Opening Prices:
Actually at 9:15 am CT:
> WTI oil NOV20 futures are down $0.15 to $40.68.
> HH natural gas NOV20 futures are up $0.141 to $2.936.
Closing Prices:
> For WTI the DEC20 futures contract is now the front month. It closed today at $41.70
> The HH natural gas NOV20 contract closed at $2.913 and the DEC20 contract closed at $3.260
Energy Report: Do What Is Necessary
By Phil Flynn (Oct 20, 2020 09:10AM ET)
OPEC+ says it will do what is necessary to balance the global oil market but stopped short of making any firm commitments to extending production cuts. Still, they say they will be proactive and are on top of it, and no one should doubt their resolve in what they describe as a precious oil market. Again, the Saudi energy minister warned speculators that shorting the oil market might be dangerous to your pocketbook, continuing a long-standing Saudi tradition of blaming speculators for their oil woes.
The Saudi energy minister said:
“I recognize the need for modern risk management and the useful role of derivative markets play in enabling market participants to manage risk, [but] destabilizing speculation and manipulation have no place in a responsible and efficient market.”
So says the guy who helped manage an oil price war that brought the global oil industry to its knees in the throes of a worldwide pandemic emergency.
In the meantime, the crude oil market is stuck in a tight trading range. Signs of improvements in demand are offset by concerns of a second wave of the coronavirus.
Some cheered when more than 1.0 million passengers were screened by the Transportation Security Administration on Sunday, marking a new pandemic high for airline travel. Still, the oil trade knows we have a long way to go. Jet fuel demand is a good thing as the petroleum industry has to deal with a global jet fuel glut. Distillate demand said an increase last week, and traders are hoping it continues in this week’s report.
Reports of firming cash prices in Asia signify that Chinese demand remains and a robust market is recovering. That should help OPEC plus as it will do what it takes. Gasoline demand seems to be stalling in the U.S. as bad weather and worries about the virus cause a bit of a setback.
Today the oil market is priced in dollars, but could that be replaced with a dollar digital currency? It was reported that Federal Reserve Chairman Jerome Powell said Monday that the Fed is open to collaborating with the private sector on a possible digital U.S. dollar, but reiterated that the central bank has not committed to launching one.
“We will have lots of conversations with industry and stakeholder engagement, and that’ll help us in our work on digital currencies and cross-border payments,” Powell said in an International Monetary Fund panel.
Powell said private sector initiatives like Facebook’s Libra project had accelerated central banks’ interest in setting up their digital currencies. Yet the problem with Facebook Libra is privacy. The allure of Bitcoin is privacy.
Democrats do not want republicans to know how they spend their money. And vice versa. The reason why the dollar is one of the strongest currencies is that it is the most private. Hence the most successful cryptocurrency will be the one that is the most private and secure.
Full Disclosures, I am invested in a CloudCoin and Raida Technology that I think fits the bill. Raida technology is a patented technology that is the type of technology that the Fed will want to establish. Safe, secure, fast, and private. It is better than traditional blockchain and is quicker and more secure
Powell cautioned that the Fed faces “difficult policy and operational questions,” such as the monetary policy implications of a digital dollar. Powell also listed illicit activity and cyber-attacks as risks.” I believe that Raida technology can reduce those risks.
Oil & Gas Prices - Oct 20
Oil & Gas Prices - Oct 20
Last edited by dan_s on Tue Oct 20, 2020 6:52 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Oct 20
From KeyBanc 10-20-2020
Oil & Gas: Lowering 2020E WTI Oil Prices 2.2% to ~$39 and
2021E by 9% to $50 on a Delayed Demand Recovery Due to
Spikes in COVID-19 Outbreaks & Small Cracks in the OPEC+ Deal
Leo Mariani, CFA
We are lowering our 2020E WTI oil price forecast by 2.2% to ~$39/Bbl and our
2020 Brent forecast by 2.5% to $42.90/Bbl due to a slower recovery in oil prices
in 2H20 caused by flare-ups in coronavirus infections in a number of locales
that have forced countries and/or local governments to pause reopening plans
or even reinstate stricter safety measures, which has caused oil demand to
plateau of late. However, we are raising our 2020 Henry Hub Natural Gas price
forecast by 4% to $2.05/Mcf on a strong 3Q20 and weaker than expected oil
prices in 4Q20 leading to lower than forecasted associated gas production.
