Opening Prices:
At 9:30 AM ET
> West Texas Intermediate (WTI) was up $0.28 at $70.92
> Henry Hub Natural Gas was down $0.09 to $2.71
Saudi Arabia Continues to Cut Oil Production Amid Declining Prices
In a strategic move to stabilize dwindling oil prices, Saudi Arabia declared on Monday its decision to persist with a voluntary cut in oil production of one million barrels per day. Initially instituted in July, this reduction will carry forward into August and may be extended further, according to an energy ministry source cited by the official Saudi Press Agency (SPA).
This extra voluntary cut aims to bolster the cautious measures undertaken by OPEC+ nations to support the balance and stability of the global oil markets, SPA reported. Consequently, the daily production of oil by Saudi Arabia, the world's leading oil exporter, is poised to hover around nine million bpd.
The potential for extension of the cut was pointed out by Saudi Energy Minister Prince Abdulaziz bin Salman when announcing the decision following a meeting of oil producers last month. Earlier in April, a voluntary production cut by over one million bpd was agreed upon by several OPEC+ members. Although this move initially fortified prices, it couldn't secure a sustained recovery.
Saudi Arabia's ambitious reform agenda, aiming to transition its economy away from fossil fuels, hinges significantly on high oil prices. Industry analysts estimate that Saudi Arabia requires oil prices to be at $80 per barrel to balance its budget, a figure that substantially surpasses recent averages.
In parallel, Russia, a member of the OPEC+ alliance along with Saudi Arabia, announced on Monday its decision to voluntarily reduce oil exports by 500,000 barrels per day. "To maintain a balanced oil market, Russia will voluntarily cut its oil supply in August by 500,000 barrels per day," stated Alexander Novak, the Russian Deputy Prime Minister overseeing energy policy. This cutback follows Russia's similar volume reductions in oil production this year in response to Western sanctions related to the conflict in Ukraine.
Oil producers worldwide continue to grapple with the challenges of plummeting prices, high market volatility, lingering impacts from Russia's invasion of Ukraine, and China's faltering economic recovery.
Oil & Gas Prices - July 3
Oil & Gas Prices - July 3
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 3
BBC: Energy boss says prices might rise this winter.
Energy prices could spike this winter forcing governments to step in and subsidise bills again, the head of the International Energy Agency has said. If the Chinese economy strengthens quickly and there is a harsh winter, gas prices could rise, putting pressure on consumers, Fatih Birol said. He added that governments should push for energy-saving and boost renewables. However, a UK government spokesperson said annual energy bills are set to fall by an average £430 this month. Gas prices soared after Russia's invasion of Ukraine, driving up energy bills around the world.
Energy Intelligence: Will rising prices throw U.S. gas market back into a glut?
Months of sub-$3 natural gas have many industry observers confident that supply and demand are finding some equilibrium. But does the emergence of bullish demand-side fundamentals threaten to undermine producer discipline? For now, US gas producers are expressing relief that a needed drilling pullback in the Haynesville Shale, one of the country’s most prolific gas plays, finally manifested, and that concerns about storage inventories breaching record levels this summer have abated. “We feel the market is within a good margin of error for balance,” East Daley Analytics co-founder Justin Carlson told clients Wednesday. "It’s hot. That’s great for gas markets. ... We still see a lot of production potential, meaning if we start to move up with prices, then all of a sudden rigs show up, production shows up and the market gets out of balance.”
Energy prices could spike this winter forcing governments to step in and subsidise bills again, the head of the International Energy Agency has said. If the Chinese economy strengthens quickly and there is a harsh winter, gas prices could rise, putting pressure on consumers, Fatih Birol said. He added that governments should push for energy-saving and boost renewables. However, a UK government spokesperson said annual energy bills are set to fall by an average £430 this month. Gas prices soared after Russia's invasion of Ukraine, driving up energy bills around the world.
Energy Intelligence: Will rising prices throw U.S. gas market back into a glut?
Months of sub-$3 natural gas have many industry observers confident that supply and demand are finding some equilibrium. But does the emergence of bullish demand-side fundamentals threaten to undermine producer discipline? For now, US gas producers are expressing relief that a needed drilling pullback in the Haynesville Shale, one of the country’s most prolific gas plays, finally manifested, and that concerns about storage inventories breaching record levels this summer have abated. “We feel the market is within a good margin of error for balance,” East Daley Analytics co-founder Justin Carlson told clients Wednesday. "It’s hot. That’s great for gas markets. ... We still see a lot of production potential, meaning if we start to move up with prices, then all of a sudden rigs show up, production shows up and the market gets out of balance.”
