Oil & Gas Prices - May 26

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - May 26

Post by dan_s »

Opening Prices:
> WTI is up $0.85 to $72.68/bbl, and Brent is up $0.73 to $76.99/bbl.
> Natural gas is down -6.7c to $2.24/MMBtu.

AEGIS Notes
Oil

West Texas Intermediate moved above $72/Bbl Friday morning after a 3% dive on Thursday
The White House and Republicans were reportedly moving closer to an agreement on the debt ceiling before breaking for the holiday weekend
The U.S. dollar pared some gains as progress was made on the debt ceiling
AEGIS notes that recent dollar strength has been a significant factor in holding oil prices in the low $70’s

There are little signs Russia is cutting oil production as promised (Bloomberg)
Crude shipments from Russian ports in the four weeks to May 21 were more than 480 MBbl/d higher than February levels, according to shipping tracking data by Bloomberg
Russia claims that seaborne crude flows have been supported since the output cut by a diversion of barrels that would have headed to Europe via pipeline
However, data shows that those pipeline flows had fallen well before the supposed output reduction came into effect (BBG)

Natural Gas

Natural gas prices are trading lower by 3%, to $2.24, and heading for a weekly loss
Lower 48 gas demand is expected to average 65-70 Bcf/d over the next two weeks

The June NYMEX contract expires today, which will make July the prompt month contract < JUL23 was trading at $2.389 this morning.

NOAA calls for near-normal hurricane season (Reuters)
US weather forecasters are predicting a total of 12-17 storms, five to nine of which are expected to develop into hurricanes
NOAA said there is a 40% chance of an average season and a 30% chance of an above-average season, although El Nino conditions could make it harder for hurricanes to form
Gulf of Mexico storms now pose a greater risk to gas demand than supply, as the majority of LNG export facilities are along the gulf coast, and supply from offshore has declined

European gas prices head for the longest streak of consecutive weekly declines since 2007 (BBG)
The Dutch TTF hub is on track for eight consecutive lower weekly settlements amid full storage levels and limited demand
The situation has led to concerns by observers that some gas demand may have been permanently lost after last year’s price spike
Prompt month TTF prices are currently trading around $8.02/MMBtu, which is still high enough to encourage exports from the US
Dan Steffens
Energy Prospectus Group
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