RJS: Focus on Fracking Summary: natural gas prices hit 13½ year high after a six-fold increase in less than 2 years; US oil exports at a 26 month high even with SPR at a 34½ year low & US oil supplies at a 17 year low; total oil + products inventories at a new 13½ year low even with highest refinery utilization rate since 2019 & greatest refinery throughput in 11 months; rigs down first time in 31 weeks Natural gas prices hit 13½ year high after a six-fold increase in less than 2 years Oil prices rose for the fifth consecutive week as a European embargo of Russian oil began to seem more likely. After rising 2.5% to 3.23 a barrel last week as fuel prices hit record highs on tight supplies and pulled nearby crude prices higher, trading
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RJS: Focus on Fracking
Summary: natural gas prices hit 13½ year high after a six-fold increase in less than 2 years; US oil exports at a 26 month high even with SPR at a 34½ year low & US oil supplies at a 17 year low; total oil + products inventories at a new 13½ year low even with highest refinery utilization rate since 2019 & greatest refinery throughput in 11 months; rigs down first time in 31 weeks
Natural gas prices hit 13½ year high after a six-fold increase in less than 2 years
Oil prices rose for the fifth consecutive week as a European embargo of Russian oil began to seem more likely. After rising 2.5% to $113.23 a barrel last week as fuel prices hit record highs on tight supplies and pulled nearby crude prices higher, trading in the contract of US light sweet crude for June delivery expired. So on Monday oil price quotes were referencing the contract price for US light sweet crude for July delivery, which had ended last week priced at $110.28 a barrel, after rising 1.5% on the week. That contract opened this week higher as U.S. fuel demand, tight supplies, and a weaker dollar supported prices while Shanghai prepared to reopen after a two-month lockdown, but failed to hold the early momentum and finished trading little changed, settling up a penny at $110.28 a barrel, as worries over a possible recession weighed against the outlook for higher fuel demand with the upcoming U.S. summer driving season and Shanghai’s plans to reopen. Oil prices held steady early Tuesday as Chinese efforts to cushion the impact of anti-virus lockdowns, including policies to help people buy cars, failed to reassure traders, and then turned lower as Hungary continued to hold up the EU’s planned embargo on Russian oil, before settling down 52 cents on the session at $109.77 a barrel, as concerns over a possible recession and China’s COVID-19 curbs outweighed tight global supply and expectations of a summer driving season pick-up in fuel demand . . . oil prices rallied in early morning trading on Wednesday, led by the rising front-month gasoline contract, after the American Petroleum Institute reported gasoline stockpiles in the United States fell by a larger-than-expected margin, leaving supplies at their lowest level for this time of the year since 2013, and extended their gains after the EIA reported crude stockpiles fell by a million barrels, and that refiners had picked up the pace of processing last week, boosting capacity use to its highest since December 2019, and settled 56 cents higher at $110.33 a barrel after the Fed minutes revealed that while the central bank was sticking to its commitment to lift short-term interest rates, Fed officials were not planning more aggressive measures in tightening monetary policy . . . oil prices then jumped about 3% to a two-month high early Thursday after European Council President Charles Michel said he was confident an agreement to ban Russian supplies could be reached before the council’s next meeting on May 30. and extended the early gains to settle $3.76 higher at $114.09 a barrel amid signs the EU was closing in on a deal with Hungary and Czech Republic to ban Russian oil imports, at a time when global supplies were already slipping further into deficit . . . oil prices moved higher again early Friday, supported by a tight market due to rising gasoline consumption in the US and the possibility of an EU ban on Russian oil, and settled 98 cents higher at $115.07 a barrel after a volatile trading session, drawing support from strong worldwide demand for fuel, while the price of Brent, the global benchmark, jumped 3.5% on reports that Iran had seized two oil tankers in the Strait of Hormuz . . . so for the week, Brent crude finished 6 percent higher, while US oil prices rose 1.5%, even as the contract price for US light crude for July delivery, which just became the quoted front month contract on Monday, finished 4.3% above its price of the prior Friday..
