Oil & Gas Prices - Sept 13

[dan_s]

Opening Prices:
> WTI is down $0.49 to $87.29/bbl, and Brent is down $0.47 to $93.53/bbl.
> Natural gas is up 7.0c to $8.319/MMBtu.

AEGIS Notes
Oil

Oil reverses earlier gains after bearish U.S. economic data
> The U.S. CPI moderated slightly, from 8.5% in July to 8.3% in August. This exceeded the 8.1% forecast made by WSJ economists
> Treasury yields surged after the data, while S&P 500 index futures fell, and the dollar rose
> Tuesday's inflation report was highly anticipated ahead of the Federal Reserve's upcoming monetary policy meeting in late September
> This would likely increase the probability of a third consecutive 75 basis-point interest rate hike by the central bank
> Last week, Chair Jerome Powell said that the bank would act "forthrightly" to achieve price stability, and some policymakers voiced support for another historically significant rate hike

Renewed COVID-19 curbs China, the world's second-largest oil consumer, continues to weigh on crude prices

The possibility of the Iranian nuclear agreement being saved in the foreseeable future is shrinking (BBG)
> U.S. Secretary of State Antony Blinken said it was 'unlikely' the U.S. and Iran would reach a new nuclear deal anytime soon and warned of "a step backward" in Iran's position
> "What we've seen over the last week or so in Iran's response to the proposal put forward by the E.U. is clearly a step backward and makes prospects for an agreement in the near-term, I would say, unlikely," said Blinken at a press conference in Mexico City
> His remarks coincide with a recent similar statement made by France, Germany, and the U.K. over Iran's commitment to a new deal
As I have posted here many time, Iran is just play the US and they have no intention of slowing their progress on getting weapons grad uranium.

Morgan Stanley and UBS Group cut their near-term outlooks for Brent crude by as much as $15/Bbl in light of the economic slowdown and Russian flows rerouting (BBG)
> M.S. lowered its forecast for the 4Q22 by $5 to $95/Bbl, while it cut its price outlook for the 3Q22 by $12 to $98/Bbl
> The bank maintained its quarterly projections for 2023 at $100/Bbl and above
> They added that Russian oil exports are expected to decline significantly, with an estimated drop of 1.5-2.0 MMBbl/d into early 2023
My stock valuations are all based on WTI averaging $90 in Q3, $95 in Q4 and $100 in 2023.

UBS Group cut its year-end projection for Brent by $15 to $110/Bbl
> The bank added that despite an increase in crude imports in August, China's restrictions would prolong the near-term demand rebound
> Russian exports have held up better than expected, with large volumes of crude flowing into European nations like Italy
> Brent is projected to rebound to $125/Bbl by the end of September 2023 as the market becomes more competitive due to the end of strategic reserve sales and increased demand for petroleum products to generate electricity

Natural Gas

Prompt month natural gas prices are up slightly this morning, trading around $8.30
> Forecasts continue to indicate below-normal temperatures this week, followed by a sharp rise in temperatures following this weekend
> Production fell by 1.4 Bcf/d, with half of the decline coming from the Permian Basin

Canadian natural gas producers reduce output (Reuters)
> Two Canadian natural gas producers said on Monday that they had temporarily reduced production due to pipeline constraints in Western Canada
> Spot prices at the AECO hub fell last month and briefly turned negative as maintenance on the NGTL pipeline system reduced capacity
> Tourmaline Oil is reducing its output by 0.1 Bcf/d and delaying the startup of new rigs; Kelt Exploration reduced its production forecast by about 5%
> AEGIS notes that reduced Canadian production will reduce gas flows from Western Canada to the Western U.S. and the Rocky Mountains regions
> Prices at the AECO hub fell to a discount of $10 to Henry Hub, but have recovered by $6 recently

[dan_s]

Closing Prices:
> Prompt-Month WTI (Oct 22) was down $-0.47 on the day, to settle at $87.31
> Prompt-Month Henry Hub (Oct 22) was up $0.035 on the day, to settle at $8.284