Oil & Gas Prices - Dec 15

[dan_s]

Opening Prices:
> WTI is up $0.08 to $77.36/bbl, and Brent is up $0.05 to $82.75/bbl.
> Natural gas is down -4.6c to $6.384/MMBtu.

AEGIS Notes
Oil

Oil is headed for the fourth day of gains after reversing an earlier decline < WTI went lower soon after the market opened to $76.34 at the time of this post. Lots of "FEAR of the Fed" still needs to be worked off.
> The Federal Reserve raised interest rates by 50 basis points on Wednesday
> The central bank reiterated that inflation in the US remains elevated, and higher rate hikes in the future were not ruled out

TC Energy restarted a segment of its 0.622 MMBbl/d Keystone oil pipeline that was not affected by the leak that caused the shutdown on Dec 8
> The company still has no timeline for the full restart of the pipeline and is awaiting regulatory approval from PHMSA

China's refinery output reached its highest level in a year after refiners increased output to boost export (BBG)
> A total of 14.56 MMBbl/d were processed last month, up 5% from October and the highest in a year, data from the National Bureau of Statistics showed
> The uptick in the world’s largest crude importer was driven by oil-product exports (highest since June 2021) than domestic demand (fell 2.5% to 13.82 MMBbl/d)
> Additionally, the demand outlook remains slow as China’s economic activity weakened in November before the government swiftly dropped its Covid Zero policy

Goldman cuts price forecasts as it projects an oil market surplus in early 2023
> The bank cut its Brent oil projections for the first and second quarters of 2023 from $115 and $105/Bbl, respectively, to $90 and $95/Bbl
> The bank said that there was less of a chance of a rise in oil prices this winter due to China's lower-than-anticipated oil demand, Russia's exports returning to pre-war levels, and easing production issues in Kazakhstan and Nigeria
> In 2023, it forecasts global demand to increase by 2 MMBbl/d as China reopens and international travel picks up
> For 2023, Goldman said it sees Brent oil to average at $98/Bbl and WTI to average $92/Bbl, down from its earlier projections of $110 for Brent and $105 for WTI

Natural Gas

Natural gas prices are down slightly to $6.38 in the prompt month < JAN23 up $0.25 to $6.68 at the time of this post.
> Weather forecasts shifted cooler today, with the Lower 48 forecast falling 5.5 °F over the 1-15 day period
> The Northeast region’s forecast fell 11.3 °F, the Southeast region fell 24.5 °F, and the South Central’s forecast is lower by 17.2 °F
> Temperatures are expected to remain below normal for the remainder of December

The EIA will release its weekly natural gas storage report today
> The median analyst expectation is for a withdrawal of 52 Bcf, according to the Bloomberg survey, while the survey ranges from -36 to -60 Bcf

China begins to secure LNG supply for next year (BBG)
> Chinas state-owned oil and gas company CNOOC has purchased four to six LNG cargoes this week, scheduled for delivery from February to December 2023
> This is one of China's largest spot LNG purchases of the past year, as China’s Covid zero policy has significantly reduced demand for imported gas
> If China begins to ramp up its purchases of LNG, the spot LNG market could remain tight throughout 2023
> Meanwhile, Gazprom reported yesterday that they are supplying China with record volumes of gas via the Power of Siberia pipeline
Parts of China will see record cold temps in a few days.

First Floating LNG import terminal to arrive in Germany this week (BBG)
> Germany’s first floating regasification unit is scheduled to arrive at the Wilhelmshaven port on Saturday and could begin flowing gas to mainland Europe as soon as next week
> The terminal is one of five that the German government has chartered, with the total cost of these charters totaling $10 billion
> It is estimated that the five terminals will be able to cover about 30% of Germany's current gas demand
> Two more floating terminals are scheduled to begin operations this winter as well

[dan_s]

Closing Prices:
> Prompt-Month WTI (Jan 23) was down $-1.17 on the day, to settle at $76.11
> Prompt-Month Henry Hub (Jan 23) was up $0.540 on the day, to settle at $6.970

#1 thing impacting oil price is "FEAR of the Fed / Recession".
#1 thing impacting ngas price is the weather forecast. The 10-day forecast now is VERY BULLISH for natural gas demand.