Oil & Gas Prices - July 19

[dan_s]

Opening Prices:
> WTI is down $1.95 to $100.65/bbl, and Brent is down $1.67 to $104.60/bbl.
> Natural gas is down -22.4c to $7.255/MMBtu.

AEGIS Notes
Oil

The recovery in Russian oil production has continued this month as higher domestic demand offset a minor drop in exports to key markets (Bloomberg)
> The nation’s producers pumped 10.78 MMBbl/d on average from July 1 to 17, according to data from the Energy Ministry’s CDU-TEK
> That is 0.6% above the June level, according to calculations based on the data, indicating that the pace of the country’s output recovery has slowed, and it is still above the 10.095 MMBbl/d February average of crude and condensate
> Supplies to domestic refineries so far in July reached 5.75 MMBbl/d, around 6% above the average for June
> Russia’s output recovery is important to monitor to see if the nation could support further increases in OPEC+ quotas at the group’s next meeting on August 3

Iraq’s Oil Minister Abdul Jabbar said that he would “like OPEC to retain its tools to measure and control output and maintain the existing balance”
> He also forecasts that oil will trade above $100/bbl for the rest of the year and remain high for the next several years
> Meanwhile, Saudi Arabia’s Foreign Minister commented that there is not a lack of oil in the market but rather a lack of refining capacity to match fuel demand following a meeting with Japan’s Foreign Minister today

Natural Gas

Natural gas futures are trading around 3.5% lower this morning, near $7.255
> Lower-48 dry gas production took a huge hit today with Northeast volumes falling 1.1 Bcf/d, bringing the total rout to 1.7 Bcf/d
> Lower-48 dry gas production now sits near 96.3 Bcf/d after touching a year-to-date high of 98.0 Bcf/d over the weekend
> The gas-weighted cooling degree day total is at 395, which would still place it as the second-most bullish since 2000, behind only 2011

On the power side, ERCOT has approached record-load levels several times over the last few weeks. peak load yesterday was 79.03 GW, 1.1 % lower than yesterday’s forecast of 79.90 GW peak and daily minimum loads were above the 5-year range, and the peak is a new ERCOT record load beating the July 12th value of 78.41 GW

Rystad sees U.S. natural gas output eclipsing 100 Bcf/d by the end of 2022

Natural gas production within the US is on pace to hit an all-time high in the next few months

Production from Haynesville alone is expected to grow by a staggering 2.6 Bcf/d this year compared to 2021, pushing annual output from the play to more than 14 Bcf/d

[dan_s]

Closing Prices:
> Prompt-Month WTI (Aug 22) was up $1.62 on the day, to settle at $104.22
> Prompt-Month Henry Hub (Aug 22) was down $-0.215 on the day, to settle at $7.264

Trading Economics:
"WTI crude futures were trading around $104 per barrel on Tuesday, rebounding from their daily lows of $100 amid a weaker dollar and persistent supply concerns. In the near term, supply gaps are unlikely to be filled by extra output from OPEC+ despite efforts from the United States to bring more oil to markets to help tame energy costs. Saudi Arabia insisted after a recent meeting with the US that policy decisions would be based on market dynamics and according to the OPEC+ meeting in August. Keeping a lid on prices were growing recession concerns, driven by aggressive rate hikes worldwide, Covid-19 lockdowns in China, and western proposals for a price cap on Russian oil."

MY TAKE: Saudi Arabia knows that OPEC+ is already at maximum production. Old Joe's trip was a waste of jet fuel. FEAR of recession and FEAR of Covid lockdowns in China are the only things keeping a lid on oil prices. The global oil market is tight and getting tighter. Thanks to the Green Bad Deal we don't have enough refining capacity to keep up with gasoline and diesel demand.