Opening Prices:
> WTI is up 73c to $71.61/Bbl, and Brent is up 62c to $73.48/Bbl.
> Natural gas is down 2.0c to $3.332/MMBtu.
AEGIS Notes
Crude Oil
Crude prices are likely to continue rising this year due to growing demand, according to two of the world’s largest independent oil traders (Reuters)
> Vitol CEO Russel Hardy sees Brent crude just shy of $80/Bbl later this year
> Hardy tempered expectations of $100 oil, saying crude will only reach the century mark if OPEC+ choose to force it that high
> Trafigura CEO Jeremy Weir, speaking at the same FT Commodities Summit, was more bullish. He forecasts sustained high prices for a range of commodities, including the possibility of $100 oil due to lack supply
A key energy market spread has flipped as U.S. oil demand stages a dramatic recovery (Bloomberg)
West Texas Intermediate futures are now at the biggest premium in more than four years over Dubai crude, a key Middle East marker
The shift in pricing will likely incentivize processors in Asia and other regions to opt for cheaper barrels from the Middle East over U.S. flows, according to traders talking with Bloomberg
Natural Gas
ERCOT asks Texas to curb electricity use this week as a heatwave batters the U.S.
Power prices hit Texas’s cap of $2,000/MWh yesterday.
Nearly 9GW of thermal generation outages were reported, more than double ERCOT’s forecast for peak summer
Yesterday’s electricity demand was just 9% lower than ERCOT’s forecast for the summer peak
There is also around 3.1 GW of renewable capacity offline < A reminder that "Renewables" are not "Reliable".
Canadian exports on the Northern Border Pipeline reach a five-month high
According to Platts, Western Canadian gas exports on the pipeline averaged 760 MMcf/d from June 8 – June 14
Chicago has experienced warmer temperatures, widening the AECO-Chicago spread and drawing more gas into the region.
The spread has fallen from around -$0.15 (May 27) to around -$0.40 on June 15, according to Bloomberg
Oil & Gas Prices - June 15
Oil & Gas Prices - June 15
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 15
Bloomberg
Oil Highest Since 2018 as Traders See Prospect of Rising Prices
Oil traded above $71 a barrel as some of the most prominent voices in the market said they expect prices to continue to rise.
West Texas Intermediate was 1% higher, earlier touching its highest level intraday since 2018. Despite a bumper rally this year, traders Glencore Plc and Vitol Group still see at least some further gains in oil. Those views came at the FT Commodities Global summit, where opinions aired included:
> Global demand should return to normal in the third quarter of next year, according to Alex Sanna, head of oil marketing at Glencore, who said crude prices may move higher on more widespread vaccinations and inflationary pressures.
> Diesel and petrochemical demand is already at pre-Covid levels, according to Russell Hardy, Vitol’s chief executive officer, adding that there is a “little bit more upside” for oil prices.
> There’s a chance oil could hit $100 a barrel on a lack of supply amid underinvestment in the sector, according to Trafigura CEO Jeremy Weir
Crude has soared this year as vaccination programs have turned the tide against the pandemic in the U.S., Europe and China. Gasoline demand in China last month was 5% higher than during the same period in 2019, according to the median of five estimates from the nation’s top oil companies including China Petroleum & Chemical Corp., better known as Sinopec.
The Commodity Super Cycle: Meanwhile money continues to rotate into the commodities sector more broadly. A monthly survey of fund managers by Bank of America showed that bullish commodities bets had overtaken Bitcoin as the most crowded trade in markets.
“Continuous oil supply deficit is as good as guaranteed for the coming six months,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. “The role of the OPEC alliance will remain as crucial as it has been since the break-out of the health crisis.” < As I have posted here for months, falling OECD oil inventories are the primary driver of the price of oil. OECD oil inventories are already under 30 Days of Consumption and on pace to drop below 28 Days of Consumption by the end of Q3. The last time they went under 28 days, the price of oil went over $100/bbl.
Still, a decision by the U.K. to extend virus restrictions has tempered some optimism around robust summer consumption. On Monday, World Health Organization Director-General Tedros Adhanom Ghebreyesus warned that the virus is now “moving faster than the global distribution of vaccines.”
