Coquest

Coquest Daily Energy Report for March 27, 2024

Posted on 2024-03-27

Crude Oil futures for May settled down -$.27 or -.331% at $81.35. Oil prices declined for the second consecutive session on Wednesday due to the strengthening of the dollar and unexpected data from government sources indicating a significant increase in both U.S. crude and gasoline inventories. The appreciation of the U.S. dollar exerted downward pressure on oil prices, as reflected in the U.S. dollar index's consecutive gains. When the U.S. currency strengthens, it makes oil priced in dollars more costly for holders of other currencies, thereby reducing demand. Analysts pointed out that the unexpected surge in U.S. crude and gasoline stockpiles further exacerbated the downward pressure on oil prices. Despite the OPEC agreement earlier this month to prolong production cuts by approximately 2.2 million barrels per day until the end of June, countries such as Russia and Iraq have faced challenges in addressing over-production.

 

Natural Gas futures for May settled down -$.071 or -3.9687% at $1.718. U.S. natural gas futures continue their decline for the sixth consecutive session, driven by concerns surrounding excess inventories and less optimistic short-term weather predictions. Factors contributing to the subdued prices include recent warmer trends, lower-than-expected LNG exports, significant surplus supplies, and potential negative roll yield as prices for May'24 contracts decrease. However, there is a silver lining as U.S. production remains tight, hovering around 100 Bcf per day. Additionally, the Biden administration is in the final stages of implementing measures to mitigate methane emissions from oil and natural gas wells on public lands, marking a significant step in addressing greenhouse gas emissions after nearly a decade of federal deliberation.

 

View the full report here.

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