Oil & Gas Prices - Mar 3

[dan_s]

Opening Prices:
> WTI is down $1.90 to $76.26/bbl, and Brent is down $1.91 to $82.84/bbl.
> Natural gas is up 7.6c to $2.841/MMBtu.

AEGIS Notes with my comments in blue
Oil

Oil heads for a weekly loss amid reports that UAE could leave OPEC
April ’23 WTI lost $1.90 this morning to trade around $76.26/Bbl < Back to $77.53 at the time of this post.
Oil plunges after Wall Street Journal reported today that UAE is debating leaving OPEC
Market continues to weigh the possibility of higher rate hikes and the subsequent slowdown in economic growth
Yet, recovering Chinese demand supported by strong manufacturing and mobility data and Russian supply risk support prices

UAE mulls leaving OPEC amid reports of disagreements with Saudi Arabia over oil and the Yemen war (WSJ)
Saudi Arabia and the UAE have differed on a number of fronts, contending foreign investment, influence on the global oil markets, and disagreements over how to proceed with the Yemen war
According to an Emirati official, the UAE is required to pump considerably less oil than it is capable of doing as part of the Saudi-led OPEC+, which hurts its oil revenue
The Saudis have long opposed its requests to pump additional oil, according to OPEC officials
The UAE is currently debating leaving OPEC, according to Emirati officials, a move that would likely upend the cartel and reduce its influence in the global oil markets < My WAG is that this is just a strategy to get Saudi Arabia to raise UAE's quota. Regardless, this world will need every barrel of oil that OPEC can bring to the market later this year anyway.

Russian oil product exports decline due to EU sanctions (SPGlobal)
Seaborne oil product exports from Russia averaged 2.13 MMBbl/d in February, a 21% decline from the recent high levels of about 2.7 MMBbl/d in January
Russia struggles to find new buyers after the EU's sanctions on Russian refined oil products on February 5
MY TAKE: With China's oil demand rising and Russian oil supply falling, the global oil market will get very tight in just a few months.

Natural Gas

Natural gas is heading for its second consecutive higher weekly close, trading around $2.84
Weather forecasts have shifted cooler for the Northeast, Midwest, Southeast, and South Central regions in the 6-15 day period
Early nominations show LNG feedgas at a record high of 14 Bcf/d as Freeport ramps up its flows < This is significant.

Yesterday the EIA reported a storage withdrawal of -81 Bcf, which expanded the storage surplus to 342 Bcf above the five-year average < My WAG is that gas in storage will decline to 1750 to 1800 Bcf by the end of March, 200 to 250 Bcf above the 5-year average and NOWHERE near a glut. The U.S. natural gas market is HUGE, now over 37 Tcf per year.

Kentucky lawmakers proposing a bill to slow coal retirements (S&P)
Citing concerns about grid reliability, state lawmakers have advanced a bill that aims to stop or slow the retirement of coal-fired power plants
Representatives from utility companies have objected to the proposed law, saying it could be costly to customers and that many coal plants planned to be retired are not economical
58 GW of coal capacity is planned to be retired by 2030, mostly to be replaced with wind, solar, and natural gas power plants

US government losing natural gas revenue to cryptocurrency mining (Reuters)
A government watchdog report has said that some oil and gas operators drilling on US public lands are diverting natural gas to cryptocurrency mining without paying royalties to the federal government
The report found that many small mobile mining units had gone undetected for long periods of time
The US Department of the Interior generated more than $1.7 billion from onshore natural gas royalties in 2022, with a royalty rate of 16.67% for new wells

[Fraser921]

Crude looks like it will break 80 soon and NG 3

Bullish ..all names are up

[ChuckGeb]

Proof of life for gassers after 2022! Someone put in a bid for oil to get it over the 80 hump!

[dan_s]

Closing Prices:
> Prompt-Month WTI (Apr 23) was up $1.52 on the day, to settle at $79.68
> Prompt-Month Henry Hub (Apr 23) was up $0.244 on the day, to settle at $3.009 < This is a 50% increase in less that 2 weeks. Why? because the selloff in late February was just the fact that some large hedge funds got caught with too many MAR23 contracts. They had to slash prices on their longs to close them out. The futures market is now back in balance, so the strip should drift up to $4.00 this summer.

BTW Winter is not over yet.