Analyst Insights

US rig count was relatively unchanged for the week ending June 9, falling by one rig vs. a week ago for a total of 695 according to Baker Hughes.  Rigs were added in the Anadarko (+1) and All Other (+2), while the Permian (-2) and Haynesville (-2) both lost rigs.  Total US rig count is down 50 in the last 90 days, and down 38 vs. this week a year ago.

The Crude Voyager report shows that crude oil shipments across the U.S. Gulf Coast fell by 679 Mb/d and were estimated at 3.7 MMb/d for the week ended June 2. With these shipments included, crude oil exports from the Gulf Coast in May were estimated at 3.5 MMb/d, down 16% from the previous month and the lowest since January. Only Houston-area terminals loaded more cargoes than in the previous month; for the remaining regions, fewer shipments were noted.

Canadian natural gas cash prices remain locked in sideways land as a persistent lack of weather-related demand strength has combined with above average storage levels and rebounding production due to the fading threat from Alberta wildfires. AECO forward prices, which had been able to partially withstand bearish price pressures until recently, have also begun to wilt with the prompt month contract price hitting lows not seen since summer 2019 and the COVID-driven lows in April 2020 (lows touching dashed red line in top figure below).

LNG feedgas was down last week driven by lower flows to Sabine Pass because of maintenance.

WTI Corpus Christi saw its premium to Midland East Houston (MEH) narrow to 16 cents/bbl last week, with market sources attributing the contraction to a decline in export demand through Corpus Christi relative to Houston, according to RBN’s latest Crude Oil TradeView report.

US oil and gas rig count continued the slide that began in early May, with rig count for the week ending June 2 falling to 696 according to Baker Hughes, a decline of 15 vs. a week ago.  This marks the first time since April 2022 that rig count is below 700.  Most major basis saw declines, including the Eagle Ford (-4), Anadarko (-3), Permian (-2), Haynesville (-2), Bakken (-1), Niobrara (-1) and All Other (-2).  Total rig count has declined 53 in the past 90 days, and declined 31 vs. this week a year ago.

U.S. propane inventories post the largest build for the week in the last ten years while exports remain low.

Press reports indicate that the U.S. Treasury Department is hard at work forming the tax framework for the hydrogen tax credits created by the Inflation Reduction Act. However, the rules aren’t complete and certain requirements have the potential to upend some proposed clean hydrogen projects. Plug Power announced that it will be part of three projects in Finland totaling 2.2-gigawatts (GW) of green hydrogen production.

Though it has taken most of the month of May, Western Canada's natural gas production has recovered to levels that prevailed in early May before the onset of wildfires in Alberta initiated significant curtailments in important gas producing regions. As the fire threat has faded, the toll on overall gas output has become more clear with May average production falling to ~16.5 Bcf/d, a drop of just over 9% versus April's record. For 2023, we are now estimating annual average production growth in Western Canada will be just 0.5 Bcf/d, half of what what we were thinking just one month ago.