Oil is trading lower, near $85.50, after rallying almost $1 yesterday
Oil climbed yesterday after it was reported that the US believes Iranian missile strikes are imminent in Israel
OPEC says close monitoring will be needed amid robust summer demand (BBG)
In OPEC’s latest monthly report, the organization said that oil demand will require close monitoring to ensure a “sound and sustainable market balance”
OPEC maintained its bullish demand forecast, calling for an annual increase of 2.7 MMBbl/d in the third quarter
While OPEC kept their demand forecast unchanged, they did lower their supply growth estimate by 100 MBbl/d to 1.2 MMBbl/d
In June, OPEC will review its current supply cut policy, which is currently removing 2 MMBbl/d from the market
Largest US refinery experiences power loss (BBG)
The Motiva Port Arthur refinery was halted following a power loss due to strong storms on Wednesday
About half of the refinery’s 630 MBbl/d capacity was taken offline
Natural gas prices trade modestly lower ahead of storage report
May ’24 Henry Hub is down 3c this morning to trade around $1.855/MMBtu
The Summer ’24 strip is down 2c to $2.286 and Winter ‘24/’25 strip is down 0.9c to $3.403
Today's Euro Ensemble indicates a cooler coastal but warmer Midwest, South Central, and Southeast, maintaining a warm trend that shifts to near or below-normal temperatures next week
US shale producers reduce hedging for 2024 due to low gas prices (S&P Global)
Nine of the largest North American E&P companies cut back on 2024 hedging due to a 20% fall in natural gas futures in Q4 2023, with only 38% of forecast production hedged, down from a four-year average of 61%
The median proportion of 2024 production that was hedged among these large shale gas drillers was 45%, at a median implied price of $3.29/Mcf, according to an April 9 report by S&P
"If a company believes that prices are currently low and will rebound later, it would not make sense to hedge prices," said S&P’s Thomas Wilson, indicating a strategic shift due to current low prices and favorable net debt positions among producers
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