Oil & Gas Prices - May 23
Posted: Tue May 23, 2023 9:00 am
Opening Prices:
> WTI is up $0.96 to $73.01/bbl, and Brent is up $0.90 to $76.89/bbl.
> Natural gas is down -3.5c to $2.365/MMBtu.
AEGIS Notes
Oil
Oil trades higher ahead of the start of U.S. driving season and amid Saudi warning to short sellers
> June ’23 gained nearly $1 this morning to trade above $73/Bbl
> The expectation of high fuel demand ahead of the start of U.S. driving season this weekend supports prices < The combination of more demand and the blending requirements of "Summer Blend" gasoline, increases crude oil demand by ~2 million bpd from Q1 to June.
> The debt ceiling talks continue without a conclusive resolution from the recent meeting between President Biden and Speaker McCarthy
> Saudi Arabia's Energy Minister Salman hints at potential further cuts being a topic in the upcoming June OPEC+ meeting (BBG)
> Despite Kremlin's production cut claims, Russia's seaborne crude exports have hit a record high since 2022 (BBG)
> Additionally, ongoing wildfires in Canada's Alberta region have halted about 260,000 Bbl/d of oil production < CPG, IPOOF and ROK have been forced to shut-in some wells. None of them expect serious damage to wells or surface facilities, but Q1 production will be impacted.
Saudi Arabia's Energy Minister warns speculators ahead of OPEC+ meeting (BBG)
> Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, has cautioned crude short sellers ahead of the forthcoming OPEC+ meeting scheduled for June 3-4
> Contrarily, other OPEC+ members believe that further actions are unnecessary as global oil inventories are expected to shrink in 2H2023 as China’s demand recovery accelerates
Russia's seaborne crude exports soar for the sixth straight week (BBG)
> The four-week average of Russian seaborne crude exports rose for the sixth consecutive week, now close to 4 MMBbl/d
> There's been a 15% increase in these exports since the start of April, the highest since Bloomberg initiated tracking in 2022
> Despite low refinery activity due to seasonal maintenance, Russia is maintaining high seaborne exports, likely by tapping into its oil inventories
Natural Gas
Natural gas prices are trading lower, around $2.36, after falling 18c yesterday
> The Winter ‘23/’24 strip is trading at $3.52, and the Summer ’24 strip is at $3.27 < NYMEX strip prices are above the HH ngas prices that I am using in my forecasts: $2.25 for Q2, $2.50 for Q3 and $2.75 for Q4. All four of our gassers (AR, CRK, EQT and RRC) will remain profitable at these prices.
> Wind generation for electricity continues to underperform, at a multi-year low of 25 GW, while solar generation is at a multi-year high of 18 GW
> Lower performance from renewables will generally lead to higher usage of natural gas, which is generating about 160 GW of electricity
Gas flaring in the Permian could rise in 2024 (Reuters)
> It is estimated by East Daly Analytics that pipeline takeaway capacity in the Permian could be lower than gas production by an average of 200 MMcf/d in 2023 and 500 MMcf/d in 2024, leading to increased flaring < Here's an idea: Instead of wasting more $Billions on windmills in West Texas, why not put natural gas fired power plants in the Permian Basin.
> Any potential construction delays on planned pipes in the basin would result in higher levels of flaring than estimated
> A total of 4-Bcf/d of pipeline takeaway capacity will be added through 2024 from the Whistler Pipeline, Matterhorn Express, and Permian Highway Expansion
> Larger producers such as Exxon, ConocoPhillips, and Chevron would likely delay completions and shut in production rather than increase flaring
Cameron LNG concludes maintenance (BBG)
> The export facility had been running at a reduced rate, with one of its three trains offline for maintenance since April 28
> The plant has a total capacity of 2.3 Bcf/d, but feedgas levels fell to 0.9 Bcf/d last week
> Total US LNG feedgas levels have recovered to 13 Bcf/d as of this morning
> WTI is up $0.96 to $73.01/bbl, and Brent is up $0.90 to $76.89/bbl.
> Natural gas is down -3.5c to $2.365/MMBtu.
AEGIS Notes
Oil
Oil trades higher ahead of the start of U.S. driving season and amid Saudi warning to short sellers
> June ’23 gained nearly $1 this morning to trade above $73/Bbl
> The expectation of high fuel demand ahead of the start of U.S. driving season this weekend supports prices < The combination of more demand and the blending requirements of "Summer Blend" gasoline, increases crude oil demand by ~2 million bpd from Q1 to June.
> The debt ceiling talks continue without a conclusive resolution from the recent meeting between President Biden and Speaker McCarthy
> Saudi Arabia's Energy Minister Salman hints at potential further cuts being a topic in the upcoming June OPEC+ meeting (BBG)
> Despite Kremlin's production cut claims, Russia's seaborne crude exports have hit a record high since 2022 (BBG)
> Additionally, ongoing wildfires in Canada's Alberta region have halted about 260,000 Bbl/d of oil production < CPG, IPOOF and ROK have been forced to shut-in some wells. None of them expect serious damage to wells or surface facilities, but Q1 production will be impacted.
Saudi Arabia's Energy Minister warns speculators ahead of OPEC+ meeting (BBG)
> Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, has cautioned crude short sellers ahead of the forthcoming OPEC+ meeting scheduled for June 3-4
> Contrarily, other OPEC+ members believe that further actions are unnecessary as global oil inventories are expected to shrink in 2H2023 as China’s demand recovery accelerates
Russia's seaborne crude exports soar for the sixth straight week (BBG)
> The four-week average of Russian seaborne crude exports rose for the sixth consecutive week, now close to 4 MMBbl/d
> There's been a 15% increase in these exports since the start of April, the highest since Bloomberg initiated tracking in 2022
> Despite low refinery activity due to seasonal maintenance, Russia is maintaining high seaborne exports, likely by tapping into its oil inventories
Natural Gas
Natural gas prices are trading lower, around $2.36, after falling 18c yesterday
> The Winter ‘23/’24 strip is trading at $3.52, and the Summer ’24 strip is at $3.27 < NYMEX strip prices are above the HH ngas prices that I am using in my forecasts: $2.25 for Q2, $2.50 for Q3 and $2.75 for Q4. All four of our gassers (AR, CRK, EQT and RRC) will remain profitable at these prices.
> Wind generation for electricity continues to underperform, at a multi-year low of 25 GW, while solar generation is at a multi-year high of 18 GW
> Lower performance from renewables will generally lead to higher usage of natural gas, which is generating about 160 GW of electricity
Gas flaring in the Permian could rise in 2024 (Reuters)
> It is estimated by East Daly Analytics that pipeline takeaway capacity in the Permian could be lower than gas production by an average of 200 MMcf/d in 2023 and 500 MMcf/d in 2024, leading to increased flaring < Here's an idea: Instead of wasting more $Billions on windmills in West Texas, why not put natural gas fired power plants in the Permian Basin.
> Any potential construction delays on planned pipes in the basin would result in higher levels of flaring than estimated
> A total of 4-Bcf/d of pipeline takeaway capacity will be added through 2024 from the Whistler Pipeline, Matterhorn Express, and Permian Highway Expansion
> Larger producers such as Exxon, ConocoPhillips, and Chevron would likely delay completions and shut in production rather than increase flaring
Cameron LNG concludes maintenance (BBG)
> The export facility had been running at a reduced rate, with one of its three trains offline for maintenance since April 28
> The plant has a total capacity of 2.3 Bcf/d, but feedgas levels fell to 0.9 Bcf/d last week
> Total US LNG feedgas levels have recovered to 13 Bcf/d as of this morning