Oil & Gas Prices - Oct 13

[dan_s]

Opening Prices:
> WTI is up $3.88 to $86.79/bbl, and Brent is up $3.81 to $89.81/bbl.
> Natural gas is down -6.7c to $3.277/MMBtu.

AEGIS Notes
Oil

Oil trades higher as the US sanctions Russian crude exports and halts the release of Iranian funds

The U.S. tightened sanctions on Russian crude exports, heightening supply concerns in a market already expecting a decline in global inventories through the fourth quarter
Additionally, following Hamas’s surprise attack on Israel, the US and Qatar blocked Iran from accessing $6 billion of its frozen oil revenue, initially set to be released in exchange for Americans imprisoned in Iran
Furthermore, Iran’s Foreign Minister warned that Tehran-backed militants might introduce a new front in Israel's battle with Hamas, heightening worries that the conflict could impact global oil supply
Given Iran's suspected backing of Hamas and involvement in the recent attack, there are concerns about potential actions against Iran, including U.S. restrictions on its oil or direct Israeli retaliation

The CPI in September held steady at 3.7%—still a ways off from the Fed’s 2% target for inflation
Fed officials recently indicated a likelihood to maintain short-term interest rates during their Oct. 31-Nov. 1 meeting, as a surge in long-term rates, might dampen economic growth

US sanctions two oil tankers carrying Russian crude for violating the oil-price cap (Bloomberg)
On Thursday, the US imposed sanctions on two oil tanker owners for carrying Russian crude above the West’s price cap of $60/Bbl and also blocked two of their vessels
Deputy Treasury Secretary Wally Adeyemo reaffirmed the US's commitment to the price cap policy aimed at both limiting Russia's oil revenue and ensuring a stable global energy market

The US's move came after reports showing Russian oil revenues reached a 14-month high in September
September's data showed the weighted average export price of Russian oil rose to $81.78/Bbl, narrowing the discount to Brent just $12.18/Bbl, the lowest since March 2022

Russia ramps up diesel exports after easing export ban (Bloomberg)
Moscow revised its October seaborne diesel exports upwards to 0.334 MMBbl/d following the recent lifting of a significant ban on diesel shipments
Despite the increase, diesel loadings from Russian ports (both Black and Baltic seas) are projected to reach 1.4 million tons (10.4 MMBbl) this month, marking a 26% decrease from September’s plan
The significant reduction in exports from month to month is due to the export ban enforced in early October and ongoing mandates requiring producers to retain a minimum of 50% of diesel for domestic consumption

Natural Gas

Natural gas prices are set to finish the week lower for the first time in four weeks
Weather forecasts shifted slightly warmer over the past day, with the Lower 48 two-week forecast warming by 3.4 °F

LNG buildout leading to increased focus on securing feedgas (S&P)
LNG feedgas demand is expected to reach 24.7 Bcf/d by 2028 from 13.5 Bcf/d this year < This is why the long-term outlook of all of our gassers is extremely bullish. LNG exporters will be in a bidding war for physical supply with the utilities that bring ngas to your home. This Bidding War will shift into a higher gear in less than a year from now soon after two more large LNG export facilities come online.

Gas production from the Haynesville basin, located close to the majority of LNG facilities, is expected to grow significantly over the coming years before declining in the 2030s
Louisiana will likely require additional pipeline infrastructure to secure the needed gas over the next few years

Cove Point LNG resumes operations (BBG)
The 900 MMcf/d export facility has returned from its yearly month-long maintenance event, with flows reaching 727 MMcf/d today
With the facility back online, the total US feedgas demand has reached 13.79 Bcf/d
The increased demand from Cove Point could help tighten balances in the Mid-Atlantic and Northeast regions

[dan_s]

Follow up from AEGIS:

Per EIA Details
> Crude stocks at Cushing fall to lowest level since July '22
> Implied weekly gasoline demand rises by 5.7 MMBbl/d, the highest since May < So, the big drop in gasoline demand that EIA reported in gasoline demand the previous was an "error". After getting EIA and IEA reports for over two decades, I've learned that the weekly reports often have errors in them. EIA especially does a lot "guessing"; if something looks "weird" it is probably an error in their database.

PS: U.S. total crude oil inventories can have big fluctuations from week to week because of off loadings from tankers or tropical storms. Just remember that moving oil from a ship to an onshore tanker is not a gain in total global above ground inventories. There are not big fluctuations in U.S. oil production from week to week.

[ChuckGeb]

Hope everyone had there chips placed on black today!

[dan_s]

Closing Prices:
> Prompt-Month WTI (Nov 23) was up $4.78 on the day, to settle at $87.69
> Prompt-Month Henry Hub (Nov 23) was down $-0.108 on the day, to settle at $3.236

Reminder: Oil prices are set by the global market with input from a lot of "noise" (Wars, Fear of Recession, Fear of the Fed, and mostly by what the herd of Paper Traders are doing each day). Natural gas prices are set by regional supply/demand fundamentals.