Oil & Gas Prices - Sept 19
Posted: Mon Sep 19, 2022 9:14 am
Opening Prices:
> WTI is down $2.50 to $82.61/bbl, and Brent is down $2.26 to $89.09/bbl.
> Natural gas is down -29.8c to $7.466/MMBtu.
AEGIS Notes
Oil
Oil fell nearly 3% this morning amid expectations of a Fed hike and a strong U.S. dollar
> The U.S. dollar held near recent highs ahead of this week’s Fed meeting on Wednesday, where monetary policy is expected to be further tightened to tame inflation
> A more expensive dollar can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
Iran's president, Ebrahim Raisi, says that he needs guarantees that the U.S. won’t walk away from a nuclear deal again as a condition for his country to enter into an accord (BBG) < IMO this is impossible for Team Biden to deliver since no president can keep the next (smarter) president from walking away from a bad deal with a country to sponsors terrorist groups.
> “There needs to be guarantees. If there were a guarantee, then the Americans could not withdraw from the deal,” Raisi told the CBS News
> Raisi expressed displeasure that the Biden administration has kept sanctions imposed by Trump after he had exited the last agreement
> The statements coincide with ongoing talks to resurrect the 2015 Iran nuclear agreement, which might bring Iranian barrels back to the market but have so far failed to make any progress < Iran is just "playing" with Team Biden. They have no intention of slowing down their uranium enrichment program.
China lifts the two-week-long lockdown on the southwest megacity Chengdu, allowing the city’s 21 million residents to resume life as normal (BBG)
> Residents will still be required to submit to testing at least once per week, and they will need to show proof of a negative test within the previous 72 hours to use public spaces and transportation
> The easing of lockdowns might improve the demand outlook in one of the world’s largest crude consumers
MY TAKE: Monday morning dips in the prices of oil and gas are caused by very tight stop loss orders on Friday. It just takes one big seller when the markets open on Monday to trigger a computer-generated selloff. At the time of this post, WTI is already back to $84/bbl.
Natural Gas
Natural gas prices are down 3.5% to start the week < Now back to $7.68.
> Prompt-month prices are down about 20% from last week's intraday high of $9.24
> Lower 48 weather forecasts have materially cooled for the next 1-5 days, with the most change occurring in the Northeast and Midwest
Gas producers struggling to meet demand (Reuters)
> Strong demand from power generators and LNG has left U.S. gas producers struggling to supply enough gas
> Electricity generation is set to make a record high this year due to economic activity and above-average summer temperatures
> Coal retirements and limited hydroelectric output have led to generators burning record amounts of gas
> Total working gas in storage is currently the second lowest for this time of year since 2010 despite consistently high prices
Europe continues to scramble for gas in anticipation of winter (Reuters)
> France is preparing to send gas to Germany, Spain says it may be forced to shutter energy-intensive industries during times of increased power demand, and Finland warned residents of potential power outages
> EU gas storage is 85.6% full, and coal imports could rise to the highest level since 2017 as countries stockpile gas and coal
MY TAKE: We are in the middle of the "Shoulder Season" for natural gas. Mild weather = lower demand. However, a La Nina winter is coming, and the U.S. and Europe don't have enough ngas or heating oil to make it through a cold winter. This is just the "calm before the storm".
> WTI is down $2.50 to $82.61/bbl, and Brent is down $2.26 to $89.09/bbl.
> Natural gas is down -29.8c to $7.466/MMBtu.
AEGIS Notes
Oil
Oil fell nearly 3% this morning amid expectations of a Fed hike and a strong U.S. dollar
> The U.S. dollar held near recent highs ahead of this week’s Fed meeting on Wednesday, where monetary policy is expected to be further tightened to tame inflation
> A more expensive dollar can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
Iran's president, Ebrahim Raisi, says that he needs guarantees that the U.S. won’t walk away from a nuclear deal again as a condition for his country to enter into an accord (BBG) < IMO this is impossible for Team Biden to deliver since no president can keep the next (smarter) president from walking away from a bad deal with a country to sponsors terrorist groups.
> “There needs to be guarantees. If there were a guarantee, then the Americans could not withdraw from the deal,” Raisi told the CBS News
> Raisi expressed displeasure that the Biden administration has kept sanctions imposed by Trump after he had exited the last agreement
> The statements coincide with ongoing talks to resurrect the 2015 Iran nuclear agreement, which might bring Iranian barrels back to the market but have so far failed to make any progress < Iran is just "playing" with Team Biden. They have no intention of slowing down their uranium enrichment program.
China lifts the two-week-long lockdown on the southwest megacity Chengdu, allowing the city’s 21 million residents to resume life as normal (BBG)
> Residents will still be required to submit to testing at least once per week, and they will need to show proof of a negative test within the previous 72 hours to use public spaces and transportation
> The easing of lockdowns might improve the demand outlook in one of the world’s largest crude consumers
MY TAKE: Monday morning dips in the prices of oil and gas are caused by very tight stop loss orders on Friday. It just takes one big seller when the markets open on Monday to trigger a computer-generated selloff. At the time of this post, WTI is already back to $84/bbl.
Natural Gas
Natural gas prices are down 3.5% to start the week < Now back to $7.68.
> Prompt-month prices are down about 20% from last week's intraday high of $9.24
> Lower 48 weather forecasts have materially cooled for the next 1-5 days, with the most change occurring in the Northeast and Midwest
Gas producers struggling to meet demand (Reuters)
> Strong demand from power generators and LNG has left U.S. gas producers struggling to supply enough gas
> Electricity generation is set to make a record high this year due to economic activity and above-average summer temperatures
> Coal retirements and limited hydroelectric output have led to generators burning record amounts of gas
> Total working gas in storage is currently the second lowest for this time of year since 2010 despite consistently high prices
Europe continues to scramble for gas in anticipation of winter (Reuters)
> France is preparing to send gas to Germany, Spain says it may be forced to shutter energy-intensive industries during times of increased power demand, and Finland warned residents of potential power outages
> EU gas storage is 85.6% full, and coal imports could rise to the highest level since 2017 as countries stockpile gas and coal
MY TAKE: We are in the middle of the "Shoulder Season" for natural gas. Mild weather = lower demand. However, a La Nina winter is coming, and the U.S. and Europe don't have enough ngas or heating oil to make it through a cold winter. This is just the "calm before the storm".