March 15, 2021

March 15, 2021
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  • WTI is down 49c to $65.12/Bbl, and Brent is down 44c to $68.78/Bbl
  • Citi revises Brent price forecast as the bank expects a pickup in fracking activity
    • The bank forecast brent averaging $69/Bbl in 2021, a $5 upward revision
    • The bank also said Brent may hit $80/Bbl on aggressive OPEC+ policy
  • Baker Hughes oil-directed rig count falls for the first time since November
    • The Baker Hughes oil rig count lost one rig to bring the total rig count to 309
    • One rig was added in the Permian basin, while the Willison basin lost one rig and the DJ-Niobrara basins remained unchanged
  • Third COVID wave causes new restrictions in the European Union
    • The COVID infection rate is now its highest since February, according to Bloomberg
    • AEGIS notes while this may not have a significant impact on price immediately, if cases continue to rise we could see more travel restrictions possible dampening demand
  • Natural gas is down 6.8c to $2.532/MMBtu
  • An overall warmer weather pattern is contributing to the natural gas price decline Monday morning
    • The April contract traded in the low $2.50’s on Monday as weather models showed a loss of over 30 heating degree days (HDDs) since Friday (Commodity Weather Group)
    • The warmth continues to win out as swaths of warm air blanket the Midwest and East in the 6-15 day window (rest of March)
    • We are still early in spring and count on HDDs for demand. Market bulls are still looking for HDDs in March, April, and even parts of May, before starting to eye cooling degree days for demand (CDDs)
  • Natural gas prices have been under pressure lately. The Nymex front-month contract is down 22% compared to a mid-February high of $3.32/MMBtu.
    • Despite the gas price weakness, front-month gas futures are up nearly 60% compared to the same time last year
    • Recent weakness has come after two bearish gas inventory withdrawals and moderate weather
    • Many analysts were expecting end-of-season storage for winter to land as low as 1.35 – 1.5 Tcf, when estimates were made back in early February. However, the estimate is now closer to 1.6-1.7 Tcf as injections have been lower than expected

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