Oil & Gas Prices - June 23

[dan_s]

Opening Prices:
> WTI is up 72c to $73.57/Bbl, and Brent is up 71c to $75.52/Bbl.
> Natural gas is up 6.6c to $3.324/MMBtu.

AEGIS Notes
Crude Oil

West Texas Intermediate reached a fresh two-year high of $73.06 yesterday
> Industry data showed a large 7.2 MMBbl draw in inventories last week; the API reported Tuesday afternoon
> If confirmed by EIA government data later today, it would be the fifth straight week of declines
> The Bloomberg survey of analysts shows a 4.1 MMBbl withdrawal for crude oil inventories to be released at 9:30 AM

OPEC and its allies are mulling a 500 MBbl/d collective output hike for August when they meet next week, delegates said, as reported by Bloomberg
De facto OPEC+ leaders Saudi Arabia and Russia are moving cautiously in ramping up output, delegates said
The cartel will meet virtually on July 1 to decide what to do next
The scenario hasn’t been formally discussed among the group, and no decision has been made

MY TAKE: Iran walking away from the negotiations over their Nuke Program is fueling this week's rally in oil prices. Iran's new hard line president is giving the finger to Team Biden. He's not giving in on anything to do with their missile program or their support for terrorist in Yemen that lob missiles into Saudi Arabia or Hamas that is attacking Israel. Iran will ignore the sanctions and export more oil because they have no fear of Biden who has instructed the Pentagon to reduce our military presents in the Middle East. If the U.S. navy does stop Iranian oil tankers we will see WTI over $80/bbl within a week.

Natural Gas

The EIA is expected to report a 63-Bcf injection for the week ending June 18, which would be less than half of the 115-Bcf build in the corresponding week of last year and the 5-year average build of 87 Bcf.
> Analysts estimates ranged from a build of 59 Bcf to 71 Bcf
> A build within this range would bring total stocks near 2.490 Tcf and the deficit to the five-year average near 146 Bcf

Asian spot LNG prices have jumped to an 8-year seasonal high to over $12/MMBtu as hot summer weather in China is forcing buyers to bid up cargoes to attract from EU (Platts)
> Rising electricity consumption has been driven by China’s economic recovery. Power generation from alternate sources has been lower as hydro generation in southwest China, plus lower rainfall and solar power output, has been below expectations
> U.S. LNG feedgas demand continued to increase and stood at 9.2 Bcf on June 22, up nearly 400 MMcf on the day, according to Platts

MY TAKE: As long as LNG exports remain high all summer (now highly likely) the amount of natural gas in U.S. storage will be WAY BELOW the 5-year average in mid-November and utilities will get into a bidding war in Q4 for regional supply. If so, AR, CRK, EQT, RRC, GDP and SBOW have a lot of upside from where they are trading today.

[dan_s]

Closing Prices:
> WTI prompt month (AUG 21) was up $0.23 on the day, to settle at $73.08/Bbl.
> Also, NG prompt month (JUL 21) was up $0.075 on the day, to settle at $3.333/MMBtu.