Select Market Pricing
Crude Oil
May 2023 NYMEX crude retreated below $80 yesterday, settling down $1.70 to $79.16/bbl as it rolled off the board. June 2023, opened at $78.87 and is currently trading at $77.06 ($2.10, 2.65% lower) in its first day as the prompt-month despite a large drawdown in storage (4.5mm bbls). The Strategic Petroleum Reserve also had a significant draw of 28.6mm bbls, which was part of the governments committed sales from earlier in the year. On the bullish front, depleting inventories ahead of driving season along with high Asian demand are both positive. On the flip side, the Fed has repeatedly indicated that it’s not finished with rate hikes, which could in turn lead to economic troubles and stifle demand. The strong rally over the last few weeks was perhaps a little much, with some corrective action taking place.
U.S. oil production remained flat from a week ago while exports jumped nearly 2mm bpd. Refinery run rates jumped up again to 91% utilization.
www.eia.gov/petroleum/supply/weekly
Rig Count Update
The U.S. O&G rig total picked up seven on the week to 842, with the Permian leading the way with three to 363. Oil rigs accounted for 653 (+5) of the total, with gas rigs at 189 (+2). The major basins netted an overall 2-rig drop on the week which was offset with a +9 change for non-core basins. Overall, the rig count averaged 849 in Q1 of this year, a decent amount lower than the 870 in Q4 of last year.
Natural Gas
The prompt-month (May 2023) contract is currently down 3.2c to $2.19 in today’s action, softening as U.S. storage #s came out - 75 Bcf injection vs 65-72 Bcf expectations and significantly higher than last year (+47 Bcf) and the 5yr avg. (+41 Bcf). Additionally, European natural gas consumption was off 11% in March compared to the same month last year which could lead to a softening in the U.S. LNG export markets.
In the Midcon, chilly weather enters the region this weekend which should boost heating demand along with spot prices. Any price bump will likely be short-lived as normal and above-normal weather return to the forecast across the subsequent couple of weeks. Spot prices in the basin continue to average in the sub-$2 range ($1.795 - $1.975).
Natural Gas Liquids (NGLs)
Subtle changes across the board in both Mont Belvieu and Conway markets for liquid pricing compared to a week ago. All products were lower 1%-7% with the exception of both Ethane markets, with were 1% and 2% higher, respectively. Isobutane in Conway felt the biggest hit, losing 7% WoW. Prices compared to WTI remained strong as crude fell below $80/bbl this week.
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