Oil & Gas Prices - Aug 3

[dan_s]

Opening Prices:
> WTI is up $1.94 to $96.36/bbl, and Brent is up $1.79 to $102.33/bbl.
> Natural gas is up 6.7c to $7.773/MMBtu.

AEGIS Notes
Oil

OPEC and its allies agreed to a small 100 MBbl/d production increase for September (WSJ)
> Delegates from OPEC said that the group needs more time to study the possibility of a slowdown in the global energy demand before deciding whether to significantly increase oil production < IMO they say stuff like this just to make the market believe they have more production capacity. OPEC+ is tapped out and without steady production increase from Russia, OPEC+ has very little control over oil prices.
> Even then, the alliance's ability to boost output remains limited as OPEC+ pumped 2.7 MMBbl/d less than its collective production target of about 42 MMBbl/d in May
> The shortfall was primarily due to falling production in sanctions-hit Russia and ongoing output issues in Nigeria, Angola, and some other nations, according to OPEC delegates
> The cartel also expects global oil demand growth to slow to 2.7 MMBbl/d next year, from 3.4 MMBbl/d in 2022

G7 nations consider measures to limit Russian oil revenues < They are too dumb to know they are going to lose the "Sanctions War".
> The bloc is considering banning Russian oil from being transported, among other measures, to deny Moscow huge revenues while it invades Ukraine
> Despite Russia's oil exports falling to their lowest levels since last August, its export earnings in June jumped by $700 million month over month due to higher prices, 40% above last year's average, said the IEA in July
> Some analysts and traders have expressed doubts that a price cap would be effective as Russia has found ways to move its oil to Asia without the use of Western ship insurance

Natural Gas

U.S. power producers are consuming near-record volumes of gas (Reuters)
> Record U.S. electricity consumption is driving near-record combustion of gas by power generators, ensuring gas inventories remain under pressure
> Gas production has remained steady while the U.S. industrial, LNG, and power sectors are consuming more gas this summer, leading to ongoing shortages
> There is not enough spare capacity in the generation system to reduce reliance on gas even as prices rise, especially since many coal units have been decommissioned
> Gas generators are almost certain to have maintained a record or near-record output of gas consumption in May, June, and July, given temperature trends across the Lower 48 states

Equitrans to complete U.S. Mountain Valley pipeline in 2023 (Reuters) < Great news for AR, CTRA, EQT and RRC.
> U.S. energy company Equitrans Midstream Corp still expects to complete the $6.6 billion Mountain Valley natural gas pipeline from West Virginia to Virginia in the second half of 2023
> That follows news on Monday that Democratic U.S. Senator Joe Manchin secured a commitment from President Joe Biden, Senate Majority Leader Chuck Schumer, and House of Representatives Speaker Nancy Pelosi to allow the long-delayed Mountain Valley to be completed
> Mountain Valley - the only big gas pipe under construction in Appalachia - is one of several U.S. pipeline projects delayed by regulatory and legal fights with environmental and local groups < We must get the Climate Change Wackos (children in adult bodies) out of the room when discussing US energy policy.
> Equitrans has said the 2 Bcf/d pipeline was "nearly 94% complete."

[dan_s]

Lots of "Noise" has oil traders worried.

Trading Economics:
"Oil prices fell more than 1% reversing earlier gains, with WTI crude futures back to $93 a barrel, after data showed US inventories rose more than expected and as investors digested the latest OPEC+ decision to raise crude output by 100,000 bpd for next month. Last month, US President Joe Biden visited Saudi Arabia and called on OPEC to increase production, but capacity constraints and the inability of some member states to meet output targets made the prospect of any significant supply boost unlikely. Meanwhile, EIA data showed stocks of crude unexpectedly rose by 4.467 million barrels last week, the most in a month and beating forecasts of a 0.629 million fall."

[dan_s]

Here is some good news:

Trading Economics:
"US natural gas futures bounced back to around $8.2/MMBtu, recovering from a two-week low of $7.7/MMBtu touched in the previous session, on prospects of increasing need for cooling amid hotter-than-normal temperatures in the United States and continued robust demand from Europe. This was despite a rise in output to record highs in recent days as domestic producers have been taking advantage of higher prices. Meanwhile, the key Nord Stream 1 pipeline from Russia to Germany is running at 20% capacity. Russia has already halted shipments to Demark, Finland, Bulgaria, the Netherlands, and Poland and reduced supplies to Germany for not consenting to its natural gas payments demand in Russian rubles."

ALWAYS REMEMBER: Natural gas and NGL prices are set by REGIONAL FUNDAMENTALS and the US ngas market is TIGHT and probably getting much tighter in Q4 when Freeport LNG facility comes back online. Gas-to-Coal fuel switching is not happening like it usually does.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Sep 22) was down $-3.76 on the day, to settle at $90.66 < Back to where WTI was before Russia invaded Ukraine.
> Prompt-Month Henry Hub (Sep 22) was up $0.560 on the day, to settle at $8.266 < Hang on to your gassers and look closely at the production mix of all of your upstream companies.