Market Searching for Coherent Direction

Market Searching for Coherent Direction
Rigzone's regular energy prognosticators take a look at public policy's role in energy markets, the war in Ukraine, LNG shipments and more.

(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author)

In this week’s preview of what to watch in oil and gas markets, Rigzone’s regular energy prognosticators take a look at public policy’s role in energy markets, the war in Ukraine, LNG shipments and more. Read on below to find out the specifics.

Rigzone: What developments/trends will you be on the lookout for this week?

Jon Donnel, Managing Director, B. Riley Advisory Services: Public policy will continue to play a prominent role in the energy markets moving forward. Governments are simultaneously having to deal with the highest inflation rates in a generation, war in eastern Europe, and trying to mitigate climate change. Individual policy prescriptions often run counter to achieving desired results depending on which issue is being targeted. Combining coordinated releases of strategic petroleum reserves, bans of Russian crude and product imports, and cancelling federal lease sales has left the market searching for a coherent direction. The uncertainty and volatility in policy has been directly reflected in energy commodity prices but has also made it easier for producers to simply stick to their original plans. While this has been very good for their cash flows and shareholder returns, overall supply remains very tight, and consumers have borne a high burden. Acknowledging the tradeoffs between individual policy goals and admitting that all of the problems cannot be solved at once would be a step in the right direction in helping the market reach the desired equilibrium.

Hillary Stevenson, Director, Industry Relations at oil and gas data firm Validere: Will be looking out for higher LNG export shipments. Venture Global recently requested FERC authorization to begin commercial service at the Calcasieu LNG facility, which has long-term agreements to supply EU and Asia. This additional capacity comes just in time as EU countries look to replace Russian-sourced molecules.

Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: Most experts believe Putin is in this war with Ukraine for the long-haul. So, we will have to see if the EU does come to a consensus on banning all imports of Russian crude oil and what the timing of that could be. U.S. refinery utilization rates continue to be high for what should be the ‘turn-around’ period which could lead to unexpected outages this summer. But, given the record high prices for both USLD and RBOB, will we see any cut-back in capacity usage?

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