Oil & Gas Prices - April 12
Posted: Wed Apr 12, 2023 9:06 am
At today's luncheon in Houston I will present why I believe oil prices could go over $100/bbl this summer.
Opening Prices
> WTI is up $0.60 to $82.13/bbl, and Brent is up $0.58 to $86.19/bbl.
> Natural gas is down -1.1c to $2.175/MMBtu.
AEGIS Notes with my comments in blue
Crude Oil
Oil surges to highest since November following the U.S. March CPI print
May ’23 WTI gained 60c this morning to trade around $82.12/Bbl
March CPI rose 0.1% from last month, below the estimated 0.2%
The year-over-year rise in Core CPI, which excludes food and energy prices, was 5.6%, in line with the expected increase of 5.6%
However, Fed is expected to hike interest rates at least once more due to strong consumer prices and the labor market while monitoring banking turmoil < Inflation will get worse this summer as transportation fuel prices increase
Additionally, treasury yields fell while equities rose following the CPI report
The U.S. dollar fell to its lowest in nearly two months, making oil more affordable for holders of other currencies
Kurdish oil exports remain halted as Iraq negotiates with Turkey
Russia's flagship Urals crude price nears $60/Bbl cap (BBG)
Russia's Urals crude price is approaching the $60 limit, with the delivered price to India's west coast over $73/Bbl as of April 6, according to Argus data
Argus data shows an $18/Bbl gap in Urals cargoes' shipping and delivery points, with Russia’s Baltic ports Primorsk and Novorossiysk selling at around $55/Bbl
However, it's difficult to assess the actual price due to the emergence of shadow vessels and trading companies with unclear affiliations
Despite surging Urals crude exports to India and China, tighter sanctions are starting to impact Russia's output, with the country pledging to cut 0.5 MMBbl/d through the end of the year
Natural Gas
Natural gas prices decline slightly, down 1.1c to trade around $2.18/MMBtu
Weather forecasts shifted cooler, with the Lower 48 forecast cooling by 3.8 °F over the two-week period
Tomorrow's U.S. ngas storage report should show a decline in the surplus to the 5-year average storage level.
Coal usage declines relative to gas and renewables (BBG)
For a second consecutive year, the amount of power generated from coal fell as utilities retired coal plants and constructed new wind and solar facilities
According to the EIA, coal is expected to generate 17% of US power in 2023, down from 20% in 2022
About 5% of total US coal generation capacity was retired in 2022, or 11 GW
New petition adds to Mountain Valley Pipeline woes (BBG)
A week after losing a crucial water crossing permit, environmental groups have filed a petition against MVP alleging that the Fish and Wildlife Service did not adequately assess the risk to endangered species
The petition was filed on Monday in the US Court of Appeals for the Fourth Circuit, the same court that pulled one of MVP’s permits last week
Opening Prices
> WTI is up $0.60 to $82.13/bbl, and Brent is up $0.58 to $86.19/bbl.
> Natural gas is down -1.1c to $2.175/MMBtu.
AEGIS Notes with my comments in blue
Crude Oil
Oil surges to highest since November following the U.S. March CPI print
May ’23 WTI gained 60c this morning to trade around $82.12/Bbl
March CPI rose 0.1% from last month, below the estimated 0.2%
The year-over-year rise in Core CPI, which excludes food and energy prices, was 5.6%, in line with the expected increase of 5.6%
However, Fed is expected to hike interest rates at least once more due to strong consumer prices and the labor market while monitoring banking turmoil < Inflation will get worse this summer as transportation fuel prices increase
Additionally, treasury yields fell while equities rose following the CPI report
The U.S. dollar fell to its lowest in nearly two months, making oil more affordable for holders of other currencies
Kurdish oil exports remain halted as Iraq negotiates with Turkey
Russia's flagship Urals crude price nears $60/Bbl cap (BBG)
Russia's Urals crude price is approaching the $60 limit, with the delivered price to India's west coast over $73/Bbl as of April 6, according to Argus data
Argus data shows an $18/Bbl gap in Urals cargoes' shipping and delivery points, with Russia’s Baltic ports Primorsk and Novorossiysk selling at around $55/Bbl
However, it's difficult to assess the actual price due to the emergence of shadow vessels and trading companies with unclear affiliations
Despite surging Urals crude exports to India and China, tighter sanctions are starting to impact Russia's output, with the country pledging to cut 0.5 MMBbl/d through the end of the year
Natural Gas
Natural gas prices decline slightly, down 1.1c to trade around $2.18/MMBtu
Weather forecasts shifted cooler, with the Lower 48 forecast cooling by 3.8 °F over the two-week period
Tomorrow's U.S. ngas storage report should show a decline in the surplus to the 5-year average storage level.
Coal usage declines relative to gas and renewables (BBG)
For a second consecutive year, the amount of power generated from coal fell as utilities retired coal plants and constructed new wind and solar facilities
According to the EIA, coal is expected to generate 17% of US power in 2023, down from 20% in 2022
About 5% of total US coal generation capacity was retired in 2022, or 11 GW
New petition adds to Mountain Valley Pipeline woes (BBG)
A week after losing a crucial water crossing permit, environmental groups have filed a petition against MVP alleging that the Fish and Wildlife Service did not adequately assess the risk to endangered species
The petition was filed on Monday in the US Court of Appeals for the Fourth Circuit, the same court that pulled one of MVP’s permits last week