Oil & Gas Prices - Mar 31

[dan_s]

Opening Prices:
> WTI is down $5.92 to $101.90/bbl, and Brent is down $5.91 to $107.54/bbl.
> Natural gas is down -3.1c to $5.574/MMBtu.

AEGIS Notes
Oil

Oil prices slumped on signs the U.S. is considering another release from its reserves
> The U.S. is mulling the release of roughly 1 MMBbl/d for several months
> The total reserve release could be as much as 180 MMBbl
> A large SPR release “would reduce the amount of necessary priced-induced demand destruction, the sole oil rebalancing mechanism currently available in a world devoid of inventory buffers and supply elasticity,” Goldman Sachs analysts said in a note to clients (Bloomberg) < This means that by artificially keeping oil prices low, it will keep demand high and make getting the global oil market back in balance take longer. That makes sense, but the Administration knows that we first have to get through the summer (and before the mid-term elections) to keep inflation somewhat in check.

Russia is offering India deep discounts on the direct sale of oil as international pressure decreases the demand for its barrels (BBG)
> Moscow is offering its flagship Urals grade to India at discounts of as much as $35/Bbl
> AEGIS notes that the ability of Russia to find alternative outlets for its crude has helped offset the magnitude of the overall global supply shock

Natural Gas

U.S. gas futures are trading lower this morning, with the prompt contract trading 3.1c lower, near $5.574
> U.S. LNG feedgas demand is up by around 0.8 at 13.2 Bcf/d. The increase in flows can be attributed to hikes at Sabine Pass LNG and Freeport LNG
> The EIA is expected to report a build of 25 Bcf for the week ending March 25, according to Bloomberg
> Bloomberg survey estimates ranged from 18 Bcf to 37 Bcf < This would be a week early for a build. Space heating demand for the week ending April 1 should result in a net draw reported next week.
> If a 25-Bcf build is reported, total stocks will increase to 1,414 Bcf < The 5-year average inventory level at the beginning of the refill season is 1,662 Bcf.

New Fortress Energy Inc proposes to build the first offshore U.S. LNG export facility
> The terminal would sit in the Gulf of Mexico, 16 miles off the Louisiana coast, and allow tankers to dock and directly load
> "This project can play a significant role in supporting our nation's commitment to our European allies and their energy security as well as support our efforts to reduce emissions and energy poverty around the world," said New Fortress Chief Executive Wes Edens in a statement
According to current plans, the facility would have an export capacity of around 2.8 million tonnes per annum or around 0.4 Bcf/d

[dan_s]

Thanks God you don't live in Europe. Their energy prices will be at least triple what overall energy prices are for the average household in North America.

Russian President Vladimir Putin said on Thursday that he had signed a decree saying foreign buyers must pay in roubles for Russian gas from April 1, and contracts would be halted if these payments were not made. "In order to purchase Russian natural gas, they must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow," Putin said. "If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either - that is, existing contracts will be stopped."

PS: When citizens find it harder to keep food on the table and can't pay any more taxes, Paris Climate Accord ambitions move to the bottom of the list of priorities.

[dan_s]

Closing Prices:
> Prompt-Month WTI (May 22) was down $-7.54 on the day, to settle at $100.28
> Prompt-Month Henry Hub (May 22) was up $0.037 on the day, to settle at $5.642

Joe Bidens release of more oil from the SPR is like putting a band aid on a broken arm. I have no problem with it because we MUST have more heavy oil to deal with the shortage of diesel. This country runs on diesel. Refiners cannot make diesel from the ultra-light shale oil. Oil in the SPR is heavy oil.

What I have a problem with is Joe Biden refusal to take any blame for this transportation fuel shortage and high prices. His ignorance of the oil & gas industry is incredible. Blaming upstream companies is childish and supports my claim that he is a terrible leader. Good leaders do not blame others for their screw-ups.