Daily Energy Report

Crude oil futures for May 2021 settled down $3.80 @ $57.76/bbl, trading in a $4.03 range including the overnight. RBOB settled down 6.34/cpg and heating oil settled down 8.04/cpg.

The U.S. Energy Information Administration expects OPEC crude oil production will average 25.3 million barrels per day in April 2021, which is similar to expected production for March and down -1.6 mil/bpd from EIA’s forecast for April OPEC production in last month’s Short Term Energy Report. The EIA expects OPEC crude oil production will rise to 26.6 mil/bpd in May. This increase reflects Saudi Arabia ending voluntary cuts of -1.0 mil/bpd, along with the relaxation of cuts that were extended through April at the March 4 OPEC+ meeting. This forecast assumes OPEC will produce 27.9 million b/d on average in the second half of 2021, as OPEC+ generally increases crude oil output to supply rising global oil consumption.

Natural gas futures for April 2021 settled down $0.074 @ $2.508/mmbtu, trading in a .079 cent range including the overnight session.

In February, the Henry Hub natural gas spot price averaged $5.350 per million British thermal units, which was up from the January average of $2.710/mmbtu. It was the highest nominal monthly average Henry Hub spot price since February 2014. Higher prices in February reflect increased demand for natural gas because of much colder-than-normal temperatures throughout most of the U.S. Price effects were amplified because the rise in demand occurred amid a drop in natural gas production due to well freeze-offs. The EIA expects Henry Hub spot prices to decline to an average of $2.880/mmbtu in the second quarter of 2021. The EIA also expects that Henry Hub spot prices will average $3.140/mmbtu in 2021, which is up from the 2020 average of $2.030/mmbtu.

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