Oil & Gas Prices - Sept 21

[dan_s]

Opening Prices:
> WTI is up 37c to $70.66/Bbl, and Brent is up 44c to $74.36/Bbl.
> Natural gas is down 5.2c to $4.933/MMBtu. < I am updating all of my forecast models based on average ngas prices of $3.90 in Q3, $4.75 in Q4 and $3.50 in 2022. I should get the last of the Sweet 16 updated today and all of the Small-Cap Portfolio companies updated by Thursday.

AEGIS Notes
Oil

Oil prices rose Tuesday morning after yesterday’s broad “risk-off” market plunge
Ida is having a lasting impact on the U.S. oil market, with some fields in the Gulf of Mexico unable to resume operations until next year

Royal Dutch Shell announced that the production of two of its largest Gulf of Mexico fields won’t resume until next year after Hurricane Ida inflicted “significant structural damage.” (Bloomberg)
The outage will disrupt about 300 MBbl/d, according to Bloomberg
The supply disruption is forcing refiners and other buyers to seek alternative supplies

Sour crudes on the U.S. Gulf Coast surged after Shell announced the outage
Mars blend narrowed its discount to WTI futures for October delivery by more than 70% on Monday to 55c/Bbl
The discount to futures for Poseidon, another sour crude, shrank by 27% to $2

Natural Gas

Cove Point LNG begins scheduled maintenance as of September 20 and will be down for the next three weeks
Cove Point feedgas demand equates to roughly 670 MMcf/d of capacity
Total U.S. feedgas is back down near 9.50 Bcf/d as Freeport LNG also struggles to restart its third and final train
Globally, LNG prices have soared with TTF, the Dutch gas benchmark, settling at $25.89/MMBtu and JKM, the Asian gas benchmark, settling at $27.19/MMBtu
> If you watched our Sept 17th webinar (replay available on the EPG website) you now know that if we have a cold winter in the U.S. and utilities are forced to bid up U.S. natural gas to take out LNG, the price of Henry Hub gas could spike to over $15/MMBtu. The last time the U.S. saw double digit natural gas prices was early in 2008 when WTI spike to $147/bbl.

Norway is boosting production limits to try to ease energy prices in Europe amid storage concerns
Production limit boosts will be allowed in the Troll and Oseberg fields and will rise by one bcm, or 3% of their current total over the next 12-months starting October 1. The announcement comes as TTF prices have tripled since the start of the year and are reaching record-level highs, settling at $25.74 on September 20. < Europe is in BIG TROUBLE because their wind project have not delivered the electricity the expected and Russia is delivering about half the amount of gas to fill storage before the winter heating season. A reminder that the Green New Deal won't work.

Baker Hughes gas-directed rig count loses one rig WoW to fall to 100 rigs, with Appalachia gaining two, and the Eagle Ford, Haynesville, and Other basins losing one each.

[dan_s]

On September 20 the average NGL barrel was priced at $43.30, which is 123% higher than a year ago. Take out ethane and the average price is over $50.
Propane is now over $54/bbl.

[dan_s]

Just keep in mind that this is the "Shoulder Season" for natural gas. That means that over the next six weeks we will see some of the largest inventory builds of the year. Here are the weekly 5-year average builds for weeks ending on the following dates.
> Sept 17 = 81 BCF
> Sept 24 = 68 BCF
> Oct 1 = 79 BCF
> Oct 8 = 81 BCF
> Oct 15 = 69 Bcf
> Oct 22 = 63 Bcf
then the builds drop off sharply
> Oct 29 = 33 Bcf
> Nov 5 = 29 Bcf
> Nov 12 = a draw of 2 Bcf
Mid-November is the beginning of the winter space heating season