Coquest Daily Energy Report
Crude Oil Futures for May 2023 settled up $0.09 @ $80.70/bbl. trading in a $1.01 range including the overnight-RBOB settled down 0.68/cpg and Heating Oil settled down 7.05/cpg. Japan has begun purchasing Russian crude oil above the $60.00/bbl. price cap, breaking with Western allies thanks to an exception authorized by the United States. As many European nations attempt curtailing themselves off Russian oil in response to the invasion of Ukraine, Japan stepped up its purchase of Russian natural gas. Japan has almost none of its own fossil fuels, heavily relying on imports for much of its energy needs. Some analysts believe this dependency influenced Japan’s hesitancy to fully back Ukraine against Russia. To date, Japan is the only G7 member not to have supplied Ukraine with lethal weapons. Despite the concession, Russian natural-gas imports to Japan are relatively small, accounting for around one-tenth of Japan’s supply and a fraction of Russia’s output. Most of what Russia exports to Japan comes from the Sakhalin-2 project in Russia’s Far East.
Natural Gas Futures for April 2023 settled down $0.144 @ $2.011/mmbtu trading in a 0.189 cent range including the overnight session. Domestic natural gas prices last week plunged to a 30-month low, crossing below $2.000 per million British thermal units for the second time this year-even as some producers have cut drilling to stave off further declines. Since the start of the year, U.S. gas futures have dropped by about 50.0%, a record drop for a quarter on rising output and mostly mild weather so far this winter that kept heating demand low and allowed utilities to leave more gas in storage than usual. The amount of gas in U.S. storage, sits about 21.0% higher than is normal for this time of year, and that surplus will set up U.S. inventories to reach record highs before next winter’s heating season.
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