First Look: Oil is lower by more than $1 after Fed comments imply rates may stay high
May 21, 2024
Oil is lower by more than $1 after Fed comments imply rates may stay high
The US dollar is trading higher following the Federal Reserve commentary
Prompt crude volatility continues to move lower, falling to the lowest level since 2019
Some physical markets have shown signs of weakening, with WTI Midland in Europe falling to 69c below Dated Brent, the lowest level since last May
Federal Reserve comments lead to demand fears (Reuters)
Oil prices fell following comments from the Federal Reserve, with Governor Waller saying they need several more months of good inflation data to begin interest rate cuts
Interest rates staying higher for longer could impact oil markets by weakening demand through higher borrowing costs
India requests refiners join Russia oil deal (BBG)
India has requested its state-run refiners jointly negotiate a long-term supply deal with Russia
The government wants refiners to lock in at least a third of their supply from Russia at a fixed discount to protect the country’s economy from price volatility
India has been a major buyer of discounted Russian crude, but tighter enforcement of US sanctions has hindered the trade and led to refiners buying more expensive crude grades
According to sources familiar with the matter, state refiners are seeking oil at a discount of more than $5/Bbl to Brent, while Russia is offering a $3/Bbl discount
Natural gas prices reverse some of yesterday’s gains to trade lower; hot weather continues to support cooling demand
June ’24 Henry Hub is down 5.8c this morning to trade around $2.693/MMBtu
The Summer ’24 strip is down 5.5c to $2.813 and Winter ‘24/’25 strip is up 4.9c to $3.518
Today’s Euro Ensemble indicates colder shifts in most regions today, especially in the Midwest, confirming a cooler pattern for next week despite forecasting warm temperatures for this week and early June (Criterion)
Summer heat promises continued retreat for South Central gas storage surplus (S&P Global)
Strong industrial and gas-fired demand in the South-Central US is eroding the region's gas storage surplus this spring
Looming hot weather coupled with tightening market fundamentals is set to catalyze a bull market in the region by late summer, according to Platts
In May, total gas demand in the Southeast and Texas averaged a record-high 29.7 Bcf/d, up 750 MMcf/d year-over-year
Industrial end-users account for over 60% of the incremental demand, with power generators making up the rest
EIA reports a gas storage surplus at 207 Bcf above the five-year average as of May 10, down from over 290 Bcf in mid-March
ADNOC acquires stake in Rio Grande Phase 1, signs supply deal from Train 4 (Bloomberg)
ADNOC secured an 11.7% stake in NextDecade’s Rio Grande LNG Phase 1, acquiring from Global Infrastructure Partners
NextDecade retains its economic interest in Phase 1 and its stakes in Train 4-5 expansion capacity
ADNOC and NextDecade signed a 20-year LNG offtake agreement for 1.9 Mtpa from Rio Grande LNG Train 4
NextDecade targets FID on the 5.4 Mtpa Rio Grande Train 4 in the second half of 2024
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