Oil & Gas Prices - April 11

[dan_s]

Opening Prices:
> WTI is up $0.39 to $80.13/bbl, and Brent is up $0.18 to $84.36/bbl.
> Natural gas is up 2.6c to $2.198/MMBtu.

AEGIS Notes with my comments in blue
Oil

Oil trades higher amid persisting supply concerns
May ’23 WTI gained 39c this morning to trade around $80.13/Bbl < Up to $80.57 at the time of this post.

The U.S. dollar trades lower today, making oil more affordable for holders of other currencies
Russia's crude oil shipments fell last week, indicating compliance with the output cut (BBG)
China's consumer inflation slowed in March, signaling weak demand amid an uneven economic recovery (Reuters)
Kurdistan’s 0.45 MMBbl/d crude supply halt enters the third week; more talks are needed with Turkey before exports can resume
The market awaits tomorrow’s March CPI report in addition to OPEC and IEA’s monthly reports this week
Operations at some French oil terminals restarted yesterday as strikes came to an end. Tankers were able to deliver crude oil after weeks of delays (Argus)

Russia's oil exports fall, signaling that output cuts are taking effect (BBG)
Russia's seaborne crude exports plunged last week, falling by 1.24 MMBbl/d to below 3 MMBbl/d for the first time in eight weeks
The decline in Russia's oil exports could be an indication that the country is complying with its commitment to cut production by 0.5 MMBbl/d as part of the OPEC+ agreement
However, the weekly data is volatile, and weather affected some ports last week, but four-week shipments were still above average
If the recently announced OPEC+ production cuts do happen in May, demand for oil will exceed supply and above ground inventories in the U.S. and the OECD are already below where they should be as the spike in summer demand is just ahead.

Natural Gas

Natural gas prices are trading higher, extending gains from yesterday
Weather forecasts shifted warmer in the 6-10 day period, with the Lower 48 forecast warming by 6.4 °F
The Gulf Coast Express pipeline out of the Permian Basin is undergoing planned maintenance from today until Thursday, which will reduce the operational capacity and limit Permian takeaway capacity < Lack of adequate pipeline takeaway capacity in West Texas will continue to keep a lid on natural gas prices in the Permian Basin.

Tellurian to sell land in $1 billion deal (Reuters)
Tellurian, the developer of the Driftwood LNG export facility, has announced that they will sell 800 acres of land in Louisiana and lease it back for $87.5 million annually
The export project received approval to begin construction in January and will have a capacity of 3.5 Bcf/d
The Driftwood project has had several setbacks, however, with multiple supply deals being canceled

Europe may not have enough long-term LNG deals (Reuters)
In 2022, European LNG purchases mostly took place on the spot market, where prices are generally higher than under supply contracts
One-third of global LNG spot market purchases in 2022 were shipped to Europe, which could increase to 50% this year if more supply deals are not signed
A resurgence in Asian LNG demand threatens to increase competition between buyers and potentially tighten the market, especially under potential scenarios of higher weather-driven demand < BIG profit margins for LNG shipments will be with us for many years.

[dan_s]

Here is the link to the slides that AEGIS spoke from during their April 6 webcast.
https://app.hubspot.com/documents/6266854/view/501227314?accessId=a769b9

[dan_s]

Closing Prices:
> Prompt-Month WTI (May 23) was up $1.79 on the day, to settle at $81.53
> Prompt-Month Henry Hub (May 23) was up $0.014 on the day, to settle at $2.186

If WTI can stay over $81 through Friday, it should break to the upside as there is little technical resistance until $90.
What's needed
> Bullish storage report by EIA tomorrow.
> Bullish IEA "Oil Market Report" that just reenforces what the said in their March report; that demand for oil will exceed supply in Q3. I think demand exceeds supply already, but definitely it will in May.
> Strong economic reports from China are also important.