Oil & Gas Prices - July 14

[dan_s]

Opening Prices:
> WTI is down $1.48 to $94.82/bbl, and Brent is down $1.30 to $98.27/bbl.
> Natural gas is up 19.4c to $6.883/MMBtu.

AEGIS Notes
Oil

Biden has landed in the Middle East and is expected to increase efforts to persuade Saudi Arabia and other OPEC members to increase oil production to curb high gasoline prices (BBG)
> The Saudi kingdom and the UAE are the only OPEC nations with significant unused output. According to official data, they have a combined buffer of almost 3 MMBbl/d
> Saudi oil industry executives have claimed in closed-door meetings that Saudi Aramco, the nation's state-owned corporation, can reach 12 MMBbl/d within 30 days and maintain that level for at least 90 days
> However, the company has not tested that production level for an extended period of time

The demand for crude oil continues to outpace supply, with no sign that the economy is slowing enough to balance the market in the short term, according to Goldman Sachs
> “The physical market is still screaming that it’s very, very tight,” said Damien Courvalin, head of energy research at Goldman Sachs
Even if US President Joe Biden persuades OPEC to increase supplies, he added, that would only be a "transient" fix that didn't address the issue of underinvestment in the global energy markets
> He also added that the recent selloff in crude futures, driven by recession fears, exacerbates underinvestment risks because the current price curve discourages much-needed production growth

MY TAKE: Strong US dollar primary reason for lower strip prices.

Natural gas futures are trading 19.4c higher, near $6.883
> Gas prices have gained a bit of ground this week on warmer weather forecasts. The gas-weighted cooling degree day total for July is expected to come in at 398
> The 398 CDD total would mark the second-highest total of a July in the 2000s
> U.S. lower-48 dry gas production has also remained below 96.3 Bcf/d after reaching a year-to-date high of 97.3 Bcf/d
> The EIA is expected to report an injection of 58-Bcf, which would be roughly in line with the five-year average
> A lot of analysts are watching this morning's report after huge misses on the last two storage prints

Europe may need to ration natural gas this winter as they hurry to fill storage
> European Storage is currently 62.6% full, while Europe is attempting to reach 80% by November. Despite this, Germany is currently withdrawing gas in what they described as a “result of market conditions”
> The issue is being exacerbated by maintenance that is currently taking place on the Nordstream pipeline and fears that Russia will not resume supply. On Wednesday Gazprom released a statement that said, "Gazprom does not have a single document to allow Siemens to take out of Canada the gas turbine engine currently being repaired there."
> The Netherlands expects to be able to sustain its supply of natural gas to Germany in the coming winter even if Russia cuts off all its supply to Europe, gas transport company GTS said on Thursday