Global oil demand improved nicely in May and June after being decimated in
April, but data out of China and India showed declines in global oil demand in
both July and August. Oil demand also stalled out a bit in the U.S. with gasoline
demand only showing a very modest improvement since the end of June. As
a result, WTI oil prices have languished at around $40/Bbl since early July.
However, September oil demand out of China and India was up from August
levels, and we expect to see oil demand in 2021 to continue to recover to around
97 MMBopd, which is down only 3% from pre-pandemic levels. Our 2021
outlook is not too different from the IEA's as it is predicting global oil demand
of 97.2 MMBopd in 2021, and OPEC is forecasting a fairly robust recovery in
global oil demand next year as well at 96.8 MMBopd. This represents a demand
increase of around 3% vs. September 2020 levels, which is encouraging.
Small cracks have formed in the OPEC+ supply cut agreement of late as Russia,
the U.A.E. and Iraq have missed monthly production quotas recently. If one or
more of these countries continues to show poor performance over the next few
months, the supply cut agreement could be in jeopardy. However, we think this
is highly unlikely as these countries generally need Brent oil prices of between
$50-$90Bbl to balance their budgets. Given the stall out in oil prices since early
July, and compliance issues regarding the OPEC+ cut deal, there is still quite
a bit of uncertainty in the near-term outlook for oil prices. As a result, we think
the vast majority of oil-focused U.S. E&Ps are going to signal maintenance
mode in 2021 as oil prices do not appear poised to break out to a much higher
level within the next handful of months. This should result in a moderate supply
outlook in 2021 which will help oil prices to recover. Overall, we see 2021 as a
tale of two halves as we see the effects of COVID-19 keeping global oil demand
somewhat suppressed in 1H21, but we expect a nice recovery in global oil
demand to near pre-pandemic levels on a potential COVID-19 vaccine or more
effective therapeutic in 2H21. Overall, we are lowering our 2021 WTI forecast
by 9% to $50/Bbl, and we are lowering our 2021 Brent forecast by 11.5% to $54/
Bbl. Our lower oil price forecast for 2021 and very modest U.S. oil production
growth forecast should benefit natural gas, and we are raising our 2021 natural
gas price forecast by 6% to $2.65/Mcf at this time.
--------------------------
MY TAKE: Similar to Raymond James oil price forecast update on 10-6-2020. RJ forecasts WTI at $42 in Q1, $48 in Q2, $60 in Q3 and $70 in Q4 for average of $55 in 2021.
I am using $50 WTI price for 2021 forecasts.
On the other hand, I think Leo's forecast of $2.65/Mcf for U.S. natural gas is way too low. EIA's forecast is $3.13 and Raymond James' forecast is $3.50.
I am using $3.00 HH gas price in my 2021 forecasts, but a normal winter could push the price over $4.00 within a few months. < Be on our webinar on October 21 to learn why.
Oil & Gas: Lowering 2020E WTI Oil Prices 2.2% to ~$39 and
2021E by 9% to $50 on a Delayed Demand Recovery Due to
Spikes in COVID-19 Outbreaks & Small Cracks in the OPEC+ Deal
Leo Mariani, CFA
We are lowering our 2020E WTI oil price forecast by 2.2% to ~$39/Bbl and our
2020 Brent forecast by 2.5% to $42.90/Bbl due to a slower recovery in oil prices
in 2H20 caused by flare-ups in coronavirus infections in a number of locales
that have forced countries and/or local governments to pause reopening plans
or even reinstate stricter safety measures, which has caused oil demand to
plateau of late. However, we are raising our 2020 Henry Hub Natural Gas price
forecast by 4% to $2.05/Mcf on a strong 3Q20 and weaker than expected oil
prices in 4Q20 leading to lower than forecasted associated gas production.
