Oil & Gas Prices - Aug 1

[dan_s]

Just remember that the price of oil NEVER goes up or down in a straight line. In fact, it is better for us in the long-run if it doesn't. Four things will combine to push oil prices higher: Fading fear of recession, Russian oil exports declining, China's demand increasing and U.S. oil production flat. These factors have OECD Petroleum Inventories on steady decline.

Opening Prices:
> WTI is down $0.63 to $81.17/bbl, and Brent is down $0.57 to $84.86/bbl.
> Natural gas is down -6.6c to $2.568/MMBtu.

AEGIS Notes
Oil

Oil trades lower amid a rising dollar, and as the market weighs the extent of supply tightness
September ’23 WTI lost 62c this morning to trade around $81.16/Bbl
Equities trade modestly higher, and the US dollar strengthened relative to its recent lows weighing on dollar-denominated commodities

WTI gained nearly $11/Bbl or 16% in July amid signs of supply tightening and expectations that the West can avoid a recession as inflation cools
There's speculation that Friday's OPEC+ meeting is likely to extend Saudi Arabia's voluntary cuts into September
Additionally, China unveiled new policy guidelines on Monday to bolster economic recovery after manufacturing fell for a fourth straight month

India's Russian oil imports dip further, expected to continue decline (Bloomberg)
> Russian oil imports by India fell from 2.11 MMBbl/d to 2.09 MMBbl/d in July, with a further decline expected in August due to Russia's planned export cutbacks
> However, a rebound, potentially reaching 2.2 MMBbl/d, is forecasted from October despite an expected August low of 1.6 MMBbl/d, according to Kpler

BP CEO sees oil prices to rise on resilient demand and OPEC+ cuts (Bloomberg)
> BP anticipates a bullish outlook for oil prices due to growing demand and OPEC+'s production cuts
> CEO Bernard Looney expects crude demand growth of over 2 MMBbl/d in 2023
> He added that despite concerns about China’s growth and economic concerns, “demand for oil has been incredibly resilient”

Natural Gas

Natural gas prices are trading lower by 3% as weather forecasts shift cooler
The Lower 48 two-week forecast cooled by 5.4 °F
The Northeast regional forecast cooled by 7.6 °F, the Midwest by 12.8 °F, and the Rockies by 8.5 °F

Kinder Morgan announced yesterday that the Permian Highway Pipeline, which was shut down on Friday, began taking nominations up to 1.2 Bcf/d yesterday and should return to full capacity today

Equitrans to complete Mountain Valley Pipeline by year-end
> The Company released their Q2 earnings today and mentioned the status of the Mountain Valley Pipeline, saying that they “continue to target completion of MVP by year-end 2023.”
> This comes after the Supreme Court overturned a ruling by a lower court halting work on the pipeline

US utilities oppose EPA power plant rule (Reuters)
> The Edison Electric Institute, which represents large utilities in the US, intends to push back against EPA proposals that would require upgrades to existing natural gas-fired power plants
> The plan would require gas plants that operate more than 50% of the time to install carbon capture by 2035 or co-fire with hydrogen by 2032
> The Edison Electric Institute argues that retrofitting plants would be difficult because of space constraints and other limitations
> The EPA will review comments to the plan after August 8

[dan_s]

Closing Prices:
> Prompt-Month WTI (Sep 23) was down $-0.43 on the day, to settle at $81.37
> Prompt-Month Henry Hub (Sep 23) was down $-0.074 on the day, to settle at $2.560

If we get a bullish EIA storage report tomorrow morning it will push oil prices through this resistance level. The bulls take control when the shorts are wiped out.