Further along the oil futures curve, there are signs of market tightness. The difference between the nearest two WTI December contracts on Tuesday hit $6, heading for its strongest close since September 2019, a sign traders are betting on a stronger long-term market. The spread between the next two December contracts is at the strongest since 2018. < This is very important. As investors gain more confidence in the long-term outlook for oil, gas and NGL prices the upstream companies will benefit from "Multiple Expansion". Take a look at the main Sweet 16 spreadsheet (updated each week) and you will see that the Sweet 16 closed on June 12 at just 3.74 X 2021 operating cash flow per share. Upstream companies the quality of our Sweet 16 (Solid Balance Sheets, FCF positive and lots of low-risk / high-return drilling inventory) should be trading for AT LEAST 6X operating CFPS and the large-caps should all be trading for 8X to 10X CFPS. Keep in mind that there is significant upside to my 2022 operating CFPS forecasts.
Oil Highest Since 2018 as Traders See Prospect of Rising Prices
Oil traded above $71 a barrel as some of the most prominent voices in the market said they expect prices to continue to rise.
West Texas Intermediate was 1% higher, earlier touching its highest level intraday since 2018. Despite a bumper rally this year, traders Glencore Plc and Vitol Group still see at least some further gains in oil. Those views came at the FT Commodities Global summit, where opinions aired included:
> Global demand should return to normal in the third quarter of next year, according to Alex Sanna, head of oil marketing at Glencore, who said crude prices may move higher on more widespread vaccinations and inflationary pressures.
> Diesel and petrochemical demand is already at pre-Covid levels, according to Russell Hardy, Vitol’s chief executive officer, adding that there is a “little bit more upside” for oil prices.
> There’s a chance oil could hit $100 a barrel on a lack of supply amid underinvestment in the sector, according to Trafigura CEO Jeremy Weir
Crude has soared this year as vaccination programs have turned the tide against the pandemic in the U.S., Europe and China. Gasoline demand in China last month was 5% higher than during the same period in 2019, according to the median of five estimates from the nation’s top oil companies including China Petroleum & Chemical Corp., better known as Sinopec.
The Commodity Super Cycle: Meanwhile money continues to rotate into the commodities sector more broadly. A monthly survey of fund managers by Bank of America showed that bullish commodities bets had overtaken Bitcoin as the most crowded trade in markets.
“Continuous oil supply deficit is as good as guaranteed for the coming six months,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. “The role of the OPEC alliance will remain as crucial as it has been since the break-out of the health crisis.” < As I have posted here for months, falling OECD oil inventories are the primary driver of the price of oil. OECD oil inventories are already under 30 Days of Consumption and on pace to drop below 28 Days of Consumption by the end of Q3. The last time they went under 28 days, the price of oil went over $100/bbl.
Still, a decision by the U.K. to extend virus restrictions has tempered some optimism around robust summer consumption. On Monday, World Health Organization Director-General Tedros Adhanom Ghebreyesus warned that the virus is now “moving faster than the global distribution of vaccines.”
Further along the oil futures curve, there are signs of market tightness. The difference between the nearest two WTI December contracts on Tuesday hit $6, heading for its strongest close since September 2019, a sign traders are betting on a stronger long-term market. The spread between the next two December contracts is at the strongest since 2018. < This is very important. As investors gain more confidence in the long-term outlook for oil, gas and NGL prices the upstream companies will benefit from "Multiple Expansion". Take a look at the main Sweet 16 spreadsheet (updated each week) and you will see that the Sweet 16 closed on June 12 at just 3.74 X 2021 operating cash flow per share. Upstream companies the quality of our Sweet 16 (Solid Balance Sheets, FCF positive and lots of low-risk / high-return drilling inventory) should be trading for AT LEAST 6X operating CFPS and the large-caps should all be trading for 8X to 10X CFPS. Keep in mind that there is significant upside to my 2022 operating CFPS forecasts.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 15
Closing Prices:
> WTI prompt month (JUL 21) was up $1.24 on the day, to settle at $72.12/Bbl.
> In contrast, NG prompt month (JUL 21) was down $0.112 on the day, to settle at $3.240/MMBtu.
WTI keeps climbing to new three year highs. My Take is that the short have all moved to the sideline. Natural gas pullback probably just because it has made such a big run and some traders see higher oil prices as bearish for natural gas because they FEAR more drilling for oil will bring on more associated gas. There is some truth to that, but I don't see the upstream companies adding a lot more rigs yet.
NEW YORK (Reuters) -Oil prices rose nearly 2% to their highest in more than two years on Tuesday, buoyed by expectations demand will recover rapidly in the second half of 2021. < It already has.
U.S. oil rose $1.24, or 1.8%, to settle at $72.12 a barrel. It hit a session high of $72.19 a barrel, its highest since October 2018.
Boosting prices, the world's biggest oil traders said on Tuesday they see oil prices staying above $70 a barrel with demand expected to return to pre-pandemic levels in the second half of 2022.
