Oil & Gas Prices - Oct 26

[dan_s]

Sorry about not posting this in the morning. Our internet service was out and we had the Houston luncheon today that was hosted by InPlay Oil today; our first luncheon in over 18 months.

Opening Prices:
> WTI is up 34c to $84.10/Bbl, and Brent is up 22c to $86.21/Bbl.
> Natural gas is down 16.1c to $5.737/MMBtu.

Closing Prices:
> WTI prompt month (DEC 21) was up $0.89 on the day, to settle at $84.65/Bbl.
> NG prompt month (NOV 21) was down $0.016 on the day, to settle at $5.882/MMBtu.

AEGIS Notes this morning
Oil

Brent crude traded near its three-year high Tuesday morning amid the expectation that oil stockpiles will continue to decline globally as demand improves and OPEC+ keeps supply subdued
In the near term, all eyes will be on Wednesday’s oil inventory report, and more significantly, how Cushing stocks move
The API will report industry estimates for oil inventories later this afternoon with more closely followed government data tomorrow morning

Saudi Aramco said oil-output capacity around the world is declining quickly, and companies need to invest more in production (Bloomberg)
“The spare capacity is shrinking.: CEO Amin Nasser said in an interview in Riyadh
The supply deficit in oil markets could worsen in 2022 if the coronavirus pandemic eases and more people fly, he said

Oil pared some gains yesterday as Iran’s Deputy Foreign Minister Ali Bagher Kani said he’ll head to Brussels on Wednesday to discuss how to reboot nuclear negotiations with world powers that have stalled since June
U.S. envoy Robert Malley warned that efforts to revive the Iran nuclear deal are entering a “critical phase,” saying that there is “shared impatience” between Washington and its allies of Iran’s nuclear program (Aljazeera)
U.S. officials say Washington is ready to join the talk as soon as Tehran agrees to another round of negotiations
AEGIS notes that an unsanctioned Iran could add 1.5 to 1.8 MMBbl/d of oil supply < If Team Biden gives in to Iran and lets them acquire weapons grade uranium it will be to stupidest move any American president has ever made.

Natural Gas

The prompt-month (Nov ’21) Henry Hub contract soared by the most in a year
The contract gained 11.7%, or 61.8c, during yesterday’s trading session
The rally was kicked off by material improvements in U.S. weather forecasts, which show much cooler temperatures in the U.S. East, Midwest

U.S. lower-48 dry gas production hits a two-month high
On October 25, gas production hit over 92.3 Bcf/d, its highest level since Hurricane Ida
The gains came from the Haynesville, Marcellus, and Utica and helped offset continued weakness from the Gulf of Mexico. Gas production in the crude-heavy basins, like Permian, Bakken, and the Denver-Julesburg, has remained relatively flat
Most of the Appalachian producers have announced highly regimented guidance plans for the balance of 2021, which focus on disciplined capital spending and maintenance-level production; However, with gas at $6 raises doubts about previously issued guidance
Coterra Energy, formerly known as Cabot Oil & Gas, has said that it will increase production ahead of the startup of Transco’s Leidy South Expansion project, which Platts estimates could increase over Northeast production by 1 Bcf/d

[dan_s]

Trading Economics
WTI crude futures were short a few cents from reaching $85 per barrel on Tuesday but slid slightly down after API report showed stocks of crude oil in the US rose more than expected in the latest week. The US oil benchmark has been steadily rising since the fourth week of August to reach 7-year highs due to an extraordinary recovery in demand following the reopening of major economies and global supply shortages exuberated by energy crises.

US natural gas futures slipped 4% towards $5.6 per million British thermal units on Tuesday morning and then regrouped to settle just below yesterday's high, after spiking 11.7% in the prior session, as domestic supply levels stood comfortably higher than those in Europe and Asia. Natural gas inventories in the US are expected to reach levels close to the long-run average at the start of the winter season in November. At the same time, output levels averaged around 92.2 billion cubic feet per day (bcfd) so far this month, close to a record high of 95.4 bcfd hit in November 2019, while LNG export plants were already operating at maximum capacity, capping the effects of higher prices in foreign markets. Still, gas futures trade near a 12-year high of $6.5 per million British thermal units hit on October 6th, supported by weather forecasts pointing to colder-than-normal temperatures in November and an energy crunch in Europe and Asia.