Oil & Gas Prices - Nov 8

[dan_s]

Opening Prices:
> WTI is up 50c to $81.77/Bbl, and Brent is up 48c to $83.22/Bbl.
> Natural gas opened down 9.9c to $5.417/MMBtu, but snapped back soon after the open. At $5.58 at the time of this post.

AEGIS Notes
Crude Oil

Oil made gains Monday morning with help from sharp price hikes from Saudi Arabia on its oil
> The Saudi price increase is one of the largest to its official selling price in decades, a move enabled by low global stockpiles and tight supplies, according to Vitol Group
> Oil price gains have met some resistance after the U.S. Energy Secretary told news networks that President Biden may make an announcement to address high oil and gasoline prices this week (Bloomberg) < Does anyone really think Biden has a clue about how to lower oil prices?

The larger-than-expected rise in oil prices from Saudi Arabia is a signal that it will continue resisting outside pressure to pump fast (Vitol Group, BBG)
> Vitol’s Mike Muller, head of Asia, said, “They (OPEC) are unlikely to change stance,”
> On Thursday, OPEC and its allies decided to keep raising daily crude supply by 400 MBbl/d per month
> OPEC+ argues that it is justified in its stance of a cautious approach because resurgent coronavirus outbreaks could hit consumption
MY TAKE is that OPEC+ really can't increase production any faster and knows that they are running out of spare capacity that can be brought to market quickly.

Natural Gas

The prompt-month Henry Hub contract opened lower this morning at $5.417, but quickly moved higher
> Weather models were relatively unchanged, though the forecast for the 6-10 day range did cool for parts of the U.S. Midwest, Northeast, and Southeast
> The gas-weighted heating degree day total increased by 65 over the weekend to 703
> U.S. dry gas production also touched a 12-month high of 94.05 Bcf/d on Friday, according to Platts

South Central gas storage nears 5-year average (Platts)
> The recent over-sized late-season injections have helped close the deficit to the five-year average, easing concerns at the Henry Hub location over winter season supply
> The region has added 229 Bcf to inventories, outpacing the five-year average by 90 Bcf. Current South-Central inventories are at 1.172 Tcf, which is 16 Bcf below the five-year average
> There has been notable production growth in the Haynesville and Permian and very mild weather, helping to alleviate the regional market’s concerns over winter supply

Watch Joe Bastardi's long range weather forecast for December on his Saturday Summary here: https://www.weatherbell.com/premium/

[dan_s]

On November 1, Reuters reported the increase in OPEC's oil output in October fell short of the rise planned under a deal with allies, a Reuters survey found on Monday, as involuntary outages in some smaller producers offset higher supplies from Saudi Arabia and Iraq. The Organization of the Petroleum Exporting Countries (OPEC) pumped 27.50 million b/d in October, the survey found, a rise of 190,000 b/d from the previous month but below the 254,000 b/d increase permitted under the supply deal. OPEC states and their allies, a grouping known as OPEC+, are relaxing output cuts made in 2020 as demand recovers from the coronavirus pandemic, although some members are not delivering the full boosts promised due to a lack of capacity. The OPEC+ alliance is also wary of pumping too much oil in case of renewed setbacks in the battle against COVID-19.

"OPEC+ will likely stay behind the demand curve, rather than risk jumping ahead and getting burned," said Rystad Energy analyst Louise Dickson.

On November 2, Bloomberg reported that global oil demand has bounced back above the key level of 100 million b/d last seen before the COVID-19 pandemic, according to BP Plc on its 3Q 2021 earnings call.

[dan_s]

Closing Prices:
> WTI prompt month (DEC 21) was up $0.66 on the day, to settle at $81.93/Bbl.
> In contrast, NG prompt month (DEC 21) was down $0.089 on the day, to settle at $5.427/MMBtu.

[Fraser921]

Natural gas prices have declined since Thursday of last week by about 6%. Natgas was off on Monday to settle at $5.427/MMbtu, down $0.089/MMbtu. This morning in early trading, gas prices are lower by another nickel, in the $5.38/MMbtu range. Production volumes keep on increasing, with lower-48 volumes hitting 97 Bcf/d last week, which is just below an all-time daily gas production level. Volumes are continuing this week near that record, with incremental supplies coming from both the Permian and Marcellus/Utica.