Coquest Daily Energy Report for February 27, 2024

Posted on 2024-02-27

Crude Oil futures for April settled up $1.29, or 1.66%, at $78.87. Crude oil experienced an increase of over $1 on Tuesday, fueled by reports suggesting that the OPEC is contemplating an extension of voluntary oil output cuts into the second quarter for additional support. Also supporting prices on the supply side, Israel and Hamas, as well as Qatari mediators, all sounded notes of caution on Tuesday about progress towards a truce in Gaza, after U.S. President Joe Biden said he believed a ceasefire could be reached in under a week to halt the war for Ramadan. Meanwhile, crack spreads, a proxy for refining margins, rose to their highest in more than five months in a sign that fuel demand could be rising.


Natural Gas futures for April settled up $.064 or 3.67% at $1.808. U.S. natural gas prices have experienced a resurgence, surpassing $1.8/MMBtu after reaching a low of $1.54 on February 19, marking the lowest point since June 2020. The mild winter has left natural gas stockpiles well above average, and despite an Arctic freeze in January, production has remained close to record levels. Qatar, a prominent LNG exporter, is planning to expand its LNG output from the current 77 million metric tons per year (mtpa) to 142 mtpa, representing an 85% increase. This ambitious expansion aims to secure Qatar's position with nearly 25% global market share by 2030 and could potentially impact competing projects, including those in the United States, where President Biden has put a pause on new export approvals.


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