Coquest Daily Energy Report for February 21, 2024

Posted on 2024-02-21

Crude Oil futures for April settled up $.87, or 1.13%, at $77.91. Crude oil prices increased on Wednesday amid ongoing geopolitical tensions in the Middle East, and market participants analyzed indications of imminent supply constraints. Contracts linked to short-term deliveries have exhibited their most significant premium compared to later-dated contracts in several months, reflecting a market structure known as backwardation—an indicative signal of a tightly supplied market. There are indications that U.S. refineries are emerging from maintenance activities after operating at their lowest rates since December 2022, leading to an accumulation of crude stockpiles. The American Petroleum Institute will post its weekly inventory data after 4:30 p.m. ET, followed by the Energy Information Administration's report at 11 a.m. ET on Thursday, both delayed a day by Monday's U.S. holiday.


Natural Gas futures for March settled down $.197 or -12.49% at $1.773. U.S. natural gas futures surged over 10% towards $1.75/MMBtu on Wednesday, following Chesapeake Energy's decision to reduce its 2024 gas production forecasts by approximately 20%. This adjustment involves scaling back capital expenses, reducing rig counts, and delaying well completions, with the aim of achieving a gas output of around 2.7 billion cubic feet per day. Similar strategies to curtail drilling activities have also been disclosed by other significant gas producers such as Antero Resources, Comstock Resources, and EQT.


The full report can be found here.