Oil & Gas Prices - June 1
Posted: Wed Jun 01, 2022 2:01 pm
Opening Prices:
> WTI is up $1.61 to $116.28/bbl, and Brent is up $2.03 to $117.63/bbl. < WTI at $115.37 at the time of this post.
> Natural gas is up 13.7c to $8.282/MMBtu. < HH natural gas was $8.73 at the time of this post.
AEGIS Notes
Oil
OPEC members are considering suspending Russia's participation in the coalition's quota system since sanctions prevent Moscow from increasing output (WSJ)
> Exempting Russia could mean an early end to the OPEC+ supply deal and see Saudi Arabia and other producers adding more barrels earlier than planned
> OPEC+ is set to meet on Thursday and is expected to approve a planned increase of 432 MBbl/d, part of a series of incremental monthly hikes aimed at bringing production back to pre-pandemic levels by the end of September
Inflation in the shale patch is accelerating as ingredients crucial to oil production, such as steel, workers, and frack equipment, are becoming more difficult to come by (BBG)
> JPMorgan raised its shale patch cost inflation forecast for this year to 25%, up from 15% in December
> Higher costs led to a 7% increase in the oil break-even price to $56 per barrel for shale operators to earn desired profits < Keep in mind that this only applies to new wells. Higher revenues thanks to much higher oil, gas and NGL prices on older wells is more than making up for this year's cost appreciation.
Natural Gas
Natural gas futures for July rose Wednesday morning following a 58c decline on Tuesday
> Analysts are estimating dry gas production at around 96-97 Bcf/d, an uptick from the previous 30-day average
> Renewable generation for electricity has been robust, as wind generation in Texas hit a new daily record over the holiday weekend
> AEGIS notes that strong renewable generation displaces the need for coal and natural gas in the power stack
Weather forecasters see a seventh year of above-average storm activity in the Gulf (BBG)
> Hurricane season kicks off today and is expected to be an above-average number of storms that reach tropical strength or greater
> The U.S. National Weather Service expects up to 21 such storms will form
> Forecasters cite warm ocean temperatures in the Atlantic and a La Nina weather pattern, as two major factors ideal for creating hurricanes < "La Nina" keeps the Pacific Ocean cooler than normal, which leads to colder U.S. winters.
> WTI is up $1.61 to $116.28/bbl, and Brent is up $2.03 to $117.63/bbl. < WTI at $115.37 at the time of this post.
> Natural gas is up 13.7c to $8.282/MMBtu. < HH natural gas was $8.73 at the time of this post.
AEGIS Notes
Oil
OPEC members are considering suspending Russia's participation in the coalition's quota system since sanctions prevent Moscow from increasing output (WSJ)
> Exempting Russia could mean an early end to the OPEC+ supply deal and see Saudi Arabia and other producers adding more barrels earlier than planned
> OPEC+ is set to meet on Thursday and is expected to approve a planned increase of 432 MBbl/d, part of a series of incremental monthly hikes aimed at bringing production back to pre-pandemic levels by the end of September
Inflation in the shale patch is accelerating as ingredients crucial to oil production, such as steel, workers, and frack equipment, are becoming more difficult to come by (BBG)
> JPMorgan raised its shale patch cost inflation forecast for this year to 25%, up from 15% in December
> Higher costs led to a 7% increase in the oil break-even price to $56 per barrel for shale operators to earn desired profits < Keep in mind that this only applies to new wells. Higher revenues thanks to much higher oil, gas and NGL prices on older wells is more than making up for this year's cost appreciation.
Natural Gas
Natural gas futures for July rose Wednesday morning following a 58c decline on Tuesday
> Analysts are estimating dry gas production at around 96-97 Bcf/d, an uptick from the previous 30-day average
> Renewable generation for electricity has been robust, as wind generation in Texas hit a new daily record over the holiday weekend
> AEGIS notes that strong renewable generation displaces the need for coal and natural gas in the power stack
Weather forecasters see a seventh year of above-average storm activity in the Gulf (BBG)
> Hurricane season kicks off today and is expected to be an above-average number of storms that reach tropical strength or greater
> The U.S. National Weather Service expects up to 21 such storms will form
> Forecasters cite warm ocean temperatures in the Atlantic and a La Nina weather pattern, as two major factors ideal for creating hurricanes < "La Nina" keeps the Pacific Ocean cooler than normal, which leads to colder U.S. winters.