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 3
AEGIS Notes
Oil
Oil trades higher following Saudi Arabia and Russia’s extended supply cuts
August ’23 WTI gained 76c this morning to trade around $71.40/Bbl
Saudi Arabia on Monday announced it would extend its voluntary cut of 1 MMBbl/d into August
Additionally, Russia will reduce its oil exports by 0.5 MMBbl/d in August, aiming to tighten global supplies
Equities trade higher, and the dollar strengthened, making commodities priced in USD expensive for holders of other currencies
Manufacturing across the eurozone and the UK contracted faster than expected following ECB’s monetary policy tightening
In Asia, marginal factory activity growth is observed in China, while Japan and South Korea see contractions in May
Saudi Arabia and Russia Extend Oil Output Cuts (Bloomberg)
Saudi Arabia will carry forward its July production cut of 1 MMBbl/d production cut into August, according to a statement from the state-run Saudi Press Agency
In a concurrent move, Russian Deputy PM Noval said that the nation will slash its oil exports by 0.5 MMBbl/d in August
Furthermore, Saudi Arabia has hinted that it may extend its production cut beyond August, and its energy minister Prince Abdulaziz, who will be speaking at an OPEC conference on Wednesday, has said that he will keep traders guessing about future plans
OPEC+ already has in place cuts of 3.66 MMBbl/d, including last year's 2 MMBbl/d cut and April’s voluntary reductions of 1.66 MMBbl/d until December 2024
India's Record Russian Oil Intake Faces Potential Slowdown (Bloomberg)
India's Russian oil imports hit a record high of 2.2 MMBbl/d in June, outdoing combined Saudi and Iraqi imports, according to Kpler
However, imports could decline next month due to infrastructure limitations and reduced Russian supply
Natural Gas
Natural gas prices are trading lower, around $2.70, reversing gains from Friday
The Winter ‘23/’24 strip is down 4.7c to $3.54, and the Summer ’24 strip is down 3.9c to $3.28
Temperatures are expected to be mostly above normal over the next two weeks, which should lead to a boost in gas demand from the power sector
LNG feedgas levels continue to recover, with 13.04-Bcf/d flowing to LNG facilities according to early pipeline nominations
NextDecade expects FID for Rio Grande LNG in early July (S&P)
The company updated its timeline for the Rio Grande LNG project in a June 29 announcement, pushing its target of an FID by the end of June to July
Phase one of the project will have a capacity of 2.35-Bcf/d, with phase two adding an additional two trains and bringing the total capacity to 3.60-Bcf/d
NextDecade said in their announcement that they have received “binding commitments from a syndicate of lenders in an amount sufficient, together with expected project equity funding, to support a positive final investment decision”
Rio Grande LNG will be constructed in the Port of Brownsville, with an expected in-service date of 2026
Oil
Oil trades higher following Saudi Arabia and Russia’s extended supply cuts
August ’23 WTI gained 76c this morning to trade around $71.40/Bbl
Saudi Arabia on Monday announced it would extend its voluntary cut of 1 MMBbl/d into August
Additionally, Russia will reduce its oil exports by 0.5 MMBbl/d in August, aiming to tighten global supplies
Equities trade higher, and the dollar strengthened, making commodities priced in USD expensive for holders of other currencies
Manufacturing across the eurozone and the UK contracted faster than expected following ECB’s monetary policy tightening
In Asia, marginal factory activity growth is observed in China, while Japan and South Korea see contractions in May
Saudi Arabia and Russia Extend Oil Output Cuts (Bloomberg)
Saudi Arabia will carry forward its July production cut of 1 MMBbl/d production cut into August, according to a statement from the state-run Saudi Press Agency
In a concurrent move, Russian Deputy PM Noval said that the nation will slash its oil exports by 0.5 MMBbl/d in August
Furthermore, Saudi Arabia has hinted that it may extend its production cut beyond August, and its energy minister Prince Abdulaziz, who will be speaking at an OPEC conference on Wednesday, has said that he will keep traders guessing about future plans
OPEC+ already has in place cuts of 3.66 MMBbl/d, including last year's 2 MMBbl/d cut and April’s voluntary reductions of 1.66 MMBbl/d until December 2024
India's Record Russian Oil Intake Faces Potential Slowdown (Bloomberg)
India's Russian oil imports hit a record high of 2.2 MMBbl/d in June, outdoing combined Saudi and Iraqi imports, according to Kpler
However, imports could decline next month due to infrastructure limitations and reduced Russian supply
Natural Gas
Natural gas prices are trading lower, around $2.70, reversing gains from Friday
The Winter ‘23/’24 strip is down 4.7c to $3.54, and the Summer ’24 strip is down 3.9c to $3.28
Temperatures are expected to be mostly above normal over the next two weeks, which should lead to a boost in gas demand from the power sector
LNG feedgas levels continue to recover, with 13.04-Bcf/d flowing to LNG facilities according to early pipeline nominations
NextDecade expects FID for Rio Grande LNG in early July (S&P)
The company updated its timeline for the Rio Grande LNG project in a June 29 announcement, pushing its target of an FID by the end of June to July
Phase one of the project will have a capacity of 2.35-Bcf/d, with phase two adding an additional two trains and bringing the total capacity to 3.60-Bcf/d
NextDecade said in their announcement that they have received “binding commitments from a syndicate of lenders in an amount sufficient, together with expected project equity funding, to support a positive final investment decision”
Rio Grande LNG will be constructed in the Port of Brownsville, with an expected in-service date of 2026
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 3
..... and it's down!
Re: Oil & Gas Prices - July 3
Closing Prices on a very light trading day. Plus we have the OPEC+ meeting on Wednesday.
> Prompt-Month WTI (Aug 23) was down $-0.85 on the day, to settle at $69.79
> Prompt-Month Henry Hub (Aug 23) was down $-0.089 on the day, to settle at $2.709
> Prompt-Month WTI (Aug 23) was down $-0.85 on the day, to settle at $69.79
> Prompt-Month Henry Hub (Aug 23) was down $-0.089 on the day, to settle at $2.709
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group