First Look: OPEC may need to deal with capacity questions at next meeting
May 03, 2024
Oil is trading higher, but heading for the largest weekly drop since February
Oil is heading for a weekly loss of more than 6% as geopolitical risk premium eases in the Middle East and the US looks to broker a ceasefire between Israel and Hamas
OPEC may need to deal with capacity questions at next meeting (BBG)
While the primary question for OPEC will be whether or not to continue its supply cuts through the second half of the year, it may also need to discuss the issue of longer-term production capacity
The UAE, Iraq, and Kazakhstan stand to bolster their production capacity by more than 300 MBbl/d next year, with the UAE advertising this week that it has already increased capacity by 200 MBbl/d to 4.85 MMBbl/d
2025 market balances remain an issue for OPEC as well, as even if supply cuts are instituted through the end of the year, it does not address balances in 2025
Natural gas prices head for a weekly gain following inventories building in line with expectations
June ’24 Henry Hub is up 0.4c this morning to trade around $2.039 /MMBtu
The Summer ’24 strip is down 0.5c to $2.354 and Winter ‘24/’25 strip is down 0.9c to $3.408
Yesterday, prompt gas prices rose by over 10c/MMBtu following the EIA's report of a 59 Bcf injection into storage last week, largely in line with expectations
Today's Euro Ensemble indicates larger swings, with today's model forecasting colder temperatures east of the Rockies and warmer in the west, but overall, it maintains a warmer trend for next week before moderating (Criterion)
Surging Bakken production boosts Oneok's natural gas and NGLs volumes (S&P Global)
Bakken Shale production growth led to a record average of 2.8 Bcf/d in April from February's 2.7 Bcf/d, contributing to a 9% rise in Oneok’s Rocky Mountain natural gas processing volumes to 1.49 Bcf/d in Q1 2024
Oneok projects an increase in Rocky Mountain processing volumes to 1.52-1.75 Bcf/d in 2024, with revised net profit guidance lifted by $70 million to $2.88 billion due to stable rig counts, longer lateral well lengths and production efficiencies
NGLs throughput in the Rocky Mountain region also increased by 12% Y-o-Y to 359 MBbl/d in Q1 2024, with volumes reaching 400 MBbl/d in April, driven by high propane plus volumes and modest ethane recovery
Oneok expects ongoing modest ethane recovery levels, supported by favorable gas-to-crude ratios and high ethane exports, with the 135 MBbl/d Elk Creek expansion expected to be completed in early Q1 2025, raising total NGL capacity from the basin to 575 MBbl/d
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