Meanwhile, natural gas prices rose the ninth time in eleven weeks and hit a 13½ year high as demand increased while supplies remained tight . . . after rising 5.5% to $8.083 per mmBTU last week as output slipped while demand for power generation and for exports remained high, the contract price of natural gas for June delivery jumped 66.1 cents, or more than 8%, to a near 13-year high of $8.744 per mmBTU on Monday, as US consumers cranked up their air conditioners to escape a spring heatwave and LNG exports plants consumed more of the fuel . . . prices then rose 5.2 cents and went on to close at new 13 year high of $8.796 per mmBTU on Tuesday, as gas volumes flowing to liquefied natural gas export plants jumped to the highest in seven weeks, and on raised forecasts for demand next week . . . natural gas prices then soared to over $9 for the first time since August 2008 on Wednesday, and hit $9.399 per mmBTU in a furious rally amid robust calls for U.S. exports and worries that fragile supplies might prove inadequate to meet summer cooling demand, before pulling back to settle 17.5 cents higher at $8.971 per mmBTU, as power generators and LNG export plants continued to consume more of the fuel…..natural gas prices opened higher and shot up to another 13 year high at $9.401 per mmBTU on Thursday, as traders digested a weak storage report and renewed concerns about a supply crunch, but pulled back in volatile trading ahead of the contract expiration on forecasts for lower demand this week than was previously expected, and settled 6.3 cents lower at $8.908 per mmBTU, while the new front month contract price of natural gas for July delivery fell 9.8 cents to $8.895 per mmBTU . . . that July contract price fell again on Friday, giving up 16.8 cents to settle at $8.727 per mmBTU, on rising output and lowered forecasts for demand over the next two weeks, but still finished 6.7% higher on the week, even as Reuters and other media outlets call it an 8% gain for the week, referencing the difference between the June contract starting price and the July contract ending price…
With natural gas prices hitting a 13½ year high this week, we’ll include a price graph for them and take a look at how it relates….
The above is a screenshot of the interactive natural gas price chart from barchart.com, which i have reset to show weekly natural gas prices over the past 3 years, in order to show the recent lower prices. This same chart can be reset to show prices of front month or individual monthly natural gas futures contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show natural gas prices by the minute, hour, day, week or month for each . . . each bar in the graph shown above represents the range of natural gas prices for a single week, with weeks when prices rose indicated in green, and weeks when prices fell indicated in red, with the small sticks above or below each weekly bar representing the extent of the price change above or below the opening and closing price for the week in question . . . likewise, the bars across the bottom show trading volume for the weeks in question, again with up weeks indicated by green bars and down weeks indicated in red…you’ll note that by positioning our cursor over the week of June 22 2020, indicated by a thin vertical line, we have caused that week’s natural gas prices to be displayed in red in the upper left corner of the graph…there we can see that natural gas prices opened at $1.671 per mmBTU on Monday of that week, fell to as low as $1.440/mmBTU, and closed that week at $1.544/mmBTU, all prices that are less than one-sixth of the $9.401 per mmBTU that front month natural gas prices hit this week . . . we can also use that interactive graph feature to determine that natural gas prices finished trading at $3.579/mmBTU on December 31st of 2021, and were still as low as $4.748 per mmBTU during the week beginning March 21st of this year . . . .those readings serve to establish that natural gas prices have increased by more than sixfold in less than two years, that they had at one time this week increased by 263% year to date, and had nearly doubled over the past nine weeks…
The EIA’s natural gas storage report for the week ending May 20th indicated that the amount of working natural gas held in underground storage in the US rose by 80 billion cubic feet to 1,812 billion cubic feet by the end of the week. This still left our gas supplies 387 billion cubic feet, or 17.6% below the 2,199 billion cubic feet that were in storage on May 20th of last year, and 327 billion cubic feet, or 15.3% below the five-year average of 2,139 billion cubic feet of natural gas that have been in storage as of the 20th of May over the most recent five years . . . the 80 billion cubic foot injection into US natural gas working storage for the cited week was less than the average forecast for a 87 billion cubic foot injection from an S&P Global Platts survey of analysts, and it was also less than the average injection of 97 billion cubic feet of natural gas that had typically been added to our natural gas storage during the same week over the past 5 years, and was much less than the 109 billion cubic feet that were added to natural gas storage during the corresponding week of 2021…