Oil & Gas Prices - March 20

[dan_s]

Trading Economics:
"WTI crude futures fell about 2% to $81 a barrel on Wednesday, moving further away from over four-month highs touched on Tuesday, as investors took some profits off the table following a strong run-up in oil prices.
A stronger dollar also pressured oil prices, as it makes oil more expensive for buyers holding other currencies, hurting demand.
Meanwhile, EIA data showed crude inventories in the US unexpectedly declined by 1.95 million, the most in two months, as refiners continue to increase activity. < U.S. Refiners are still running below 90% of capacity, which is not high enough to meet rising demand for transportation fuels.
On the other hand, recent Ukrainian drone attacks on Russian refineries raised supply concerns.
Iraq also announced plans to reduce its crude exports to 3.3 million bpd in the coming months to comply with its OPEC+ quota, while Saudi Arabia experienced a second consecutive monthly decline in crude exports."
MY TAKE: After a nice spike in oil prices, the Paper Traders tighten up their stop loss order. Then one large fund sells their long contracts to harvest their gains an it triggers a selloff like we had today. Good news is that WTI found support before noon (thanks to a bullish storage report) and moved higher in the afternoon. My hope is that WTI will firm up in this trading range of $81 to $84, building a base before the next move higher. We are just at the beginning of spike in demand for transportation fuels.

"Natural gas futures in the US fell to below $1.7 per MMBtu in March, hovering close to its lowest level in one month and holding the sharp decline since the fourth quarter of 2023 amid pessimistic demand and strong levels of domestic supply. The Freeport LNG export plant in Texas announced that two out of its three liquefaction trains will remain out of service until May, delaying the period of low capacity for the key plant. The developments prevent the US from exporting additional natural gas through the LNG plant, lifting the supply of the commodity for domestic usage. Additionally, relatively low consumption due to a tame winter, near record-high gas production, strong hydropower output, and ample beginning stocks drove current natural gas storage to be 40% above normal levels in late March. Consequently, major producers like CNX Resources, EQT, and Chesapeake Energy deliberately cut production to manage market conditions."
MY TAKE: U.S. natural gas is now so cheap that as soon as Freeport gets back up to capacity and the Plaquemine (Venture Capital) facility comes online (hopefully) in Q3, then demand for U.S. LNG will spike higher. Well shut-ins and delaying well completions should get the U.S. ngas market back into balance in a few months. At least I hope so.