Oil & Gas Prices - July 28

[dan_s]

Opening Prices:
> WTI is up $1.87 to $99.13/bbl, and Brent is up $1.84 to $108.46/bbl.
> Natural gas is up 3.2c to $8.586/MMBtu.

AEGIS Notes
Oil

Federal Reserve officials raised interest rates by 75 basis points for the second straight month
> Chairman Powell said that the Committee will now make decisions on a meeting-by-meeting basis rather than providing the kind of clear guidance it provided for the last two meetings
> Powell also said the Fed would slow the pace of increases at some point and added that another 75bp hike remains on the table

The U.S. economy contracted for the second consecutive quarter, confirming a recession, depending on your definition
> GDP dropped at a 0.9% annualized rate after a 1.6% decline in the first quarter of the year, according to the Commerce department
> Historically GDP and crude oil consumption have a good correlation, and the print could be a sign that crude consumption growth is slowing
> Global crude consumption usually grows at around half the rate of the economy, and we have been warning of the risks posed by a recession. Prior to COVID, the last time the U.S. economy posted two consecutive quarters of negative GDP growth ('08-'09), U.S. crude consumption fell by 2.65 MMBbl/d

The U.S. is exporting more oil than ever before, with shipments poised to climb even higher
> Crude shipments rose 21% last week to an all-time high of 4.55 MMBbl/d, according to EIA
> On Wednesday, the WTI was trading at more than $9 below Brent, and this widening gap may allow traders to make more profit from each American barrel sent to energy-scarce Europe and other regions
> Brent oil prices have remained high, and the demand for U.S. crude has increased due to tight supply in Europe as a result of Russia's growing isolation
> WTI prices have also been restrained by releases from the U.S. strategic petroleum reserve

Natural Gas

Natural gas futures are up 3.2c ahead of the EIA storage report
> The EIA is expected to report an injection of 19 Bcf
> The estimates range from 9 Bcf to 28 Bcf. This compares to an injection of 32 Bcf last week and 36 Bcf this time last year.
> The five-year average injection is 36 Bcf
> Total natural gas in storage is currently 2.40 Tcf, while the five-year average is 2.73 Tcf

NextDecade to supply LNG to ExxonMobil from the Texas Rio Grande plant (Reuters)
> NextDecade Corp said on Wednesday it will supply 0.13 Bcf/d of LNG to a unit of ExxonMobil Corp for 20 years from its proposed Rio Grande LNG export project in Brownsville, Texas
> Rio Grande is one of several North American LNG export projects that delayed decisions to start construction in recent years
> NextDecade said it anticipates making a positive FID on up to three trains at Rio Grande in the second half of 2022, with FIDs of its remaining trains to follow thereafter

[dan_s]

Trading Economics:
"Crude traders sent oil on a roller coaster ride Thursday, first rallying to almost $100 per barrel due to falling US inventories and signs of a pick up in demand, then falling to nearly $96 per barrel on fears that an economic downturn will undercut fuel demand, then ultimately rising as risk appetite improved again. Commodity markets have been gripped by fears that aggressive rate hikes would lead to demand destruction, but persistent supply-side issues and various disruptions kept the global market tight and energy prices elevated. The latest data showed the world's largest economy unexpectedly contracted for a second quarter in Q2, fueling recession fears. On Wednesday, WTI crude advanced 2.4% after EIA data showed that US crude stockpiles fell by 4.52 million barrels last week, while exports rose to a record 4.55 million barrels a day. US gasoline demand also increased 8.5% week-on-week, with inventories declining by 3.3 million barrels."

FEAR + lots of noise keeps paper traders on edge. Almost $10/bbl gap between Brent and WTI is interesting.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Sep 22) was down $-0.84 on the day, to settle at $96.42 < Brent closed at $107.49, the largest gap that I've seen.
> Prompt-Month Henry Hub (Sep 22) was down $-0.420 on the day, to settle at $8.134 < A pullback was expected because last week's ngas price spike was just a short squeeze on the paper traders that got stuck with too many short contracts as the AUG22 expiration date approach. We may similar spikes at the end of each month.