Vitol Chief Executive Russell Hardy sees the oil moving between $70 and $80 a barrel for the remainder of 2021 on the expectation that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) keep supply discipline, even as Iran's exports may resume if the United States rejoins a nuclear agreement with Tehran.
"We have had those stock draws for a couple months, the market is heading in the right direction," Russell Hardy told the FT Commodities Global Summit.
Trafigura Chief Executive Jeremy Weir told the same event there was a good chance prices could reach $100 a barrel because of falling reserves before the world reaches peak oil demand.
OPEC+ producers have been gradually relaxing record output curbs in recent months. < Keep in mind that OPEC+ cannot bring on millions of BOPD as easy as most people think. It is not as simple as opening up a few values. Also, keep in mind that floating oil storage is very low. So, increased production in Saudi Arabia will take months to show up in the U.S. Oil tankers are not speed boats.
"The decision by OPEC+ to be overly cautious in returning supply to the market, whether this is true caution or they are intentionally stoking oil prices higher, has been a main tenant in seeing $73 per barrel Brent," said Louise Dickson, oil markets analyst at Rystad Energy.
Analysts polled by Reuters expect U.S. crude stocks to have fallen for a fourth week in a row, dropping by about 3.3 million barrels last week. Industry data is due at 4:30 p.m. Tuesday, followed by official figures on Wednesday morning. [EIA/S]
Investors and traders are also watching the outcome of a two-day U.S. Federal Reserve meeting that starts on Tuesday for signals on when it will start to scale back monetary stimulus.
The Fed is getting ready to debate how and when to start tapering a massive asset-purchase program that helped to support the U.S. economy during the pandemic.
> WTI prompt month (JUL 21) was up $1.24 on the day, to settle at $72.12/Bbl.
> In contrast, NG prompt month (JUL 21) was down $0.112 on the day, to settle at $3.240/MMBtu.
WTI keeps climbing to new three year highs. My Take is that the short have all moved to the sideline. Natural gas pullback probably just because it has made such a big run and some traders see higher oil prices as bearish for natural gas because they FEAR more drilling for oil will bring on more associated gas. There is some truth to that, but I don't see the upstream companies adding a lot more rigs yet.
NEW YORK (Reuters) -Oil prices rose nearly 2% to their highest in more than two years on Tuesday, buoyed by expectations demand will recover rapidly in the second half of 2021. < It already has.
U.S. oil rose $1.24, or 1.8%, to settle at $72.12 a barrel. It hit a session high of $72.19 a barrel, its highest since October 2018.
Boosting prices, the world's biggest oil traders said on Tuesday they see oil prices staying above $70 a barrel with demand expected to return to pre-pandemic levels in the second half of 2022.
Vitol Chief Executive Russell Hardy sees the oil moving between $70 and $80 a barrel for the remainder of 2021 on the expectation that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) keep supply discipline, even as Iran's exports may resume if the United States rejoins a nuclear agreement with Tehran.
"We have had those stock draws for a couple months, the market is heading in the right direction," Russell Hardy told the FT Commodities Global Summit.
Trafigura Chief Executive Jeremy Weir told the same event there was a good chance prices could reach $100 a barrel because of falling reserves before the world reaches peak oil demand.
OPEC+ producers have been gradually relaxing record output curbs in recent months. < Keep in mind that OPEC+ cannot bring on millions of BOPD as easy as most people think. It is not as simple as opening up a few values. Also, keep in mind that floating oil storage is very low. So, increased production in Saudi Arabia will take months to show up in the U.S. Oil tankers are not speed boats.
"The decision by OPEC+ to be overly cautious in returning supply to the market, whether this is true caution or they are intentionally stoking oil prices higher, has been a main tenant in seeing $73 per barrel Brent," said Louise Dickson, oil markets analyst at Rystad Energy.
Analysts polled by Reuters expect U.S. crude stocks to have fallen for a fourth week in a row, dropping by about 3.3 million barrels last week. Industry data is due at 4:30 p.m. Tuesday, followed by official figures on Wednesday morning. [EIA/S]
Investors and traders are also watching the outcome of a two-day U.S. Federal Reserve meeting that starts on Tuesday for signals on when it will start to scale back monetary stimulus.
The Fed is getting ready to debate how and when to start tapering a massive asset-purchase program that helped to support the U.S. economy during the pandemic.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 15
Go here https://www.marketwatch.com/investing/index/dxy and run a three year chart of the U.S. dollar.
Dollar going down is bullish for oil and all commodities.
Dollar going down is bullish for oil and all commodities.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group