Oil & Gas Prices - Dec 30

[dan_s]

Opening Prices:
> WTI is down 14c to $76.42/Bbl, and Brent is down 18c to $79.05/Bbl.
> Natural gas is down 2.4c to $3.826/MMBtu.

AEGIS Notes
Oil

Oil and gas sector hit with record costs, Dallas Fed survey shows
> Among E&P companies, an index for finding and development costs jumped to an all-time high, as did a separate one for lease operating expenses
> Oilfield services also flagged similar inflationary pressures. One respondent commented, “Rising supply-chain disruption and associated inflation have the potential to delay and impact drilling and completion activity in 2022.”
> Those polled expect West Texas Intermediate to average $75/bl by the end of 2022, with responses ranging from $50-125/bbl < IMO if the "Pandemic of Fear" ends in a few months, it is a good bet that WTI averages above the mid-point of this range (over $87.50/bbl).

The EIA reported a drawdown in US crude oil inventories of 3.57-MMBbls for the week ending December 24
> U.S. crude oil inventories are about 7% below the five-year average for this time of year
> Motor gasoline and distillate fuel oil inventories also both decreased by 1.5 MMBbls and 1.7 MMBbls, respectively
> The stat marked the fourth consecutive draw in inventories < During the time of year when crude oil inventories
normally build.

Natural Gas

Gas prices are below $4 again, sitting at $3.78/MMBtu as we switch over to the February contract
> After a volatile session yesterday, which saw prices hit a monthly high of $4.261/MMBtu before settling at $4.024 due to low liquidity and the expiry of the Jan 22 contract
> LNG feedgas levels have dropped by 0.45 Bcf/d to 11.8 Bcf/d this morning, as feedgas levels have been on a decline since reaching record high levels above 13 Bcf/d last Monday

The EIA is expected to report a 127-Bcf withdrawal for the week ending December 24, which would be larger than the 120-Bcf draw in the corresponding week of last year and the five-year average draw of 121 Bcf
> A draw within this range would bring total stocks near 3.235 Tcf and the surplus to the five-year average would decrease to 28 Bcf
> Over the past six weeks, the survey has missed the EIA estimate by an average of less than 2 Bcf