Oil & Gas Prices - Aug 10

[dan_s]

Opening Prices:
> WTI is down $0.68 to $89.82/bbl, and Brent is down $0.65 to $95.66/bbl.
> Natural gas is down 3.1c to $7.802/MMBtu.

AEGIS Notes
Oil

Russian crude flows into Europe restarted today after Hungarian refiner Mol paid Ukraine a transfer fee to resume crude flows (BBG)
> Ukraine's oil transportation has been halted for a few days due to technical difficulties with the banking and economic sanctions
> Crude flows over the southern Druzhba link could reach Slovakia by the end of today, according to Transneft PJSC

EIA focused on the altered crude flow patterns caused by the conflict between Russia and Ukraine in their August Short Term Energy Outlook
> Europe continues to acquire more crude from the U.S. and decreases its exports of crude to several Asian nations
> Additionally, the EIA lowers its projection for U.S. crude output through 2022 from 11.91 MMBbl/d to 11.86 MMBbl/d < This compares to pre-pandemic peak production in November, 2019 of 12.86 MMBbl/day.

U.S. oil production is still on course to reach a record in 2023 despite output growing more slowly than projected because of rising costs and labor shortages in America's shale fields < This is nothing but a Wild Ass Guess by EIA. It is more of a "HOPE" than a forecast since they have no way of knowing the D&C plans for the upstream companies.
> According to the EIA, production will increase YOY on average at a rate of 840 MBbl/d in comparison to an earlier prediction of 860 MBbl/d
> Although production is still anticipated to reach an all-time high in 2023, EIA marginally lowered its forecast from 12.77 MMBbl/d to 12.70 MMBbl/d
Have Team Biden and AOC's Squad approved this? I thought he promised to shut down U.S. fossil fuel production during his first term!

Natural Gas

Lower natural gas production offsetting lower demand forecasts
> Weather forecasts continue to cool for august with the next three weeks all expected to be cooler than the current week, which should see demand from the power generating sector decline
> Production is down to its lowest level since May at 95.5 Bcf/d.
> Canadian imports are also at their lowest level in months, dropping to 5 Bcf/d from the peak in July at nearly 7 Bcf/d
> Tomorrow the EIA releases its weekly natural gas storage report with a median estimate of 40 Bcf

As German natural gas rationing looms, industry begs exemptions (Reuters)
> Germany's network regulator, which would oversee gas rationing in the event of a supply emergency, has received scores of exemption requests from across the industry, reflecting fears of potential production cuts and subsequent losses
> Big gas consuming sectors that have raised their voices publicly are the glass, steel, pharmaceutical, and chemical industries
> Russia's Gazprom is supplying 20% of the usual capacity of the Nord Stream 1 pipeline, which normally carries around a third of Russian gas exports to Europe
This is going to get a lot worse during the winter.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Sep 22) was up $1.43 on the day, to settle at $91.93
> Prompt-Month Henry Hub (Sep 22) was up $0.369 on the day, to settle at $8.202

After Labor Day the Wall Street Gang will slowly focus on how low all space heating fuel inventories are (heating oil, natural gas and propane) + the Eastern Europeans will be fighting over firewood in a few months. We are in for quite a ride. Hang Tough.