Oil & Gas Prices - July 5

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - July 5

Post by dan_s »

Opening Prices:
> WTI is down $0.18 to $108.25/bbl, and Brent is up $0.23 to $111.86/bbl. < WTI is down more than 5% at the time of this post to $102.57.
My GUESS is that FEAR of recession triggered a large sell that triggered a computer driven selloff.

> Natural gas is down -32.4c to $5.406/MMBtu. < HH ngas is bouncing back, at $5.72 at the time of this post

AEGIS Notes
Oil


A small number of shipowners still transporting Russian crude are making significant profits on at least one route, while others avoid the trade (BBG)
> Shipping Russian ESPO oil from the eastern Russian port of Kozmino to China can bring in almost $1.6 million, said shipbrokers
> That is around three times what it was before the invasion of Ukraine, according to Bloomberg
> The majority of ESPO exports in recent months have gone to or are headed towards Chinese ports, with occasional shipments traveling to India

Saudi Arabia raised oil prices for its largest market, Asia, for August due to indications that underlying demand is still strong despite mounting recessionary concerns
> Saudi Aramco increased the price of its key Arab Light crude grade for Asian buyers by $2.80/Bbl from July to $9.30 over the regional benchmark, almost a record high
> The world's largest independent oil trader, Vitol Group, issued a warning on Sunday, saying that demand was beginning to be impacted by high prices
> Meanwhile, Citigroup Inc. projected that the price of crude will most likely fall to $85/Bbl by the end of 2022 and may possibly reach $65 in the event of a severe recession

U.S. imports of European gasoline increased week over week by 57% in the last seven days of June in anticipation of the Fourth of July holiday (BBG)
> The week's European gasoline arrivals increased to 345 MBbl/d from the previous week's revised 220 MBbl/d, which was the lowest level since late March
A total of 2.415 MMBbl were delivered at ports throughout the U.S. East Coast by twelve vessels

Natural Gas

U.S. natural gas futures are trading lower this morning, near $5.431
> The gas-weighted cooling degree day total has fallen, indicating natural gas demand could come in slightly weaker than expected, coming in around 5.3 CDDs lower than Friday‘s total of 366.3 CDDs
> U.S. lower-48 dry gas production also touched the year-to-date high several times recently, and production is up by around 0.7 Bcf/d month-over-month
> AEGIS notes that we have been saying that associated and dry gas production remains the largest threat to gas prices. Production has been inconsistent, so it could just be a temporary push higher, but we will continue to watch this

Greece launches more energy subsidies to curb soaring energy costs
> Greece will extend subsidies for power bills totaling $700 MM euros for households and businesses
> On top of soaring energy costs, Russia has cut off supplies to some EU countries, triggering a further rise in natural gas prices for Europe
> The country has spent about $7 billion euros so far in power subsidies and other measures to help households
> AEGIS notes that some have blamed the subsidies by the European government for exacerbating the spike in power, gas prices
MY TAKE: The Eastern European Countries are screwed and "Energy Poverty" during the winter will spread.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - July 5

Post by dan_s »

On the Flip Side...

JPMorgan: Oil Could Reach $380 If Russia Retaliates
Dated July 4 at 8AM

Global oil prices could reach a “stratospheric” $380 a barrel if Russia retaliates to U.S. and Western sanctions with cuts in crude oil, JPMorgan Chase & Co. analysts warn.

The Group of Seven’s latest ammunition against Russia for its unprovoked war in Ukraine has been to cap the price of Russian oil.

Russia is in a relatively robust financial position that would permit it to cut daily crude oil production by 5 million barrels a day, Bloomberg reports JPMorgan analysts as writing in a client note.

“The most obvious and likely risk with a price cap is that Russia might choose not to participate and, instead, retaliate by reducing exports,” the analysts wrote. “It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side.”

President Vladimir Putin on June 30, 2022 raised the stakes in its economic war with the West and its allies with a decree that seized full control of the Sakhalin-2 gas and oil project in Russia's far east, a move that could force out Shell and Japanese investors.

The decree, signed on Thursday, creates a new firm that wrenched all rights and obligations of Sakhalin Energy Investment Co., in which Shell and two Japanese trading companies Mitsui and Mitsubishi hold just under 50%.

There are 15 major global oil and gas companies, including Chevron, Exxon Mobil and Shell, that do business in the Sakhalin Islands in the far reaches of northeastern Russia.
-------------------------------
Russia's Medvedev: Japan Price Cap Could Push Oil to $400
Dated July 5 at 5AM ET


Russia's former president Dmitry Medvedev said Tuesday that a reported proposal from Japan to cap the price of Russian oil at around half its current price would lead to significantly less oil on the market and could push prices above $300-$400 a barrel.

