March 10, 2021

March 10, 2021
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  • WTI is up 73c to $64.74/Bbl, and Brent is up 65c to $68.17/Bbl
  • Overnight trading for WTI was choppy with over a dollar in range in pre-market action
    • The American Petroleum Institute (API) reported on Tuesday a 12.8 MMBbl rise in crude inventories for the week ended March 5
    • More closely followed U.S. government data is due out later this morning
  • The continuation of OPEC+ cuts have hit the oil waterborne shipping business in the pocketbook
    • As producers enjoy higher oil prices due to the global restriction of supply some shippers are experiencing losses for supertanker rates on a benchmark Middle East-to-China route as rates deepened to -$6,779 a day on Tuesday (Bloomberg)
    • That is the biggest loss in at least the past three years and effectively means vessel owners would be subsidizing the transport of oil on that route
    • For reference, the same route in September made a positive $25k/day and about $15k/day in January
  • The EIA increased its U.S. crude production estimates for 2021 and 2022 because of expected higher crude prices
    • Domestic oil production will average 11.15 MMBbl/d this year, up by more than 1% from the previous forecast of 11.02 MMBbl/d, according to the agency’s Short-Term Energy Outlook (STEO)
    • Crude production in 2022 will average about 12.02 MMBbl/d, up about 4% from the prior month’s STEO
    • The agency estimates that WTI will average $57.24/Bbl this year and $54.75 in 2022, up from 14% and 6% respectively
  • Natural gas is down 3.5c to $2.627/MMBtu
    • Prompt-month natural gas has declined over 0.40/MMBtu over the last month or so
    • The summer ’21 strip has declined from a high of $3.08 to $2.74, while the winter 2021-2022 strip declined from a high of $3.22 to $2.95 over the same time period
    • Part of the reason for this decline is due to the weather moderating after the deep freeze that hit the central U.S. several weeks ago
  • EIA expects gas and power consumption to rise in it’s March Short-Term Energy Outlook (STEO)
    • The agency projects gas production will rise to 91.4 Bcf/d in 2021, which is 0.9 Bcf/d more than the February STEO forecast and 92.83 Bcf/d in 2022, up from 91.34 Bcf/d in 2020 and below the 2019 all-time high of 93.06 Bcf/d
    • The agency also raised its forecast for U.S. electricity consumption for the year by 2.1%, driven by colder temperatures in the first quarter compared with the 2020 season
    • Gas consumption was also projected to fall to 82.5 Bcf/d in 2021 and 81.6 Bcf/d in 2022 from 83.25 Bcf/d in 2020. The agency cites gas prices rising compared to the previous year as the reason for the decline
    • Henry Hub spot prices will average $3.14/MMBtu in 2021, up from the $2.03/MMBtu in 2020, and $3.16/MMBtu in 2022

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