Oil & Gas Prices - Mar 28
Posted: Tue Mar 28, 2023 9:05 am
Opening Prices:
> WTI is up $0.16 to $72.97/bbl, and Brent is up $0.12 to $78.24/bbl.
> Natural gas is down -1.5c to $2.073/MMBtu. (As of 08:15 AM CDT)
AEGIS Notes with my comments in blue
Oil
Oil remains relatively unchanged amid halted flows from Iraqi Kurdistan and easing banking fears
May ’23 WTI gained 16c this morning to trade around $72.97/Bbl
Oil prices rallied by $3.55/Bbl on Monday, marking the largest single-day rise since October 2022
Prices found support as semi-autonomous Kurdistan stopped exporting 0.45 MMBbl/d via Turkey due to an arbitration decision requiring Iraq's approval for oil shipments
Kurdish officials head to Baghdad today to discuss resuming oil exports through Turkey (BBG)
Additionally, Monday's announcement that First Citizens Bank will purchase deposits and loans from failed Silicon Valley Bank boosted optimism about the banking sector
Equities are trading flat as the market focuses on the banking crisis and the upcoming February CPI report on Friday
Russian crude exports fell by less than Kremlin's pledged 0.5 MMBbl/d output cutback in March (BBG)
Russian shipments fell by 0.123 MMBbl/d for the week ending on March 24, significantly less than the 0.5 MMBbl/d cut Moscow had pledged
No Russian crude was exported to Northern Europe, with demand in China and India still accounting for the majority of exports of Russian crude in 2023
Additionally, Russia’s Deputy Prime Minister Alexander Novak admitted yesterday that Russia will need to find new insurance and re-insurance mechanisms for its oil exports as the West won't insure cargo above the EU and US price cap
Oil consumers rush to increase hedging levels as prices drop, boosting open interest in crude contracts (Bloomberg)
Oil consumers, including airlines, increased their hedging levels when prices plunged earlier this month to guard against a possible rebound in oil prices later this year < Sign that large consumers of oil-based fuels believe that we've seen the bottom of oil prices and that they believe oil prices will be higher in the future.
Swap dealers posted their second-largest increase in long positions in ICE Brent futures and options last week, indicating a significant uptick in consumer hedging activity
Many research shops including Goldman Sachs forecast a rebound in oil prices later this year, which would increase costs for oil users, leading to a rise in hedging activity
Higher hedging volumes have also boosted open interest across the oil market, hitting the highest in a little over a year late last week
Natural Gas
Natural gas trades lower around $2.07, after falling to a multi-week low yesterday
Weather forecasts moderated again today, with the Lower 48 forecast warming by 13.8 °F over the two-week forecast period
The largest change was from the Midwest regions forecast, which warmed by a total of 39.8 °F
House Republicans look to pass energy bill this week (BBG)
The goal of the bill will be to lower energy costs by increasing the speed at which permits are authorized and projects are approved
The bill comes amid a strong push in congress for energy infrastructure permitting reform from both parties
It is expected that Biden will veto the bill, with the administration saying that the bill would only “pad oil and gas company profits”
The chance of this bill getting approved by the Senate and then signed by Biden is close to zero. The Republicans just want to send a clear message that they have a "Common Sense Energy Plan".
China’s gas demand is expected to rise by 7% (BBG)
Despite below-average economic growth from China, which is still in the process of reopening its economy, S&P Global expects China’s gas demand to rise by 7% and LNG imports to increase by 5 million tons
China could potentially receive more gas from Russia via the Power of Siberia pipeline
There has however been a decline in coal-to-gas switching as the country's power grid has ramped up coal generation, prioritizing grid stability
Chinese domestic coal trades at a discount of about $10/MMBtu to spot JKM gas prices
> WTI is up $0.16 to $72.97/bbl, and Brent is up $0.12 to $78.24/bbl.
> Natural gas is down -1.5c to $2.073/MMBtu. (As of 08:15 AM CDT)
AEGIS Notes with my comments in blue
Oil
Oil remains relatively unchanged amid halted flows from Iraqi Kurdistan and easing banking fears
May ’23 WTI gained 16c this morning to trade around $72.97/Bbl
Oil prices rallied by $3.55/Bbl on Monday, marking the largest single-day rise since October 2022
Prices found support as semi-autonomous Kurdistan stopped exporting 0.45 MMBbl/d via Turkey due to an arbitration decision requiring Iraq's approval for oil shipments
Kurdish officials head to Baghdad today to discuss resuming oil exports through Turkey (BBG)
Additionally, Monday's announcement that First Citizens Bank will purchase deposits and loans from failed Silicon Valley Bank boosted optimism about the banking sector
Equities are trading flat as the market focuses on the banking crisis and the upcoming February CPI report on Friday
Russian crude exports fell by less than Kremlin's pledged 0.5 MMBbl/d output cutback in March (BBG)
Russian shipments fell by 0.123 MMBbl/d for the week ending on March 24, significantly less than the 0.5 MMBbl/d cut Moscow had pledged
No Russian crude was exported to Northern Europe, with demand in China and India still accounting for the majority of exports of Russian crude in 2023
Additionally, Russia’s Deputy Prime Minister Alexander Novak admitted yesterday that Russia will need to find new insurance and re-insurance mechanisms for its oil exports as the West won't insure cargo above the EU and US price cap
Oil consumers rush to increase hedging levels as prices drop, boosting open interest in crude contracts (Bloomberg)
Oil consumers, including airlines, increased their hedging levels when prices plunged earlier this month to guard against a possible rebound in oil prices later this year < Sign that large consumers of oil-based fuels believe that we've seen the bottom of oil prices and that they believe oil prices will be higher in the future.
Swap dealers posted their second-largest increase in long positions in ICE Brent futures and options last week, indicating a significant uptick in consumer hedging activity
Many research shops including Goldman Sachs forecast a rebound in oil prices later this year, which would increase costs for oil users, leading to a rise in hedging activity
Higher hedging volumes have also boosted open interest across the oil market, hitting the highest in a little over a year late last week
Natural Gas
Natural gas trades lower around $2.07, after falling to a multi-week low yesterday
Weather forecasts moderated again today, with the Lower 48 forecast warming by 13.8 °F over the two-week forecast period
The largest change was from the Midwest regions forecast, which warmed by a total of 39.8 °F
House Republicans look to pass energy bill this week (BBG)
The goal of the bill will be to lower energy costs by increasing the speed at which permits are authorized and projects are approved
The bill comes amid a strong push in congress for energy infrastructure permitting reform from both parties
It is expected that Biden will veto the bill, with the administration saying that the bill would only “pad oil and gas company profits”
The chance of this bill getting approved by the Senate and then signed by Biden is close to zero. The Republicans just want to send a clear message that they have a "Common Sense Energy Plan".
China’s gas demand is expected to rise by 7% (BBG)
Despite below-average economic growth from China, which is still in the process of reopening its economy, S&P Global expects China’s gas demand to rise by 7% and LNG imports to increase by 5 million tons
China could potentially receive more gas from Russia via the Power of Siberia pipeline
There has however been a decline in coal-to-gas switching as the country's power grid has ramped up coal generation, prioritizing grid stability
Chinese domestic coal trades at a discount of about $10/MMBtu to spot JKM gas prices