Oil & Gas Prices - Oct 28

[dan_s]

Opening Prices:
> WTI is down 89c to $81.77/Bbl, and Brent is down 82c to $83.76/Bbl.
> Natural gas is down 14.3c to $6.055/MMBtu.

AEGIS Notes
Oil

WTI fell for a second day by over 1% Thursday morning after total U.S. crude inventories grew and news that Iranian will likely restart nuclear talks next month
> Iran and the EU agreed Wednesday to restart negotiations on reviving the 2015 JCPOA agreement
> AEGIS notes that Iran has the potential to add 1.5-1.8 MMBbl/d of supply to the oil market but is not likely a near term threat < I believe that Iran is smuggling quite a bit of their oil out already. They have now fear of Team Biden.

The 1.2 MMBbl/d Capline crude pipeline that travels from Patoka, Illinois, to St. James, Lousiana, began line fill this week (Argus)
> Traditionally, Capline moved crude from the Gulf Coast to the Midwest refinery complex
> The pipeline will now offer an initial capacity of 102 MBbl/d north to south when it enters full service in early 2022
> The uncommitted rate for walk-up shipments on Capline was set at $3.75/Bbl, with discounted tariffs of $1.75-$2.50/Bbl for long-term contracts

In their weekly petroleum inventory report, the EIA showed a 3.8 MMBbl decline at Cushing – the largest since January
> The large Cushing draw puts stocks at the oil storage hub at the lowest seasonal level since 2014
> Tighter availabilities at the hub have pressured the spread between U.S. Gulf coast WTI prices and Cushing WTI narrower over the trade month, according to Argus

Natural Gas

The prompt-month (Dec ’21) gas contract is down by 14.3c this morning near $6.055, in its first trading session as the prompt contract
> The November ’21 gas contract gained 32c yesterday during its final trading day to expire at $6.202, its highest settle since reaching a seven-year high of $6.312 on October 5, 2021
> Gas is up 92c this week, or 17.46%, as bullish weather forecasts have continued to trickle in

The EIA is expected to report a 90-Bcf injection for the week ending September 3, which would be more than the 32-Bcf build in the corresponding week of last year and the five-year average build of 62 Bcf
> Analysts estimates ranged from a build of 80 Bcf to 95 Bcf
> A build within this range would bring total stocks near 3.551 Tcf, and the deficit to the five-year average would decline to 123 Bcf
> The current end-of-season storage number settled at 3.645 Tcf on ICE, while Platts has this number pegged closer to 3.7 Tcf

Russian President Vladimir Putin ordered Gazprom to start refilling European gas-storage inventories next month (Bloomberg)
> The company was instructed to begin filling natural gas inventories in Germany and Austria starting on November 8
> The move does not necessarily mean the country is relenting to pressure to bail Europe out of the energy crisis as the reserves will be at Gasprom’s own facilities, and they were scheduled to increase production anyway
> Russia has not booked pipeline capacity to boost natural gas deliveries for next month and has instead opted to fulfill its contractual obligations, which has caused many officials to accuse Russia of withholding gas to accelerate Nord Stream 2 approval

[dan_s]

Closing Prices:
> WTI prompt month (DEC 21) was up $0.15 on the day, to settle at $82.81/Bbl.
> In contrast, NG prompt month (DEC 21) was down $0.416 on the day, to settle at $5.782/MMBtu. < First day of trading for DEC21 as the front month. If we have a cold November, it will roll over at a much higher price that the NOV21 contract. Mother Nature and Old Man Winter are now in charge of the gas price.

[CreativeEquity]

I noticed lately the daily price change on my gassers is much more closely correlated with the weather forecast than the front month NGL price.

[dan_s]

The propane shortage is a SERIOUS PROBLEM. I don't think we have enough to make it thru a mild winter.

When I was Hess we sold a lot of propane. Seemed at everyone waits until the first cold wave to order a tank full. This year there may be none available by mid-November. AR should make a killing in Q1 because none of their NGLs are hedged after year-end.