Oil & Gas Prices - June 23

[dan_s]

EIA's weekly Petroleum Report and their weekly Natural Gas storage report will be released this morning.
Note from EIA: Several U.S. Energy Information Administration product releases scheduled for the week of June 20, 2022, will be delayed as a result of systems issues.

Opening Prices:
> WTI is down $0.41 to $105.78/bbl, and Brent is down $0.27 to $111.47/bbl.
> Natural gas is down -13.3c to $6.725/MMBtu.

AEGIS Notes
Oil

Oil posted its biggest loss in 6-weeks, yesterday, falling $4.46.
> The prompt-month contract is trading near $105.78 and has lost $0.41 since markets opened
> The Cal '23 strip has fallen over $10+ since the start of June, to trade near $90.03, while Cal '24 has fallen by around $5+ to around $81.27
> Market liquidity has been fading recently and can make the market more prone to large swings < All of the "noise" in the market has moved lots of energy traders to the sidelines.
> There has been much speculation about what drove yesterday's selloff, with many pointing to Fed Chairman Jerome Powell's testimony on capitol hill where he took a more hawkish tone, and the dollar jumped in response

Treasury Secretary Janet Yellen stated that discussions about how the U.S. and its allies might cap the price of Russian oil shipments are still ongoing (WSJ)
> Cap may be able to get around the EU's insurance ban
> She added that the EU's oil ban could remove Russian oil from the global market and further increase costs because many shipments of Russian oil are insured in the EU and U.K.

Putin claimed yesterday that trade with China and India had increased despite Western oil restrictions enacted in reaction to the invasion of Ukraine (BBG)
> “Russian oil supplies to China and India are growing noticeably,” said Putin at the BRICS Summit on Wednesday
> China purchased Russian oil last month for an average price of $93/bbl, $17 less than it paid for imports from Saudi Arabia during the same period, according to customs data
> Russia has a record volume of 74-79 MMBbl of crude oil in transit and floating storage amid the Ukraine war

Natural Gas

Germany warns of “Lehman-Like” contagion from Russian gas cuts (Bloomberg)
> Germany warned that Russia’s moves to cut gas exports to Europe threaten to collapse energy markets
> Germany is currently in the “alert” stage that gives the government the option to pass on costs to homes and businesses as energy suppliers get hit with losses from covering volumes at high prices < German consumers are screwed.

The EIA is expected to report an injection of 70 Bcf for the week ending June 17 (Platts)
> Responses to the survey ranged from 48 Bcf to 96 Bcf
> A 70 Bcf weekly injection would surpass the last year’s corresponding-week injection of 49 Bcf but fall short of the five-year average injection of 82 Bcf
> This week’s inventory print will be the first that is fully inclusive of the Freeport LNG outage that happened on June 8. So far, extremely warm temperatures in the region have been able to offset some of the impacts < If the next few weeks injections are below the 5-year average despite the Freeport outage, it will confirm my forecast that the hot weather in June is more than offsetting the Freeport outage. Weather is the MOST IMPORTANT driver of natural gas demand in the summer; including hurricanes.
> Aegis notes that if the 70-Bcf injection is confirmed, it would be slightly looser than the modeled five-year weather-adjusted injection of 43 Bcf.

[dan_s]

I know that everyone is focused on gasoline prices now, but if Team Biden does not get their heads out of their ass soon the home heating fuel shortages will be much worse than high gasoline prices.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Aug 22) was down $-1.92 on the day, to settle at $104.27
> Prompt-Month Henry Hub (Jul 22) was down $-0.619 on the day, to settle at $6.239

Considering all of the "noise" and total lack of leadership in Washington, I think oil & gas prices are holding up OK. Q2 results are going to be very good.

Join me and Michael Churchill on tomorrow's EPG webinar. We are going to focus on the macro economic stuff impacting the energy market first and then we are going to look at Callon Petroleum (CPE) and SilverBow Resources (SBOW). They are both in our Sweet 16 and I think they are trading at less than half fair value today.

You must register on the EPG home page to attend the live webinar, which will start at 1PM CT on Friday, June 24