Oil & Gas Prices - Jan 27

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - Jan 27

Post by dan_s »

Opening Prices:
> WTI is up $0.98 to $81.99/bbl, and Brent is up $0.97 to $88.44/bbl.
> Natural gas is down -8.4c to $2.86/MMBtu.

AEGIS notes
Oil

Oil heads for a weekly gain amid hopes of a rebound in Chinese demand
> March ’23 WTI gains nearly $1 this morning to trade around $82/Bbl
> Optimism for a recovery in Chinese demand supported crude this week, reversing some losses from early January
> High refined product cracks due to refinery outages and a weaker US Dollar also supported prices this week
> A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods

OPEC+ delegates meet next week (Feb. 1) to review crude production levels, and sources from the bloc expect the existing output policy to remain unchanged (Reuters)

Additionally, the EU is in the planning phases for a price cap on Russian fuel products that will go into effect on February 5, along with sanctions
> The EU is mulling a plan to impose a price cap of $100/Bbl on premium Russian oil products like diesel (BBG) < Europe's economy will be crushed if Russia stops sending them diesel. U.S. diesel inventories are 20% below the normal level.
> According to reports, a $45/Bbl cap level is being considered for products that sell at a discount to crude
> The price cap is expected to go into effect on February 5, the same day the EU ban on Russian products would start
> A price cap level will be more formally discussed today, and if EU members are unable to come to an agreement by February 5, the full ban on Russian petroleum products would go into effect, which will likely tighten the diesel and other fuels markets
> Additionally, a coalition led by Estonia, Lithuania, and Poland is pushing to lower the crude oil price cap somewhere between $40 - $50 to curb Russian revenues further

Natural Gas

Natural gas prices are trading around $2.86, heading for a sixth consecutive weekly loss
> Weather forecasts shifted materially warmer again
> The Midwest regions forecast gained 26 °F in the 6-10 day period and 16 °F in the 11-15 day period
> Yesterday the EIA reported a storage withdrawal of 91 Bcf, which is 73 Bcf less than the five-year average withdrawal for this week

Freeport LNG receives approval to begin steps to restart the facility (Reuters)
> Federal regulators approved Freeport’s request to begin cooling down some of their piping systems, a process which could take about 11 days to complete
> However, the export plant has yet to request approval to restart liquefaction operations
> Freeport expects to steadily increase gas flows once they begin the restart process, ramping up to a full capacity of 2.1 Bcf/d by March

Mountain Valley Pipeline may face another delay (BBG)
> The completion date of the long-awaited pipeline could be extended into 2024 due to ongoing litigation
> On January 24, Virginia courts heard oral arguments pertaining to two lawsuits challenging MVPs water permits
> Bloomberg estimates that there is a 60% chance that MVPs developer, Equitrans, loses one or both of the lawsuits
> Equitrans is still guiding towards completion of the 2 Bcf/d pipelines in the second half of 2023

ICE to create a new gas trading hub in London due to EU price cap (Reuters)
> The hub will act as a “parallel market” to the Dutch TTF hub, which ICE also operates
> The market is being created due to concerns that the EU’s gas price cap could create situations that prevent customers from trading or managing risk at the TTF hub
Dan Steffens
Energy Prospectus Group
Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Re: Oil & Gas Prices - Jan 27

Post by Fraser921 »

The price cap, Im starting to think is just posturing.
Has to be high enough to keep the products flowing or they are screwed

This whole thing could blow up in their face with oil / products moving up 50 %
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Jan 27

Post by dan_s »

One of the weird days in the oil market.

Trading Economics:
Oil
WTI crude futures reversed earlier gains and fell more than 1% to below $80 per barrel on Friday, as prospects of still strong Russian supply offset better-than-expected Q4 US GDP numbers and hopes of continued demand recovery in top crude importer China. Oil loadings from Russia's Baltic ports are set to rise by 50% from a month earlier in January as sellers try to meet strong demand in Asia and benefit from rising global energy prices. Traders noted that Urals and KEBCO crude oil loadings from Ust-Luga over Feb. 1-10 may rise to 1.0 million tonnes from 0.9 million in the plan for the same period of January. Meanwhile, OPEC is expected to maintain current oil production levels when they meet next, keeping supply tight. For the week, the US oil benchmark is down more than 2%."

Some longs might be worried about OPEC announcing a production increase. There is still an incredible amount of noise out there.

Trading Economics
Natural Gas
US natural gas futures extended losses to below $3/MMBtu, the lowest since May 2021 as milder weather has reduced heating demand and production remains strong. Natural gas production in the seven major onshore producing regions in the Lower 48 states that excludes Alaska and the Gulf of Mexico is estimated to have increased by 7.4 Bcf/d or 8.4% year-over-year for January 2023. In 2022, total US natural gas production is projected to have increased by 4.3 Bcf/d based on EIA data, and reach the highest on record. Also, more gas is set to stay on the domestic market as it may take until February, March, or even later for the Freeport LNG plant to fully restart the operations and production to go back to full capacity. The facility, which was shut in by a fire on June 8, 2022, said on Monday it had finished repairs and asked US regulators for permission to restart it. US natural gas prices are down more than 70% since their 14-year high of $10/MMBtu hit in August.

Much colder weather rolling into Chicago this weekend might get some attention for natural gas.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Jan 27

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (Mar 23) was down $-1.33 on the day, to settle at $79.68 < You may have noticed that oil opened higher each day this week and then sold off into the close. I think the "Paper Traders" are setting tight Stop Loss Orders to protect the early gains, so one large sell order can trigger a lot of computer generated trades. Also, have you noticed that gasoline prices are drifting higher. I think refiners know that oil prices are likely to go higher this summer and they are gradually rising gasoline prices so consumers get accustomed to higher prices.
> Prompt-Month Henry Hub (Feb 23) was up $0.165 on the day, to settle at $3.109 < It is always about the weather in Q1.
Dan Steffens
Energy Prospectus Group
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