Oil & Gas Prices - Dec 16

[dan_s]

Opening Prices:
> WTI is down 2c to $47.60/Bbl, and Brent is down 0c to $50.76/Bbl.
> Natural gas is down 2.2c to $2.660/MMBtu.

Aegis Energy Morning Notes:
Crude Oil
WTI is down 2c to $47.60/Bbl, and Brent is down 0c to $50.76/Bbl

Strong Chinese and Indian oil demand pushes spot prices higher
Chinese daily refining rates rose to a record for the second consecutive month, while several Indian refiners are running at near 100% capacity, according to Bloomberg
AEGIS notes spot prices have risen significantly over the last month as Asian demand has supported price, while demand stagnates in other countries around the world (U.S., Europe)

Diesel demand has returned to pre-virus levels lifted by an e-commerce driven increase in trucking, even as gasoline demand stagnates
The rebound in diesel demand has led to larger margins on U.S. light sweet crude, pushing WTI and LLS refining margins to multi-month highs
Refinery run rates in the U.S. Gulf Coast are at their highest since August < This is the key stat for rising oil prices.

EIA weekly data is due at 9:30 am CST
U.S. Crude Inventories: – 1,088 MBbls (Avg. Bloomberg surveys)
U.S. Gasoline Inventories: + 1,822 MBbls
U.S. Distillate Inventories: + 1,207 MBbls
U.S. Refinery Utilization: + 0.47% change

Natural Gas
Natural gas is down 2.2c to $2.660/MMBtu

The U.S. Energy Information Administration (EIA) is expected to report a 120 Bcf withdrawal for the week ended December 11 on Thursday, according to the average Bloomberg survey
The survey of economist provided a range of withdrawal between -105 and -138 Bcf
Cooler weather in the Northeast helped increase overall residential and commercial demand by more than 4 Bcf/d, according to Platts data

Natural gas prices are modestly lower this morning despite a small improvement (cooler) weather model changes
Over the past 24-hours, weather forecasts have added 2.7 HDDs (heating degree days) (~5 bcf) of demand with a cooler Midwest and Northeast (CWG)

The 11-15 day time-frame showed a cooler north, but also a warmer southeast
December is trending to be on the warmer end of the past 20 years for the same month at 810 HDDs, according to CWG estimates
The 10 year climate normal for December is 816 HDDs while the 30 year normal is a bit higher at 867 HDDs
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MY TAKE: If EIA reports a triple digit draw from storage tomorrow for the week ending Dec 11 and an even larger draw next week for the week ending Dec 18 (thanks to winter storm Gail), then we may see the JAN21 NYMEX contract push over $3.00. U.S. production is down YOY and LNG exports are much higher than anyone expected six weeks ago.

[dan_s]

This is a very bullish weather map for natural gas demand: https://weather.com/maps/ustemperaturemap

Also, Gail is going to generate high winds across the Northeast resulting in blizzard conditions. High wind speeds create more space heating demand.

[dan_s]

Closing Prices:
> WTI prompt month (JAN 21) was up $0.20 on the day, to settle at $47.82/Bbl.
> NG prompt month (JAN 21) was down $0.005 on the day, to settle at $2.677/MMBtu.