Oil & Gas Prices - April 13
Posted: Wed Apr 13, 2022 8:48 am
I will be updating the valuation models for all of our "gassers" today based on the assumption that HH natural gas averages $6.00 during Q2&Q3, $6.50 for Q4 and $5.00 for 2023. I now have confidence in my forecast that the structural change in the North American natural gas market will take several years to fix. I will discuss this in my live webinar tomorrow at 10:30AM CT. You must register for the webinar on the EPG website home page.
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Opening Prices:
> WTI is up $1.17 to $101.77/bbl, and Brent is up $1.49 to $106.13/bbl.
> Natural gas is up 20.4c to $6.884/MMBtu.
AEGIS Notes
Oil
My comments are in blue.
Oil prices rallied back over $100/Bbl on Tuesday, surging 6% in the previous session
> The rise came as China signaled that it’s likely to use monetary policy to stimulate growth, and Putin said talks with Ukraine are “at a dead end”
> In its monthly report, the International Energy Agency (IEA) trimmed its estimates of global crude demand after China reimposed lockdowns to contain the recent Covid-19 outbreak < IEA has a long history of understating demand for oil.
OPEC forecasts that Russia’s invasion of Ukraine will curtail both world oil supply and demand (OPEC MOMR)
> The neutral view suggests the group will stick to modest supply hikes (BBG) < The cartel has no choice, they are at peak production and most of the OPEC members are actually on decline. The "easy supplies" are all back online. Only Saudi Arabia and IEA have more upside, but they will need to drill more wells and infrastructure. OPEC+ actual production has been below the official quotas for six months.
> OPEC cut forecasts for global oil consumption in 2022 by 410 MBbl/d, according to its latest monthly report
> The group also lowered its projection for supplies outside its membership by 330 MBbl/d
Vitol Group will stop trading Russian crude by year-end (BBG)
The world’s largest independent oil trader said volumes of Russian oil handled by the company “will diminish significantly in the second quarter as current term contractual obligations decline.” < Oil is over $100/bbl and we still have not seen a significant decline in amount of Russian oil coming to the physical market. It is going to steadily decline starting at the end of Q2. U.S. and OECD petroleum inventories have been on decline for 21 months. The inventory declines will steepen and draws from strategic petroleum reserves will be necessary to keep western economies on life support. This inflation is not "transitory".
Natural Gas
Gas futures have continued to strengthen despite warmer weather forecasts. The prompt-month (May ’22) contract is up by 20.4c, near $6.884
> The forecasted gas-weighted heating degree day total fell by 11 HDDs to 348 HDDs, its lowest mark since April 5 < If "Global Warming" is real, why are we still talking about "heating degree days" in mid-April???
> Production is also down by -0.95 Bcf/d, currently around 93 Bcf/d < Without more pipeline access it will be difficult for supply to catch up to demand.
> LNG feedgas demand is back up by another 1 Bcf/d to 12.5 Bcf/d < This is why.
> Flows to Calcasieu Pass have stalled in between 700-800 MMcf/d over the last several weeks, as the pace of commissioning seems to have slowed down
Europe scrambles to secure floating LNG storage capacity
> According to the supply deal with the United States, Europe is aiming to replace 155 bcm of Russian gas imports by 2030, which translates to around 15 Bcf/d
> European countries are looking for any way they can to boost gas supplies. It only has 176 MM metric tons/year (23 Bcf/d) of total regasification capacity, with much of it located in Spain, which lacks pipeline infrastructure to move the rest of the gas to Europe < Thanks to the Green Bad Deal.
> Leasing rates for floating storage regasification units (FSRU) have increased by 50% since the beginning of the Russian incursion into Ukraine, with some deals being reached at $150k/day - $200k/day
---------------------------------
Opening Prices:
> WTI is up $1.17 to $101.77/bbl, and Brent is up $1.49 to $106.13/bbl.
> Natural gas is up 20.4c to $6.884/MMBtu.
AEGIS Notes
Oil
My comments are in blue.
Oil prices rallied back over $100/Bbl on Tuesday, surging 6% in the previous session
> The rise came as China signaled that it’s likely to use monetary policy to stimulate growth, and Putin said talks with Ukraine are “at a dead end”
> In its monthly report, the International Energy Agency (IEA) trimmed its estimates of global crude demand after China reimposed lockdowns to contain the recent Covid-19 outbreak < IEA has a long history of understating demand for oil.
OPEC forecasts that Russia’s invasion of Ukraine will curtail both world oil supply and demand (OPEC MOMR)
> The neutral view suggests the group will stick to modest supply hikes (BBG) < The cartel has no choice, they are at peak production and most of the OPEC members are actually on decline. The "easy supplies" are all back online. Only Saudi Arabia and IEA have more upside, but they will need to drill more wells and infrastructure. OPEC+ actual production has been below the official quotas for six months.
> OPEC cut forecasts for global oil consumption in 2022 by 410 MBbl/d, according to its latest monthly report
> The group also lowered its projection for supplies outside its membership by 330 MBbl/d
Vitol Group will stop trading Russian crude by year-end (BBG)
The world’s largest independent oil trader said volumes of Russian oil handled by the company “will diminish significantly in the second quarter as current term contractual obligations decline.” < Oil is over $100/bbl and we still have not seen a significant decline in amount of Russian oil coming to the physical market. It is going to steadily decline starting at the end of Q2. U.S. and OECD petroleum inventories have been on decline for 21 months. The inventory declines will steepen and draws from strategic petroleum reserves will be necessary to keep western economies on life support. This inflation is not "transitory".
Natural Gas
Gas futures have continued to strengthen despite warmer weather forecasts. The prompt-month (May ’22) contract is up by 20.4c, near $6.884
> The forecasted gas-weighted heating degree day total fell by 11 HDDs to 348 HDDs, its lowest mark since April 5 < If "Global Warming" is real, why are we still talking about "heating degree days" in mid-April???
> Production is also down by -0.95 Bcf/d, currently around 93 Bcf/d < Without more pipeline access it will be difficult for supply to catch up to demand.
> LNG feedgas demand is back up by another 1 Bcf/d to 12.5 Bcf/d < This is why.
> Flows to Calcasieu Pass have stalled in between 700-800 MMcf/d over the last several weeks, as the pace of commissioning seems to have slowed down
Europe scrambles to secure floating LNG storage capacity
> According to the supply deal with the United States, Europe is aiming to replace 155 bcm of Russian gas imports by 2030, which translates to around 15 Bcf/d
> European countries are looking for any way they can to boost gas supplies. It only has 176 MM metric tons/year (23 Bcf/d) of total regasification capacity, with much of it located in Spain, which lacks pipeline infrastructure to move the rest of the gas to Europe < Thanks to the Green Bad Deal.
> Leasing rates for floating storage regasification units (FSRU) have increased by 50% since the beginning of the Russian incursion into Ukraine, with some deals being reached at $150k/day - $200k/day