Oil & Gas Prices - June 15

[dan_s]

Opening Prices;
> WTI is down $0.15 to $118.78/bbl, and Brent is down $0.04 to $121.13/bbl.
> Natural gas is up 30.9c to $7.498/MMBtu.

AEGIS Notes
Oil

The IEA forecasts that the world's oil supply will have difficulty keeping up with demand in 2023
> The agency projected in its most recent monthly report that a recovering Chinese economy will increase oil demand while harsher sanctions against Russia will curtail oil production
> Global oil demand is anticipated to grow by 2.2 MMBbl/d to a record high of 101.6 MMBbl/d in 2023, while non-OPEC+ supply is forecasted to increase by 1.9 MMBbl/d according to the IEA < US upstream companies will need to ramp up drilling programs to make this happen.

China increased its oil refinery output in May as processors gradually increased their operating rates in anticipation of the easing of virus-related lockdowns
> Refiners processed 12.75 MMBbl/d of crude oil in May, up 0.7% from April but down 11% year over year when the Chinese economy was better prior to the most recent Covid-19 outbreak
> China’s apparent oil demand (oil processing volume and net import of refined petroleum oil) in May was 8.3% lower than a year earlier
> Chinese oil demand is anticipated to increase at a relatively moderate pace as present lockdowns are eased, according to analysts

Natural Gas

Yesterday, natural gas futures in the U.S. retreated sharply, posting their largest one-day loss in recent memory
> The prompt-month price lost -14.5% on the day to $7.443, while Summer '22, Winter' 22/’23, and Summer ’23 fell by -14.1%, -12.5%, -2.5%, to $7.43, $7.46, and $5.61, respectively

Freeport LNG announced that it would be able to restart partial operations in 90 days possibly, but that it could be late 2022 before the facility is up and running at full capacity
> The 90 days translates to around 180 Bcf (2 Bcf/d consumptions vs. 90-day outage) that could end up in storage and is around 2% of the U.S. natural gas market
> The impact has been bullish for international gas prices, with TTF and JKM prices both surging higher following the announcement
EU, Israel, and Egypt sign gas supply deal (Reuters)

Israel and Egypt will aim to boost natural gas exports to Europe under a memorandum of understanding (MoU) signed on Wednesday
"Today, Egypt and Israel make a commitment to share our natural gas with Europe and to help with the energy crisis," Israeli Energy Minister Karine Elharrar said after the signing of the MoU in Cairo
> Rising domestic demand in Egypt has caused LNG facilities to become underutilized and exports to fall, but with the new Israeli supply, the countries should be able to keep those facilities in Egypt running at capacity

[dan_s]

Closing Prices:
> Prompt-Month WTI (Jul 22) was down $-3.62 on the day, to settle at $115.31
> Prompt-Month Henry Hub (Jul 22) was up $0.231 on the day, to settle at $7.420

Keep in mind: All of my Q2 forecasts are based on WTI averaging $105/bbl and HH ngas averaging $7.50.