Oil & Gas Prices - Sept 22

Oil & Gas Prices - Sept 22

Postby dan_s » Thu Sep 22, 2022 9:01 am

EPG's Monthly Live Oil & Gas Market Update webinar is TODAY at 10AM CT. Still time to register on the EPG home page.

Opening Prices:
> WTI is up $2.66 to $85.60/bbl, and Brent is up $2.58 to $92.41/bbl.
> Natural gas is down -6.8c to $7.711/MMBtu.

AEGIS Notes
Oil

Oil is trading nearly 3% higher this morning
> The market weighs the demand outlook following the Federal Reserve's third-consecutive interest rate hike of 75-basis-points
> Fed Chair Powell signaled even more aggressive hikes ahead
> The U.S dollar weakened relative to its recent highs

Fed hiked interest rates by 75-basis-points yesterday and signaled that rate hikes will continue into 2023 (BBG)
> Officials lifted their target for the federal funds rate benchmark (short-term bank rate) to a range of 3% to 3.25%
> Rates are expected to reach 4.4% by the end of this year and 4.6% in 2023, according to officials, which is a more hawkish shift than anticipated in their dot plot
> Fed Chair Powell agreed that the median of the quarterly projections made by policymakers implied an additional 125 basis points of tightening this year
> He added that the main takeaway was that he and his colleagues were committed to bringing inflation down to the Fed's target of 2% and "will keep at it until the job is done"
> Increased rates are constraining by nature and are expected to have an adverse effect on consumer spending

Signs of an economic slowdown are mounting, with U.S. gasoline and diesel demand falling to its lowest seasonal levels in more than a decade (BBG)
> Gasoline demand plunged to its lowest level for this time of year since 1997, according to the EIA's weekly statistics
> Distillate product supplied, a measure of diesel demand, is at its lowest since 2009
> The four-week average product supplied for both fuels—which measures the amount of product delivered to wholesale distributors—was below where it stood during the pandemic when lockdowns crippled economic activity

Natural Gas

Prompt-month gas prices are down 1.25% ahead of the EIA weekly storage report
> According to the Bloomberg survey, the median estimate is for a storage build of 95 Bcf, while the survey ranges from 80-104 Bcf
> The five-year average injection for this time of year is 88 Bcf

Cheniere will fix LNG plant equipment to pass the pollution test (Reuters)
> Tests showed that at least one of Cheniere's turbines failed to meet EPA pollution standards at its Louisiana export facility, while the turbines at their Texas facility are not affected
> The EPA raised their concerns with Cheniere years before they began operating, and Chenier is the only LNG exporter that uses these types of turbines
> Robert Gray, the senior environmental coordinator for Sabine Pass, said, "Our turbine engineers determined a repair could improve the emission performance of the turbine"
> The company requested approval to retest eight turbines and said it would replace four others

Britain formally lifts ban on gas fracking (Reuters)
> Shale gas fracking has been banned in the U.K. since 2019 due to environmental concerns and potential impact on seismic activity
> Earlier this month, new prime minister Liz Truss said fracking would be allowed where it was supported by communities
> However, experts have said that lifting the ban on fracking will not help energy prices this winter and will take several years to have an effect
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 30137
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Re: Oil & Gas Prices - Sept 22

Postby dan_s » Thu Sep 22, 2022 9:12 am

The primary reason that WTI is not at $100/bbl is the more than 15% rise in the U.S. dollar.

"Years of underinvestment in oil and gas production is the leading cause of today’s energy crisis, and when the global economy rebounds from the current slowdown, the little spare oil production capacity that’s left will be wiped out.", Saudi Aramco’s chief executive Amin Nasser said on Tuesday.

Read more: https://www.zerohedge.com/energy/i-told-you-so-aramco-ceo-slams-unrealistic-energy-policies

As I have posted here many time.
> OPEC has be producing at maximum capacity for month. They have not produced up to their "official quota" for more than 12 months and the deficits are increasing.
> From the article above: "Saudi Arabia has plans to boost its production capacity to 13 million barrels per day (bpd) by 2027, from around 12 million bpd now, but not much further above that. The Kingdom is one of just two major oil producers believed to hold some additional spare capacity now. The other producer is fellow OPEC member the United Arab Emirates (UAE)."
> There is no "Quick Fix" for this energy crisis.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 30137
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Sept 22

Postby dan_s » Thu Sep 22, 2022 9:30 am

Trading Economics:
"WTI crude futures regained some traction and rose more than 2% toward $85 per barrel on Thursday morning, recovering from two consecutive sessions of losses, as hopes of higher Chinese demand and geopolitical tensions more than offset global growth worries. At least three Chinese state oil refineries and a privately run mega refiner are considering increasing runs by up to 10% in October from September, on prospects of stronger demand and a possible surge in fourth-quarter fuel exports. Also, President Vladimir Putin announced a partial military mobilization in Russia, raising fears of further supply disruptions. Energy giants Saudi Aramco and Crescent Petroleum also flagged underinvestment in the oil sector that is expected to keep prices elevated. Meanwhile, a global wave of central bank policy tightening added to market headwinds, while official data also showed that US crude inventories rose by 1.1 million barrels last week."
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 30137
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Sept 22

Postby dan_s » Thu Sep 22, 2022 6:18 pm

Closing Prices:
> Prompt-Month WTI (Nov 22) was up $0.55 on the day, to settle at $83.49
> Prompt-Month Henry Hub (Oct 22) was down $-0.690 on the day, to settle at $7.089 < We are in "Shoulder Season". The weekly storage builds will be large thru mid-October, but so are the 5-year average builds.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 30137
Joined: Fri Apr 23, 2010 8:22 am


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