Global oil demand improved nicely in May and June after being decimated in
April, but data out of China and India showed declines in global oil demand in
both July and August. Oil demand also stalled out a bit in the U.S. with gasoline
demand only showing a very modest improvement since the end of June. As
a result, WTI oil prices have languished at around $40/Bbl since early July.
However, September oil demand out of China and India was up from August
levels, and we expect to see oil demand in 2021 to continue to recover to around
97 MMBopd, which is down only 3% from pre-pandemic levels. Our 2021
outlook is not too different from the IEA's as it is predicting global oil demand
of 97.2 MMBopd in 2021, and OPEC is forecasting a fairly robust recovery in
global oil demand next year as well at 96.8 MMBopd. This represents a demand
increase of around 3% vs. September 2020 levels, which is encouraging.
Small cracks have formed in the OPEC+ supply cut agreement of late as Russia,
the U.A.E. and Iraq have missed monthly production quotas recently. If one or
more of these countries continues to show poor performance over the next few
months, the supply cut agreement could be in jeopardy. However, we think this
is highly unlikely as these countries generally need Brent oil prices of between
$50-$90Bbl to balance their budgets. Given the stall out in oil prices since early
July, and compliance issues regarding the OPEC+ cut deal, there is still quite
a bit of uncertainty in the near-term outlook for oil prices. As a result, we think
the vast majority of oil-focused U.S. E&Ps are going to signal maintenance
mode in 2021 as oil prices do not appear poised to break out to a much higher
level within the next handful of months. This should result in a moderate supply
outlook in 2021 which will help oil prices to recover. Overall, we see 2021 as a
tale of two halves as we see the effects of COVID-19 keeping global oil demand
somewhat suppressed in 1H21, but we expect a nice recovery in global oil
demand to near pre-pandemic levels on a potential COVID-19 vaccine or more
effective therapeutic in 2H21. Overall, we are lowering our 2021 WTI forecast
by 9% to $50/Bbl, and we are lowering our 2021 Brent forecast by 11.5% to $54/
Bbl. Our lower oil price forecast for 2021 and very modest U.S. oil production
growth forecast should benefit natural gas, and we are raising our 2021 natural
gas price forecast by 6% to $2.65/Mcf at this time.
--------------------------
MY TAKE: Similar to Raymond James oil price forecast update on 10-6-2020. RJ forecasts WTI at $42 in Q1, $48 in Q2, $60 in Q3 and $70 in Q4 for average of $55 in 2021.
I am using $50 WTI price for 2021 forecasts.
On the other hand, I think Leo's forecast of $2.65/Mcf for U.S. natural gas is way too low. EIA's forecast is $3.13 and Raymond James' forecast is $3.50.
I am using $3.00 HH gas price in my 2021 forecasts, but a normal winter could push the price over $4.00 within a few months. < Be on our webinar on October 21 to learn why.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Oct 20
Today there is almost no geopolitical risk premium priced into Middle East oil supply. Maybe there should be ......
"ISIS calls for attacks on Saudi oil industry. The Islamic State has called on its members to start targeting Saudi Arabia oil infrastructure as punishment for the Kingdom warming up to Israel. “Targets are plenty…Start by hitting and destroying oil pipelines, factories, and facilities which are the source (of income) of the tyrant government,” a spokesman for ISIS said."
"ISIS calls for attacks on Saudi oil industry. The Islamic State has called on its members to start targeting Saudi Arabia oil infrastructure as punishment for the Kingdom warming up to Israel. “Targets are plenty…Start by hitting and destroying oil pipelines, factories, and facilities which are the source (of income) of the tyrant government,” a spokesman for ISIS said."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group