Oil & Gas Prices - Dec 15

[dan_s]

Opening Prices:
> WTI is up 44c to $47.43/Bbl, and Brent is up 36c to $50.65/Bbl.
> Natural gas is down 6.3c to $2.619/MMBtu.

Aegis Energy morning notes with my comments in blue:
Crude Oil:
WTI is up 44c to $47.43/Bbl, and Brent is up 36c to $50.65/Bbl

U.S. shale output is expected to decline by about 136 MBbl/d in January (EIA) < As I have told you many time in my podcasts, production normally declines in Q1 due to a significant decline in well completions after Christmas thru improved weather in March and April. Demand for oil is seasonal and Q1 is the low demand period each year.
Output from shale formations is forecast to be around 7.44 MMBbl/d next month, with all seven major shale formations expected to see a decline aside from the Haynesville, which will likely remain flat, according to the EIA. < The Haynesville produces very little oil.
The Permian is expected to account for the largest decline of the basins, with production expected to fall by 44 MBbl/d to 4.2 MMBbl/d

China sets a record for daily crude processing for a second straight month (Bloomberg)
Crude processing was at around 14.26 MMBbl/d last month
Several Chinese refiners are increasing their processing capacity, while demand has also forced state-run operators to raise refinery run-rates
Oil demand in China a most of Asia is now above pre-pandemic levels.

OPEC President, Algeria’s Energy Minister Abdelmajid Attar, reiterates that OPEC should exercise caution in increasing output
Attar said there was no guarantee that the cartel would raise output by 2 MMBbl/d by April, as doubts of a quick demand recovery surfaced
OPEC said in its Monthly Oil Market Report (MOMR) that global demand will rise by 5.9 MMBbl/d to 95.89 MMBbl/d in 2021.
Last month, it predicted that next year’s consumption would grow by 6.25 MMBbl/d
The OPEC MOMR that the producer network could incrementally restore that full consignment over the next four months, without pushing world markets back into surplus
MY TAKE: U.S. oil production is down 2.0 million BOPD and Non-OPEC+ production (including the U.S.) is probably down ~4 million BOPD. It will remain on decline due to lack of capex spending and if we escape from "Pandemic World" in six months, this world will need a lot more oil from OPEC+.

Natural gas:
Natural gas is down 6.3c to $2.619/MMBtu
Gas futures for January are down this morning despite weather model changes showing a slight overall gain in heating degree days
The 11-14 day model changes presented more below-average temperatures in the East around Christmas day
More near-term forecasts show little change from previous runs, keeping more above-average temperatures across much of the Lower 48

U.S. natural gas deliveries into LNG facilities hit a new record of 11.6 Bcf/d as Asian prices reach yearly highs (Platts)
The Asian benchmark JKM (Japan-Korea Marker) was assessed at $12.213/MMBtu on December 14 according to Platts data
The JKM price is now double what it was trading three weeks earlier
LNG netbacks from the U.S. Gulf Coast from the JKM rise to about $6/MMBtu on December 14, a nearly $4.80/MMBtu premium to the TTF netback (Dutch)
AEGIS notes that U.S. LNG companies are having no problem shipping gas abroad with a wide open arbitrage – a striking change from this summer

[dan_s]

Closing Prices:
> WTI prompt month (JAN 21) was up $0.63 on the day, to settle at $47.62/Bbl.
> NG prompt month (JAN 21) was unchanged on the day, to settle at $2.682/MMBtu.