Oil & Gas Prices - May 15
Posted: Mon May 15, 2023 9:24 am
Opening Prices:
> WTI is up $0.45 to $70.49/bbl, and Brent is up $0.45 to $74.62/bbl.
> Natural gas is up 7.7c to $2.343/MMBtu.
AEGIS Notes
Oil
Oil traded over $70/Bbl Monday morning after four previous weeks of declines
> President Biden’s staff and House Speaker McCarthy’s office are in serious and continuing negotiations on the debt ceiling
> Speculators and money managers have amassed the largest bearish position in ICE Brent since July 2021. Hedge funds are less bearish on US crude futures and options
Refinery profit margins for typically low-value fuel oil in Asia are improving (BBG)
> The ‘bottom of the barrel’ was lifted as refineries in Asia and the Middle East turned to fuel oil
> The discount for Singapore 380-centistoke high-sulfur fuel oil over Dubai benchmark crude – a heavily watched industry metric - narrowed to $7.05/Bbl on Monday from near $24 at the start of the year, according to Bloomberg
> The price boost for typically less desirable inputs is boosting demand for heavier crude grades
Fires continue to rage in Canada’s producing region (Bloomberg)
> A heat wave brought hot, dry conditions, prompting officials to warn that more blazes are coming
> This month’s fires have largely spared the oil-sands region, unlike the 2016 blaze that knocked more than 1 MMBbl/d offline near Fort McMurray
> The current fires have helped lift an already strengthening WCS crude oil whose discount to WTI has narrowed to -$12.85/Bbl
Crescent Point Energy (CPG) and InPlay Oil (IPOOF) have reported that some wells have been shut in.
Natural Gas
Natural gas prices are higher, around $2.35, extending gains from Friday < My "hope" is that HH moves over $2.50 by the end of June and over $3.00 by the end of September.
> Weather forecasts shifted cooler, with the Lower 48 two-week forecast losing 6.4 °F
> Demand for space cooling is forecast to be below the 10-year average until May 24 before climbing to above-average levels into the end of the month
LNG feedgas continues to be down about 2 Bcf/d from the highs set last month due to scheduled maintenance at several facilities
Natural gas rig count falls by the most since 2016 (BBG)
> The Baker Hughes weekly rig count on Friday reported a decline of 16 natural gas directed drilling rigs, falling from 157 to 141 < As I have posted here many times, "market forces" will rebalance the U.S. natural gas market this summer. It is just Good Business not to complete shale gas wells that come online strong and decline rapidly into today's low gas prices when much higher gas prices are just a few months away.
> The drop was dispensed between regions, with five rigs dropped from the Haynesville, three from the Permian Basin, and three from the Marcellus
> The reduction is in-line with language from public producers who have discussed cutting back on drilling activity
Some LNG projects may startup earlier than expected (S&P)
> Research firm, Bernstein, cited three export projects they believe will come online earlier than expected in 2024 and 2025
> Venture Global’s Plaquemines LNG, Exxon Mobile’s Golden Pass, and Cheniere’s Stage Three expansion were listed as the projects which could be completed sooner than company estimates indicate < This is extremely good news for all of our "gassers". We will be publishing updated profiles on Antero Resources (AR) and Comstock Resources (CRK) today. We just published the updated profile on SM Energy (SM) this morning, which has a lot of natural gas production.
> Bernstein said that the early arrival of demand would push market balances in 2024 from “very oversupplied to only slightly oversupplied” < In Early 2025 the U.S. gas market will be under-supplied and could move to very under-supplied by 2027 when the U.S. will have close to 40 Bcf per day of export capacity.
> WTI is up $0.45 to $70.49/bbl, and Brent is up $0.45 to $74.62/bbl.
> Natural gas is up 7.7c to $2.343/MMBtu.
AEGIS Notes
Oil
Oil traded over $70/Bbl Monday morning after four previous weeks of declines
> President Biden’s staff and House Speaker McCarthy’s office are in serious and continuing negotiations on the debt ceiling
> Speculators and money managers have amassed the largest bearish position in ICE Brent since July 2021. Hedge funds are less bearish on US crude futures and options
Refinery profit margins for typically low-value fuel oil in Asia are improving (BBG)
> The ‘bottom of the barrel’ was lifted as refineries in Asia and the Middle East turned to fuel oil
> The discount for Singapore 380-centistoke high-sulfur fuel oil over Dubai benchmark crude – a heavily watched industry metric - narrowed to $7.05/Bbl on Monday from near $24 at the start of the year, according to Bloomberg
> The price boost for typically less desirable inputs is boosting demand for heavier crude grades
Fires continue to rage in Canada’s producing region (Bloomberg)
> A heat wave brought hot, dry conditions, prompting officials to warn that more blazes are coming
> This month’s fires have largely spared the oil-sands region, unlike the 2016 blaze that knocked more than 1 MMBbl/d offline near Fort McMurray
> The current fires have helped lift an already strengthening WCS crude oil whose discount to WTI has narrowed to -$12.85/Bbl
Crescent Point Energy (CPG) and InPlay Oil (IPOOF) have reported that some wells have been shut in.
Natural Gas
Natural gas prices are higher, around $2.35, extending gains from Friday < My "hope" is that HH moves over $2.50 by the end of June and over $3.00 by the end of September.
> Weather forecasts shifted cooler, with the Lower 48 two-week forecast losing 6.4 °F
> Demand for space cooling is forecast to be below the 10-year average until May 24 before climbing to above-average levels into the end of the month
LNG feedgas continues to be down about 2 Bcf/d from the highs set last month due to scheduled maintenance at several facilities
Natural gas rig count falls by the most since 2016 (BBG)
> The Baker Hughes weekly rig count on Friday reported a decline of 16 natural gas directed drilling rigs, falling from 157 to 141 < As I have posted here many times, "market forces" will rebalance the U.S. natural gas market this summer. It is just Good Business not to complete shale gas wells that come online strong and decline rapidly into today's low gas prices when much higher gas prices are just a few months away.
> The drop was dispensed between regions, with five rigs dropped from the Haynesville, three from the Permian Basin, and three from the Marcellus
> The reduction is in-line with language from public producers who have discussed cutting back on drilling activity
Some LNG projects may startup earlier than expected (S&P)
> Research firm, Bernstein, cited three export projects they believe will come online earlier than expected in 2024 and 2025
> Venture Global’s Plaquemines LNG, Exxon Mobile’s Golden Pass, and Cheniere’s Stage Three expansion were listed as the projects which could be completed sooner than company estimates indicate < This is extremely good news for all of our "gassers". We will be publishing updated profiles on Antero Resources (AR) and Comstock Resources (CRK) today. We just published the updated profile on SM Energy (SM) this morning, which has a lot of natural gas production.
> Bernstein said that the early arrival of demand would push market balances in 2024 from “very oversupplied to only slightly oversupplied” < In Early 2025 the U.S. gas market will be under-supplied and could move to very under-supplied by 2027 when the U.S. will have close to 40 Bcf per day of export capacity.