Oil & Gas Prices - April 21

[dan_s]

Opening Prices:
> WTI is down $0.32 to $102.43/bbl, and Brent is up $0.42 to $107.22/bbl.
> Natural gas is up 5.9c to $6.996/MMBtu.

Late getting started today since I had to deal with Susan's car problem first. At the time of this post, WTI was trading at $103.46 and HH gas was trading at $6.82.

AEGIS Notes
Oil

Supply concerns outweigh disruption to oil demand in China due to lockdowns
> The measure of WTI volatility remains elevated as competing factors of supply and demand keep uncertainty high
> WTI’s three-month implied volatility was at 49.09 percent yesterday, about 14 percent higher than the five-year average
> AEGIS notes that high volatility causes option premium to be more expensive and can change approaches to a variety of hedging strategies

Germany’s Foreign Minister Annalena Baerbock announced plans to stop imports of Russian oil by year-end (Reuters)
> “I, therefore, say here clearly and unequivocally, Germany is also completely phasing out Russian energy imports,” said Baerbock
> A German oil embargo on Russia has previously been thought unworkable without causing recessionary pressure

Natural Gas

Ukraine lobbies to have current gas flows on Nord Stream (1) pipeline be cut, re-directed through Ukraine
> According to Reuters, the country seeks to have gas rerouted through Ukraine to give it more leverage in peace talks with Russia
> Ukraine energy official told lawmakers and officials close to the Biden administration that the move would also make Moscow pay more transit fees that could help Ukraine's wartime defense and deter Russia from damaging Ukraine's gas pipelines in the meantime
> Analysts' have said the likelihood of such a move is slim, and European officials have declined to comment

Baker Hughes faces pressure from global supply chain issues, geopolitical events in 1Q2021, says CEO
> The company said, "to meet the world's energy needs in a responsible manner, we believe multiple years of spending growth will be required, as well as a significant increase in LNG infrastructure investment" in its 1Q2022 earnings call
> The company also noted that it sees some near-term risk to oil demand but said that oil and gas supply would likely be constrained for the next few years, which should result in higher spending
> With regards to its oilfield services division, the company said, "In the international market, we expect the continuation of a broad-based recovery with industrywide activity growth in the low-to-mid double digits. In North America, we expect continued activity increases, with the broader market set to experience strong growth in excess of 40%"
> AEGIS notes that there was a greater focus on natural gas in the latest earnings call, with the company going as far as to say that governments have begun prioritizing natural gas and LNG as a key transition and destination fuel for the energy transition

[dan_s]

Closing Prices:
> Prompt-Month WTI (Jun 22) was up $1.04 on the day, to settle at $103.79
> Prompt-Month Henry Hub (May 22) was up $0.020 on the day, to settle at $6.957

Despite a surprising natural gas storage report ( I was expecting a much smaller build), ngas closed 2 cents higher.