Oil & Gas Prices - April 22

[dan_s]

Opening Prices:
> WTI is down $2.88 to $75.61/bbl, and Brent is down $2.85 to $82.29/bbl.
> Natural gas is down -5.3c to $2.336/MMBtu.

AEGIS Notes
Oil

Oil extends losses and heads for a weekly decline
March ’23 WTI lost $2.88 this morning to trade around $75.61/Bbl
Thursday’s stronger-than-expected producer price index (PPI) report and strong initial jobless claims raised concerns that the Fed may have to hike rates aggressively < In this "Upside Down World" good economic news is viewed as bad news that fuels the FEAR of the Fed raising interest rates.
PPI rose by 0.7% in January after declining by 0.2% in December, and PPI’s rise often reflects supply conditions in the economy
Also weighing on prices this week was a strong US dollar that is at a six-week high

Saudi Arabia says OPEC+ will maintain current quotas all year (Bloomberg)
> Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said yesterday that “The agreement that we struck in October is here to stay for the rest of the year, period”
> OPEC+ has agreed to reduce their crude production targets by 2 MMBbl/d until the end of 2023
> The minister said that the bloc is still wary of a recovery in Chinese demand and they could not increase output based only on early indications of a revival in demand
> The alliance raised its global demand forecast for 2023 earlier this week after China abandoned Covid restrictions, but the minister noted that more evidence of a sustained rebound is still needed
MY TAKE: OPEC knows that raising their production targets / quotas will lower oil prices. They want Brent to stay over $80 and drift up to $100. Plus, they also know that 2/3rds of the cartel members are out of spare capacity already.


Natural Gas

Natural gas prices are lower this morning, trading around $2.34 < This is the MAR23 NYMEX contract. With the utilities now out of the futures market, there are not enough Buyers to bail out the Paper Traders that must close out their long contracts before they expire. The Paper Traders very seldom have the ability or desire to take physical delivery of the gas.
The Summer ’23 strip is down by 7c to $2.82, and the Winter ‘23/’24 strip is lower by 6c to $3.79

Weather forecasts have shifted materially warmer, with the Lower 48 forecast losing 8.4 °F in the 6-10 day period
The Northeast forecast warmed by 11.8 °F, and the Midwest by 18 °F, both in the 6-10 day period

US LNG developers secure financing for export facilities (Reuters)
More than ten project developers are planning to make final investment decisions this year for LNG export facilities, three of which have secured enough long-term contracts to move forward
Sempra Energy’s Port Arthur plant, Energy Transfer’s Lake Charles facility, and NextDecades’s Rio Grand plant have all signed enough long-term offtake agreements to secure debt financing from banks
Most of the export projects currently being developed will not enter commercial operation for several years, with cargoes expected to enter the market around 2027

FERC approves new power grid standards (Reuters)
The standards are being implanted based on recommendations from an inquiry into the 2021 Winter Storm Uri
Generator owners will now be required to implement freeze protection measures and prepare equipment and personnel for emergency situations
Texas recently implemented new rules for its electrical grid, which would pay power generators to remain on standby, but the plan is still being scrutinized by legislators

[dan_s]

OilPrice.com: "The gap seems to be widening between WTI and other global crude benchmarks as climbing crude inventories and another SPR release are pushing the U.S. benchmark lower. This week’s release of strong economic data in the U.S. and evidence of a tight labor market has added some macro pressure to oil prices as well, adding to concerns that the Federal Reserve’s hikes might continue for longer. As a result of these bearish developments, WTI moved back below $76 on Friday morning."

FEAR of the Fed causing a recession is the "noise" causing today's pullback in oil prices. Oil price volatility is going to be with us for a while longer.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Mar 23) was down $-2.15 on the day, to settle at $76.34
> Prompt-Month Henry Hub (Mar 23) was down $-0.114 on the day, to settle at $2.275