Oil & Gas Prices - Sept 26

[dan_s]

Opening Prices:
> WTI is down $0.42 to $89.26/bbl, and Brent is down $0.47 to $92.82/bbl.
> Natural gas is down -6.6c to $2.573/MMBtu.

AEGIS Notes
Oil

Oil edges lower as economic outlook concerns counter supply tightness

Low-risk appetite across markets with investors pricing in a prolonged period of higher interest rates is weighing on crude prices
Meanwhile, the U.S. dollar hit a ten-month high on Tuesday as higher bond yields attracted investors toward the greenback making dollar-denominated commodities expensive

However, supply remains tight as Russia and Saudi Arabia have extended their voluntary 1.3 MMBbl/d production cuts to the end of the year

Regulator approves Trans Mountain Oil Pipeline route change (Bloomberg)
Canada regulator approved replacing the 1.3 km tunneled section of the Trans Mountain pipeline with an open trench to cut costs and delays
The expansion will triple oil pipeline capacity from 0.30 to 0.89 MMBbl/d from Alberta to the Pacific coast
The project has faced over a decade of delays since first announced and was purchased by the government in 2018 after costs had quadrupled; with the recent route change approval, it is now expected to be completed by early 2024

Oil could hit $150 without more exploration, Shale executive warns (Bloomberg) < Watch my podcast to learn why OECD petroleum inventories will keep falling to 22 Days of Consumptions and why "rationing by price" will be necessary. This is not a good thing from the global economy.
Continental Resources Chairman Harold Hamm warns oil could reach $150/Bbl without more US government support for drilling and exploration
Shale executives at the American Energy Security Summit called for the Biden administration to adopt consistent policies allowing more drilling, warning of tight supplies and higher prices < NEWS FLASH: Team Biden will not do a thing to help U.S. oil and gas companies.
However, the CEOs noted they don't intend to significantly boost output despite oil nearing $100/Bbl for the first time in over a year

Natural Gas

Natural gas prices are down 2.5% to a two-week low
The Winter ‘23/’24 strip is down 6c to $3.27, and Summer ’24 is down 5c to $3.16

Gas demand is expected to stay around 65-70 Bcf/d over the next two weeks
LNG feedgas levels have fallen to 11.14 Bcf/d, which is one of the lowest levels of the past three months

Construction on Tennessee Gas East 300 Upgrade ongoing despite legal troubles (S&P)
Tennessee Gas is continuing work on a new compressor station in New Jersey while it appeals a court decision that vacated the facility’s regulatory exemption
A spokesperson from Kinder Morgan said they "will continue to work with the NJDEP to address the ruling, as well as consider all other appropriate actions to ensure this federally approved project is placed in service on schedule, in advance of the winter heating season."
The East 300 upgrade would provide 115 MMcf/d of additional capacity to the Northeast Pipeline grid, which has some of the highest delivered gas prices in the country
The January 2024 Algonquin contract, which represents gas delivered to the Boston area, has traded as high as $16.19/MMbtu in the past week

Alaska utility resumes plan to construct pipeline (S&P)
Alaska’s largest utility is again looking to construct a 36-inch pipeline from Alaska’s North Slope to the Cook Inlet
This comes amid projections that the Cook Inlet will run short of needed gas supplies within this decade
Other potential options for securing new gas supplies include LNG imports, which would likely come from British Columbia

[dan_s]

Oil price moving up despite the steadily increasing U.S. dollar is impressive: https://www.marketwatch.com/investing/index/dxy

If the dollar does pull back, we should see a spike up in oil prices.

[dan_s]

Decade-Low Stocks At Cushing May Send Oil Prices Even Higher: Inventories at Cushing have slumped by ~47% to 22.9m barrels. That’s the lowest since July 2022 and that’s not far away from the 2014 lows.
https://oilprice.com/Energy/Crude-Oil/Decade-Low-Stocks-At-Cushing-May-Send-Oil-Prices-Even-Higher.html

Energy Fund Manager Predicts Major Upside For Oil Equities
By Tom Kool - Sep 25, 2023, 11:00 AM CDT
Eric Nuttall: What we see now are inventories falling at the fastest pace in history.
Nuttall: There is currently a massive disconnect between the price of oil and the way oil company stocks are trading.
Nuttall also said he expected Canadian oil producers to return as much as 20% in 2024.
https://oilprice.com/Energy/Crude-Oil/Energy-Fund-Manager-Predicts-Major-Upside-For-Oil-Equities.html

[Fraser921]

Latest interview on Bloomberg, Mentions Baytex at 5:26

https://www.youtube.com/watch?v=elPUHKazDzI

[dan_s]

Closing Prices:
> Prompt-Month WTI (Nov 23) was up $0.71 on the day, to settle at $90.39
> Prompt-Month Henry Hub (Oct 23) was up $0.017 on the day, to settle at $2.656 < NOV23 closed at $2.845 and DEC23 closed at $3.258

For HH ngas we really need to see a trend where the NOV and DEC NYMEX contracts do not fall back toward the OCT price on expiration date. My forecast models are based on HH ngas averaging $2.75, but my HOPE is that we can see the average for the quarter push up over $3.00.

[Fraser921]

Pre-market we are pushing 92

Full yr 2023 avg 80
q3 looks like it will avg $ 89
q4 strip is at $ 90

This is where we start printing money

If you think US E&p's are lagging , the Canadian names are worse.

Surge Energy (ZPTAF) is flat vs 6 months ago while crude is up 35 % in same time period. Their outlook is based on $80 wti which should be attained. Then we start having positive qtr over qtr comparisons in 2024. Then everyone piles in May.