Commenting on the proposal, which was reportedly put forward by Prime Minister Fumio Kishida, Medvedev said that Japan "would have neither oil nor gas from Russia, as well as no participation in the Sakhalin-2 LNG project" as a result.

G7 leaders agreed last week to explore feasibility of introducing temporary import price caps on Russian fossil fuels, including oil, in an attempt to limit Russian resources to finance its military campaign in Ukraine.

JPMorgan Chase & Co. analysts have also warned that global oil prices could reach a “stratospheric” $380 a barrel if Russia retaliates to U.S. and Western sanctions with cuts in crude oil,

The Group of Seven’s latest ammunition against Russia for its unprovoked war in Ukraine has been to cap the price of Russian oil.

Russia is in a relatively robust financial position that would permit it to cut daily crude oil production by 5 million barrels a day, Bloomberg reports JPMorgan analysts as writing in a client note.

“The most obvious and likely risk with a price cap is that Russia might choose not to participate and, instead, retaliate by reducing exports,” the analysts wrote. “It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side.”
Dan Steffens
Energy Prospectus Group
mkarpoff
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Joined: Fri May 30, 2014 4:27 pm

Re: Oil & Gas Prices - July 5

Post by mkarpoff »

The West, unfortunately, is shooting itself in the foot vis a vis Russia. As long as India and China continue to buy as much as they need from Russia Putin will continue to do whatever he wishes as long as he is willing to treat Russian troops as canon fodder. As you have stated ad nauseum, the only cure is energy independence. Meanwhile, shortages notwithstanding, share prices continue to fall with the market in general. Quite a conundrum for energy investors.
Last edited by mkarpoff on Tue Jul 05, 2022 10:56 am, edited 1 time in total.
Fraser921
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Re: Oil & Gas Prices - July 5

Post by Fraser921 »

Oil prices tumbled Tuesday with the U.S. benchmark falling below $100 as recession fears grow, sparking fears that an economic slowdown will cut demand for petroleum products.

West Texas Intermediate crude, the U.S. oil benchmark, slid 8%, or $8.67, to trade at $99.76 per barrel. The contract last traded under $100 on May 11.
dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - July 5

Post by dan_s »

NEW YORK (Reuters) -Oil plummeted by about $10 a barrel on Tuesday on concerns of a looming global recession curtailing demand, even with expected supply disruptions as oil and gas workers in Norway began to strike.

Global benchmark Brent crude was down $10.77, or 9.5%, at $102.73 a barrel by 11:43 a.m. EDT (1543 GMT). U.S. West Texas Intermediate (WTI) crude fell $9.30, or 8.6%, to $99.13 a barrel from Friday's close. There was no WTI settlement on Monday because of a U.S. holiday.

"The global oil market is getting tight, but still we're getting creamed and the only way you can explain that away is fear of recession in every risk asset," said Robert Yawger, director, energy futures at Mizuho, New York. "You're feeling the pressure."

Oil futures sank along with equities, which often serve as demand indicator for crude, as investors fretted about the possibility of an economic downturn as central banks across the world take aggressive actions to limit inflation.

In the euro zone, data showed business growth across the bloc slowed further last month, with forward-looking indicators suggesting the region could slip into decline this quarter as the cost of living crisis keeps consumers wary.

In South Korea, inflation hit a near 24-year high in June, adding to concerns about slowing economic growth and oil demand.

Supply concerns still linger, initially lifting WTI and Brent earlier in the session, due to potential output disruption in Norway, where offshore workers began a strike.

The strike is expected to reduce oil and gas output by 89,000 barrels of oil equivalent per day (boepd), of which gas output makes up 27,500 boepd, Norwegian producer Equinor has said.

Saudi Arabia, the world's top oil exporter, raised August crude oil prices for Asian buyers to near record levels amid tight supply and robust demand.

Meanwhile, Russia's former President Dmitry Medvedev said a reported proposal from Japan to cap the price of Russian oil at about half its current level would mean less oil on the market and could push prices above $300-$400 a barrel.

G7 leaders agreed last week to explore the feasibility of introducing temporary import price caps on Russian fossil fuels, including oil, in an attempt to limit resources to finance Moscow's "special military operation" in Ukraine.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - July 5

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Aug 22) was down $-8.93 on the day, to settle at $99.50
> Prompt-Month Henry Hub (Aug 22) was down $-0.207 on the day, to settle at $5.523

IMO one big sell order at the open today kicked off a computer driven selloff. Buyers did return when WTI hit $98.00. Tomorrow will be interesting. We still have a global oil shortage.
Dan Steffens
Energy Prospectus Group
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