Oil & Gas Prices - Jan 14

[dan_s]

Opening Prices:
> WTI is down 25c to $52.66/Bbl, and Brent is down 38c to $55.68/Bbl.
> Natural gas is up 0.8c to $2.735/MMBtu.

Aegis Morning Notes
Crude Oil

WTI is trading slightly lower this morning as grim Chinese import data offset encouraging OPEC+ data
The dollar index (DXY) bounced from its intra-week low of $90 by 50 pips to $90.509
The EIA reported a drawdown in inventories of 3,248 MMBbls, in contrasts with the average Bloomberg survey estimate of 1,930 MMBbls
OPEC+ cuts contribute to declining global inventories (Bloomberg)
IF OPEC maintains adherence to the cuts, the cartel will pump an average of 25 MMBbl/d, well below the 26.79 MMBbl/d required to balance the market.
According to the report, inventories should decline at a rate of 1.8 MMBbl/d < As I have posted here many times, falling above ground inventories is the primary catalyst for rising oil prices. Plus, Q1 is the lowest demand period of the year. Demand always picks up in Q2 and peaks in June & July.

OPEC’s 2021 forecast remained the same; however, the group foresees a tighter 1Q2021 as consumption returns while rival output slows
Chinese imports data shows 2020 was a record-year for energy imports (General Administration of Customs Data – PRC)
Coal and gas shipments showed a surprise-surge in December, bringing the annual total to 300 MM Tons, its highest since 2013 < Yes, there is still a lot of demand for coal. Coal consumptions will increase at least through 2025. Very cold winter in Asia is the cause this month.
Total oil imports saw a 7% year-over-year increase in 2020. Still, concerning data came out showing China crude imports reached a 27-month low of 9.096 MMBbl/d in December

Natural Gas

Nymex gas prices are steady Thursday morning as weather models remain mostly unchanged overnight and the market awaits the EIA’s storage data
Cooler temperature changes were concentrated in the Northeast within the 6-10 day window while the end of January time-frame shows gains in anomalous warmth in the Southeast U.S.
For the next 15 days there was a minor increase in overall heating degree days of 0.6 (~1.2 bcf)

Regulators in the U.S. have given the green light for work to begin on nearly all of the route of the 125-mile Double E Pipeline that would connect gas-rich areas of the Permian’s Delaware basin to Waha Hub
The Summit Midstream owned pipe will transfer up to 1.35 Bcf/d and connect to Kinder Morgan’s Gulf Coast Express and Permian Highway Pipelines (PHP) as well as Energy Transfer’s Transo-Pecos Pipeline
Connecting to these long haul pipelines will allow the gas to reach downstream markets on the Texas Gulf Coast
Waha gas prices have already greatly improved recently and much of that improvement has come with the addition of PHP. Cash Waha reached a six-week high of $2.70/MMBtu on January 13 < This is great news for all of our Permian Basin upstream companies because they have been forced to take low gas and NGL prices for over two years because of insufficient pipeline capacity. With excess pipeline capacity comes higher bids from the midstream companies.

[dan_s]

Closing Prices:
> WTI prompt month (FEB 21) was up $0.66 on the day, to settle at $53.57/Bbl.
> In contrast, NG prompt month (FEB 21) was down $0.061 on the day, to settle at $2.666/MMBtu.