Oil & Gas Prices - Nov 29

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - Nov 29

Post by dan_s »

Opening Prices:
> WTI is up $3.62 to $71.77/Bbl, and Brent is up $3.32 to $76.04/Bbl.
> Natural gas is down 52.5c to $4.952/MMBtu.

AEGIS Notes
Oil


WTI rebounded nearly 5% on Monday morning from one of the largest ever daily drops as investors assess the risks to global demand due to the new Omicron variant. Oil fell over $10 or 13% on Friday to $68.15/Bbl
OPEC+ have already moved its technical meetings in order to give themselves time to review Friday’s route (BBG)

OPEC and its allies will discuss their response to the Omicron variant at their meeting (Bloomberg)
> Ministers from OPEC are scheduled to meet on Dec. 2 to set their oil production policy for January
> The group is set to boost output by 400 MBbl/d, but some delegates say they may ditch the output increase in the short term

Technicals:
> WTI’s put skew soared to 21.77ppt as of Friday; the most bearish since May 2020
> WTI’s 2nd-month implied volatility jumped to 60.45% as of Friday; the highest since early November 2020

Natural Gas

The January ’21 gas contract is down by 52.5c this morning, near $4.952 in its first session as the prompt contract
> The December ’21 Henry Hub contract gained 37.9c in its expiry session on Friday, though the rally did not come from any significant weather changes or headlines. Instead, many analysts are chalking the gain to gas price’s inverted relationship to crude oil; When oil prices post such a large downside move, the expectation is that oil production and thereby associated gas supply will falter
> Weather forecasts shifted more bearish over the weekend, with the December 2021 gas-weighted heating degree day forecast losing 27 to bring the total to 780.7 days
> LNG feedgas demand is down around 0.62 Bcf/d from its record high of 12.47 Bcf/d set on November 26, as Freeport LNG feedgas demand is down by around 0.5 Bcf/d, again

U.S. dry gas production surged to 95 Bcf/d, a nearly two-year high as operators stage a near-winter push (Platts)
> The new high represents an eight-week drive by producers since September Hurricane Ida knocked lower-48 supply to 90.1 Bcf/d
> Appalachian production is at a record-high of around 34.7 Bcf/d as producers adjusted their fourth-quarter guidance to reflect gains ahead of Transco’s Leidy South Expansion Project
> Haynesville production has also set multiple record-highs and is now at more than 14.1 Bcf/d, while the Permian is just shy of its record at 13.6 Bcf/d
> The production gains in the Appalachian and Haynesville regions have come with relatively little change in the drilling rig total, as most gains in rigs have occurred in oil-focused plays, particularly the Permian
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Nov 29

Post by dan_s »

The JAN22 NYMEX futures contract is trading at $4.88/MMBtu, partly because of the rebound in oil prices. Traders equate higher oil prices to more drilling for oil and more "associated gas".

Go here https://weather.com/maps/tendayforecast and scroll thru the 10-day forecast. On December 3rd the overnight lows start to plunge below freezing across the Great Lakes region. That is when daily draws from ngas storage can go to 20-30 Bcf, which turn into triple digit weekly draws from natural gas storage. Remember that Chicago is the "Bull's Eye" for space heating demand for gas.

Go here http://americanoilman.homestead.com/GasStorage.html and you will see that weekly draws over 100 BCF normally begin the 2nd week of December. The weather pattern now looks like the week ending December 10 could be our first triple digit weekly draw.

On Thursday, I expect EIA to report a draw from storage that is over 50 BCF for the week ending November 26, which compares to the 5-year average draw of 32 Bcf.

Back in 2016 the last two weekly draws from storage in December were 209 BCF and 237 BCF. If we have anything close to those, HH gas prices will go back over $6.00.
Dan Steffens
Energy Prospectus Group
Fraser921
Posts: 2953
Joined: Mon Mar 22, 2021 11:48 am

Re: Oil & Gas Prices - Nov 29

Post by Fraser921 »

Super good stuff!! That's why we pay you the big bucks! :)
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Nov 29

Post by dan_s »

There is lots of "noise" coming out of Team Biden, OPEC+ and the WHO that has lots of oil traders on the sidelines. Fresh talks with Iran also a concern. This will take time to resolve, but my take is that WTI flops around near $70 thru year-end.
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Investing.com - Oil markets recovered some of last week’s stunning loss triggered by panic over the Omicron variant of Covid after some said that the strain might be milder than thought, despite the World Health Organization reporting that it carried a very high risk of infection.

Crude prices were up about 4% in late-afternoon New York trade after Friday’s dump of about 12%, which was the biggest one-day percentage loss in oil since April 2020.

“We know that the cart was out in front of the horse on Friday, but we must respect the fact that the charts saw some technical damage,” Phil Flynn, energy analyst at brokers Price Futures Group in Chicago, said, referring to Friday’s action in crude precipitated by the first news headlines on Omicron.

But as bad as that selloff was, “the price of oil is still substantially above where it was a year ago”, Flynn noted.

WTI, or the West Texas Intermediate benchmark for U.S. crude, settled up $1.80, or 2.6%, at $69.95 per barrel.

London-traded Brent crude, the global benchmark for oil, was up $1.36, or 1.8%, to $72.95 by 2:35 PM ET (19:35 GMT).

The WHO said the Omicron variant carried a very high risk of infection surges, prompting more countries to close borders and casting a shadow over economic recovery from the two-year pandemic. But some experts said the variant might prove to be milder than initially feared.

Big airlines, however, acted swiftly to protect their hubs by curbing passenger travel from southern Africa, fearing that a spread of the new variant would trigger restrictions from other destinations beyond the immediately affected regions, industry sources said.

OPEC, or the Organization of the Petroleum Exporting Countries, took no chances as well.

The oil producing cartel delayed by two days the technical meetings of its OPEC+ alliance, before Thursday’s all-important ministerial meeting led by Saudi Energy Minister Abdulaziz bin Salman and his Russian peer Alexander Novak.

The postponement was to study the potential impact of the Omicron strain on the market, OPEC had initially said, although both Abdulaziz and Novak later said they did not think any adjustments were necessary as yet to the oil producing cartel’s targets.

Providing more relief to oil were remarks by White House press secretary Jan Psaki that a further release of U.S. crude reserves was not needed at this time. The United States and other major oil consuming countries announced the coordinated release of about 55 million barrels of crude last week, in an attempt to force down oil prices trading at near seven-year highs.

Looming talks between Iran and world powers were also proving to be of little immediate significance to crude prices as Tehran insisted that the United States drop all sanctions on Iranian oil exports in order to slow down its nuclear program. The White House and other Western powers have demanded instead that the Islamic Republic halt all activity related to atomic bomb-making activity. < If Biden gives in and drops all sanctions against Iran while allowing them to move toward weapons grade uranium, he is totally out of control. The potential impact of that could be catastrophic! Israel would be forced to take military action against Iran.
Dan Steffens
Energy Prospectus Group
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