Opening Prices:
> WTI is down 43c to $82.99/Bbl, and Brent is down 64c to $85.18/Bbl.
> Natural gas is down 10.2c to $5.068/MMBtu.
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AEGIS Notes
Oil
Oil futures fell 1% on Thursday morning following their strongest closing price since 2014
> Other industrial commodities also retreated as the prospect for headwinds to China’s economy grew, while the dollar climbed (Bloomberg)
Crude inventories at Cushing, Oklahoma, fell to the lowest in three years last week (EIA)
> A global energy crisis is incentivizing more fuel output, and buyers in Asia and Europe are looking for alternatives to pricier international oil grades (BBG)
> Stocks at the hub are approaching 30 MMBbl, a key psychological level and a drop below could send oil prices higher, according to traders talking with Bloomberg < FYI Cushing's tanks can hold over 64 million barrels of oil, but rarely go over 50 million.
Saudi Arabia said any extra oil from OPEC+ would do little to bring down surging natural gas prices
> “We see our role as extremely limited,” Saudi Energy Minister Price Abdulaziz bin Salman said during the CERAWeek India Energy Forum
> AEGIS notes that OPEC+ has been called on by many (including Biden from his knees) to expand their planned supply increases beyond 400 MBbl/d
> The group’s next meeting is early next month < I now firmly believe that OPEC+ can't increase their production by more than 400,000 bpd per month because all but a few countries in the cartel can produce at their current quotas. I now think there is a chance that OPEC+ will run out of spare capacity in Q2 2022.
Natural Gas
The EIA is expected to report an 88-Bcf injection for the week ending October 15, which would be more than the five-year average build of 69 Bcf during the corresponding week and 49 Bcf during the same week a year ago
> Analysts estimates ranged from a build of 84 Bcf to 96 Bcf
> A build within this range would bring total stocks near 3.457 Tcf and the deficit to the five-year average near 155 Bcf
> The current end-of-season storage number settled at 3.665 Tcf on ICE < the 5-year average is 3,735 Bcf
> The U.S. supply-demand backdrop has weakened over the past several weeks, and injections have picked up, which has helped narrow the deficit to the five-year average
Russia is worried surging gas prices risk destroying demand (Bloomberg)
> The energy crunch is driving up costs for businesses, causing several industries to curb operations that have become too expensive to run
> BASF SE, CF Industries Holdings Inc, and Yara Intl ASA are among those companies to limit gas consumption
> The soaring gas prices have also affected Asian businesses ’ consumption. China’s southwest Sichuan province has started limited gas supplies to some industries
> LNG cargos are getting over $30/MMBtu in Europe and over $33/MMBtu in Asia.
Oil & Gas Prices - Oct 21
Oil & Gas Prices - Oct 21
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Oct 21
Closing Prices:
> WTI prompt month (DEC 21) was down $0.92 on the day, to settle at $82.50/Bbl.
> NG prompt month (NOV 21) was down $0.055 on the day, to settle at $5.115/MMBtu.
Today was the first day that the DEC21 contract for WTI was the front month.
Trading Economics: "US natural gas futures increased to almost 5.2 per million British thermal units, recovering from a 1-month low of $5.0 hit on Wednesday as investors anticipate stronger heating demand as the temperature is expected to cool down over the next two weeks. Meanwhile, the EIA reported an injection of 92 Bcf natural gas into storage for the week ended October 15th, slightly above forecasts of a 90 Bcf build and compared with the five-year average of 69 Bcf. US gas prices hit their highest level since December 2008 in October on expectations global competition for LNG would keep demand for US exports strong, particularly in Europe and Asia, which face an unprecedented energy crisis amid depleted inventory levels. US gas inventories are seen approaching 3.6 trillion cubic feet (tcf) by the start of the winter heating season in November, slightly below the 3.7 tcf five-year average. In Europe, stockpiles are estimated to be about 15% below normal for this time of year."
> WTI prompt month (DEC 21) was down $0.92 on the day, to settle at $82.50/Bbl.
> NG prompt month (NOV 21) was down $0.055 on the day, to settle at $5.115/MMBtu.
Today was the first day that the DEC21 contract for WTI was the front month.
Trading Economics: "US natural gas futures increased to almost 5.2 per million British thermal units, recovering from a 1-month low of $5.0 hit on Wednesday as investors anticipate stronger heating demand as the temperature is expected to cool down over the next two weeks. Meanwhile, the EIA reported an injection of 92 Bcf natural gas into storage for the week ended October 15th, slightly above forecasts of a 90 Bcf build and compared with the five-year average of 69 Bcf. US gas prices hit their highest level since December 2008 in October on expectations global competition for LNG would keep demand for US exports strong, particularly in Europe and Asia, which face an unprecedented energy crisis amid depleted inventory levels. US gas inventories are seen approaching 3.6 trillion cubic feet (tcf) by the start of the winter heating season in November, slightly below the 3.7 tcf five-year average. In Europe, stockpiles are estimated to be about 15% below normal for this time of year."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group