Oil & Gas Prices - Sept 3

[dan_s]

Opening Prices
> WTI is up 23c to $70.22/Bbl, and Brent is up 41c to $73.44/Bbl.
> Natural gas is up 4.0c to $4.681/MMBtu.

AEGIS Notes
Oil

WTI is trading above $70/Bbl after settling yesterday at $69.99/Bbl
> Investors are wagering the oil market can absorb additional supply from OPEC+
> Nearly 94% of Gulf of Mexico crude production remains shut days after Ida left the region
> About 1.3 MMBbl/d of U.S. refining capacity remains offline, down from 2.5 MMBbl/d earlier in the week

The Department of Energy has authorized Exxon Mobil Corp. to receive crude from the Strategic Petroleum Reserve (SPR) to help with the production of fuels (Bloomberg)
> Exxon will be getting 1.5 MMBbl from the SPR for its Baton Rouge refinery
> The company will have to restock the same amount of oil plus premium barrels within a few months, according to the statement

Natural Gas

More Gulf of Mexico (GoM) production was brought offline yesterday (Platts)
> According to the Bureau of Safety and Environmental Enforcement, 91.29% of GoM production is shut in, an increase from 83.21% on Wednesday
> Offshore GoM production is at 167 MMcf/d, down from the 2.5 Bcf/d averaged in the 30 days leading up to Hurricane Ida
> Gas demand in Louisiana has averaged 1.04 Bcf/d over the last two days, down about 200 MMcf/d from pre-storm levels

The EIA reported a second consecutive injection to storage below analysts estimates
> The agency reported a 20-Bcf injection for the week ending August 27, in contrast with the average estimate of 25 Bcf (Bloomberg)
> Inventories for the US are now at a deficit of 579 Bcf to last year and a deficit of 222 Bcf to the five-year average, and working gas inventories increased to 2.871 Tcf. < The deficit to last year is significant because in mid-November 2021 (when the winter heating season begins) the US will have less natural gas in storage than it had on December 25, 2020 (3,460 BCF).

[SergioSays]

do we have any news on the status of Mexico off-shore production?

[dan_s]

Natural gas and oil production taken offline in the Gulf of Mexico (GOM) by Ida is not coming back as quickly as first advertised, federal officials said Thursday.

Read more: https://www.naturalgasintel.com/goms-oi ... officials/

[SergioSays]

sorry my question was a little unclear. I was referring to the Pemex situation with the Maya production offline from their incident a couple weeks back. Thanks in advance.

[mrbill]

https://www.workboat.com/coastal-inland ... ggles-back

The GOM offshore boat fleet is ok. But, the whole loading and unloading infrastructure of Fourchon is devastated
along with all of the workers in that "swath" being severely effected. IMHO this will "choke" supply to all the offshore
rigs and platforms. They need periodic resupply to do what they do.

I

[dan_s]

Hurricane Larry has been intensifying steadily and, by Thursday afternoon, had grown slightly larger, according to the National Hurricane Center. Larry is forecast to develop rapidly into a major hurricane with top winds reaching up to 140 mph.

As of today, Larry is not likely to enter the GOM but it will impact the import/export of oil because oil tankers will stay 100s of miles away from big storms like this.

[dan_s]

Good update on where the US natural gas market is today:
https://oilprice.com/Energy/Energy-Gene ... cords.html

You may recall that in one of my recent newsletters I said that "Paradigm Shifts" on Wall Street can cause BIG moves in stock prices. The Wall Street Gang is just beginning to figure out the significant tightening that we have developing in the US natural gas market. All of our gassers (AR, CRK, EQT, RRC, XEC, GDP, SBOW and NOC) will benefit from this Paradigm Shift.

Continental Resources (CLR) has been mentioned here several times because it has over a Bcf per day of unhedged gas production. So, a $1/mcfe increase in their realized natural gas prices in Q4 will add over $92 million to their revenues for the quarter. That is significant even for a large-cap like CLR.
For 2021 CLR is on track to generate $5.3 Billion of revenues and $2.5 Billion of free cash flow. Natural gas and NGL sales will be approximately $1.5 Billion this year.

[dan_s]

Mexico does have their offshore production back online.