Oil & Gas Prices - Jan 3

[dan_s]

Opening Prices:
> WTI is down $1.45 to $78.81/bbl, and Brent is down $1.42 to $84.49/bbl.
> Natural gas is down -42.0c to $4.055/MMBtu.

AEGIS Notes
Oil

Oil trades lower as the market mulls China’s demand recovery
> Feb ’23 WTI fell by nearly $1.50 this morning to trade below $80/Bbl
> China's President Xi warned of challenges in the nation's fight against COVID-19 in his New Year's address on Saturday
> Although many cities have seen an increase in hospitalizations since reopening began last month, President Xi did express some optimism, saying that the "light of hope is right in front of us"
> However, some mobility measures in significant urban regions have increased, indicating that the wave of Covid infections may have peaked

The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) relatively strengthened to its recent lows
> A stronger dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods

Kuwait’s crude exports fall to the lowest in 14 months (BBG)
> According to Bloomberg's tanker tracking data, total crude exports decreased 7.4% last month to 1.8 MMBbl/d from 1.98 MMBbl/d in November
> Shipments to Kuwait's top buyer China plummeted to their lowest level since October, and they also hit a multi-month low for India
> The CEO of Kuwait Petroleum Corp said in an interview early last month that customers were hesitant to increase oil imports in 2023 due to economic uncertainties

Natural Gas

Natural gas prices are down 10% to $4.05 this morning
The Summer ’23 strip is lower by 26c to $3.83, and the Winter ‘23/’24 strip is down 23c to $4.55
Weather forecasts have shifted warmer in the 1-5 day period, with the Lower 48 forecast gaining 10.3 °F
The Northeast regions forecast gained 12.5 °F, and the South Central gained 21.8 °F

Fears of a global gas shortage subside (BBG)
With winter starting off warmer than normal across the Northern Hemisphere, fears that there could be a gas supply crisis have eased
Warmer than normal weather in China, the world's largest importer of LNG should reduce competition for spot LNG cargoes
“The risk of extreme market tightness that people were worried about before winter started seems low now”, said an analyst from Bloomberg

China's natural gas power generating capacity to double (BBG)
China imports a significant amount of the natural gas it uses, with LNG imports totaling 10.5 Bcf/d in 2021
As the country looks to move away from coal-powered electricity generation, 114 GW of gas-powered generation is planned to be installed or is currently under construction
The competitiveness of gas-powered generation has been undermined this year by high gas prices in Asia; if prices remain elevated, some projects could be delayed or canceled

[Fraser921]

>The CEO of Kuwait Petroleum Corp said in an interview early last month that customers were hesitant to increase oil imports in 2023 due to economic uncertainties


Recession fears are winning at the moment

[dan_s]

Closing Prices:
> Prompt-Month WTI (Feb 23) was down $-3.33 on the day, to settle at $76.93
> Prompt-Month Henry Hub (Feb 23) was down $-0.487 on the day, to settle at $3.988

I've heard from several New York Wall Street Gang Members that "lack of liquidity" has something to do with this. A lot of the Paper Traders that set the oil & gas prices do trade on margin. So, they set stop loss orders very tight and one large sale of front month oil contracts can set off a lot of computer trades. These "margin call" selloffs can feed on themselves. This is probably more to do with the oil price than the gas price. Gas traders are looking at each day's weather forecast.