Oil & Gas Prices - Sept 2

[dan_s]

Opening Prices:
> WTI is up $2.43 to $89.04/bbl, and Brent is up $2.40 to $94.76/bbl.
> Natural gas is down -18.6c to $9.076/MMBtu.

AEGIS Notes
Oil

Oil prices rose slightly, reversing a significant weekly decline
> WTI rose above $89 following an almost 11% decline this week
> WTI recovered some losses amid reports of the G-7 nations agreeing to a price cap on Russian oil

The G-7 agreed to set a price cap for Russian crude exports, a move the U.S. thinks will reduce pressure on the energy market and reduce Moscow's revenues (NY Times, Reuters) < IMO the G-7 has no power over Russia. In fact, it is probably the other way around. Consumers of a commodity cannot set the price unless they have viable alternative, can they?
> The group's finance ministers said that they were finalizing the plan's details, which must be implemented by early December
> "We commit to urgently work on the finalization and implementation of this measure," G-7 finance ministers said in a statement, without specifying the cap level
> Meanwhile, Dmitry Peskov, the Kremlin's press secretary, told reporters on a conference call that Russia won't supply oil to countries who support a price cap on its oil. "We simply won't interact with them on such non-market principles," he said
> He added that markets for Russian oil would be found in countries that operate on market principles

Iran announced that it had sent a "constructive" response to the final draft of the nuclear deal to the Biden administration on Thursday (BBG)
> The White House countered by stating Tehran's response was "not constructive" at all, raising questions about whether the two sides could strike a deal that would release more oil for global markets < As I have posted many times, Iran is just playing with Team Biden as they continue to move closer and closer to weapons grade uranium.
> "We are studying it and will respond through the EU, but unfortunately, it is not constructive," said Vedant Patel, a U.S. State Department spokesperson

Natural Gas

Prompt month gas prices are down 2%
> While prices for October and Winter 22/23 are down, prices are flat in the months following March
> Temperature forecasts have moved lower for the next two weeks, yet are still expected to exceed the 10-year normal
> Yesterday the EIA reported natural gas storage levels at 2,640 Bcf, a 61 Bcf increase from last week, and 338 Bcf below the five-year average

Power generation from natural gas has increased on low coal inventories (BBG)
> While lower than average gas storage will typically lead to increased generation from coal, power generation from coal has remained below 2021 levels
> Coal inventories in 2022 are down 19.5% from 2021, and down 41.7% from 2020
> This drop in coal storage has led to higher coal prices and less flexibility in power generation, leading to increased gas usage

[Cliff_N]

Team Biden should not be dealing with Iran after it came to light they were out to assassinate both Bolton and Pompeo. Huge sign of weakness.

[aja57]

Agree with you fully but after last night's Biden vitriolic speech he looks at Bolton and Pompeo as ultra MAGA semi fascists that must be cleansed.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Oct 22) was up $0.26 on the day, to settle at $86.87
> Prompt-Month Henry Hub (Oct 22) was down $-0.476 on the day, to settle at $8.786

September/October is the "Shoulder Period" when demand for oil and gas dips a bit. We do not have fuel shortages today, but we are definitely heading toward winter with space heating fuel inventories much too low to make it through a cold winter.