Notes
Oil
Oil futures were up 6% Thursday morning, after slumping for three days
> A Russian spokesman denied that Russia and Ukraine had made significant headway in their negotiations (BBG)
> The dollar retreated from a two-year high on Wednesday after the Federal Reserve raised interest rates for the first time since 2018
> The Fed also signaled six more such rate hikes are likely this year amid increasing risks to the economic recovery
For the week ending March 11th, the EIA recorded a 4.3 MMBbl crude build
> The build was larger than what many analysts were expecting
> Stocks at Cushing storage hub in Oklahoma rose by 1.8 MMBbl to 24 MMBbl
> U.S. crude output was unchanged at 11.6 MMBbl/d from the week prior, according to the EIA < There has been no increase in U.S. oil production since it peaked at 11,773,000 bpd in November, 2021. It is normal for U.S. oil production to peak in November because well completions normally slow down during the winter and major cold waves do causes some wells to freeze off. U.S. oil production was ~11.2 million bpd in March 2021, so it has only increased 0.4 million bpd despite a significant YOY increase in well completions over the last 12 months.
Natural Gas
U.S. natural gas futures are trading higher this morning, thanks in part to renewed weather volatility
> The March gas-weighted heating degree day forecast posted a 3.3 HDD gain to bring the total to 552
> The cooler weather is supposed to affect the South Central and Rockies U.S. regions and is focused in the 7-14 day range
The U.S. Energy Information Administration is expected to report a 70 Bcf withdrawal for the week ending March 11
> A 70 Bcf withdrawal would be more than the five-year average draw of 65 Bcf and more than quadruple the 16 Bcf pull reported during the corresponding week in 2021 < I checked and the average 5-year draw for the week ending March 11 is 43 bcf.
> The deficit to last year would increase to 335 Bcf. The deficit to the five-year average would climb to 295 Bcf
> If confirmed, the draw would bring inventories to 1,449 Bcf
> The ICE end-of-season inventory number, a proxy for where traders see season-end inventory levels, is at around 1,434 Bcf < Inventories will be much lower than this on April 1. The average storage level at the end of winter (~March 31) is 1,662 Bcf. My SWAG is that ngas inventories will be within the range of 1,300 to 1,350 bcf.
To see weekly draws and builds for the last five years go here: http://americanoilman.homestead.com/GasStorage.html
U.S. Gulf of Mexico is full of LNG tankers as exports rise
> LNG export terminals are running near full capacity, with U.S. exports in high demand amid Russia's invasion of Ukraine and Europe's drive to rebuild shrunken natural gas stocks
> 27 ships were on the way or near LNG terminals along the U.S. Gulf Coast on Wednesday, according to Refinitiv
> The peak number of tankers was reached on February 28, with 28 vessels, matching the record set on February 10 and November 11 of 27 and 28 vessels