Oil & Gas Prices - Nov 24

[dan_s]

Opening Prices:
> WTI is up 77c to $43.83/Bbl, and Brent is up 72c to $46.78/Bbl. < Next resistance level for WTI is $45.
> Natural gas is up 3.6c to $2.747/MMBtu.

Aegis Energy morning updates:

WTI inter-month price spreads flipped to backwardation by most since the onset of the COVID-19 pandemic. A backwardated curve implies a need for crude to be released from storage into the market. Demand resilience in India and China has likely bolstered the near-term prices in the futures curve. Hedging activity may also be fueling the rise in the time-spreads, as producers look to lock in future sales prices by selling on the back of the vaccine-driven rally.

OPEC+ is likely to delay its planned 2 MMBbl/d January production ramp-up by three months (Goldman). According to GIR, an extension would see the global market enter into a 1 MMBbl/d deficit in 1Q2021, after a brief return to a surplus in December 2020. UAE’s push to increase its specified quota may complicate talks, but ultimately a deal is expected to be reached

Aramco confirms attack on Jeddah fuel facility (Bloomberg). The damage from the Quds-2 rocket was minimal as firefighters were able to put out the blaze in less than 40 minutes.
No oil products were lost as a result of the attack, and the damaged tank should be repaired in a few weeks. However, this is an escalation of the conflict and the rocket was provided by Iran. Geopolitical risk is back in the formula for oil price.

Natural Gas
Natural gas is up 3.6c to $2.747/MMBtu

Operators in the Haynesville accelerate drilling amid a more bullish 2021 outlook (Platts). The shale play that straddles the Texas-Louisiana border added four rigs for the week ended Nov. 18, lifting the count to 46, or its highest in almost a year, according to Enverus data. Recent midstream additions and higher gas prices in 2021 are likely to send Haynesville production higher. A recent Platts forecast shows output there hitting new record highs by mid-2021 potentially surpassing 15 Bcf/d by the third quarter of 2021. Haynesville output month-to-date as averaged 12.5 Bcf/d as its rebound from about 10.5 Bcf/d earlier this summer.

Good news for Western Canada Gassers: The winter AECO strip is 60c above the level observed the past three years. Cash prices are expected to be well in excess of $2/MMBtu this winter, according to Platts. AECO futures for the remaining part of the winter 2020-20221 strip were recently trading around $2.35/MMBtu, which is about 60c better than the past three winters.
The higher price for the western Canada gas raises the possibility for gas-to-coal switching. But, even at these prices, data since August indicated that there is little risk of material gas demand loss from the power sector, according to Platts Analytics. Data from the past several months have shown little sensitivity to gas price as it relates to its share of thermal loads for Alberta Electric System Operator (AESO)

[dan_s]

API: "October US petroleum demand up 5.5% month-on-month".

Also, Most of Asian demand for oil is now above pre-pandemic levels. Post-pandemic demand in India will surge.

[dan_s]

Closing Prices:
> WTI prompt month (JAN 21) was up $1.85 on the day, to settle at $44.91/Bbl.
> Also, NG prompt month (DEC 20) was up $0.064 on the day, to settle at $2.775/MMBtu. < Cold start to Dec should push the JAN21 contract over $3.00.