Oil & Gas Prices - Oct 16

[dan_s]

Oil traders have a lot of "noise" to digest; primarily what will Iran and Saudi Arabia do. Iran threatening to strike Israel if they invade Gaza.

Opening Prices:
> WTI is up $0.37 to $88.06/bbl, and Brent is up $0.31 to $91.20/bbl.
> Natural gas is down -9.1c to $3.145/MMBtu.

AEGIS Notes
Oil

Oil trades higher with the US trying to contain the Israel-Hamas conflict

Last week, WTI gained $4.90 and Brent $6.31 amid rising tensions in the Middle East, especially a potential ground offensive in Gaza, raising fears of disrupted crude supplies
On Saturday, US Secretary of State Antony Blinken communicated with Middle Eastern leaders, including those from Saudi Arabia, Qatar, and Kuwait, to contain the Gaza crisis
However, Iran's Foreign Minister warned that conflict might escalate if Israel persists with its ground offensive, especially with the Iranian-supported Hezbollah
Additionally, last week, the U.S. sanctioned owners of tankers carrying Russian oil above the G7's $60/Bbl cap to tighten revenue loopholes for Moscow

US tries to contain the Gaza crisis | Further sanctions on Russia and Iran pose more supply risks (Bloomberg)
On Sunday, the US, through back-channel talks, warned Iran about escalating tensions, acknowledging the possibility of intervention through Hezbollah
On the war front, Israel prepares for a major offensive by mobilizing 300,000 reservists; meanwhile, the US seeks Qatar's influence to prevent Hezbollah from opening a second war front

Increasing sanctions on Iran and Russia simultaneously poses a political tightrope for President Biden as the 2024 election approaches
Although the US Treasury mulls actions against Iran due to its ties with Hamas and Russia for breaching the G7 price cap, combined, they represent 13% of global oil supply, underlining potential supply risks
As Iran's oil exports surge by 1.5 MMBbl/d and with the Saudi-Russia alliance strengthening, the US is in a tough spot as sanctions could lead to higher fuel prices

Natural Gas

Gas prices edged lower Monday morning as weather runs showed a net bearish change over the weekend
Prompt-month gas (Nov) was down 10c to $3.13/MMBtu in AM trading
The winter ’23-’24 strip has relaxed 6.6c to $3.483 since Friday

LNG feedgas strengthened over the weekend to a near-record level of 14.54 Bcf
Increased gas flows into Sabine Pass LNG was responsible for the overall push higher for US LNG
Sabine flows increased by almost 0.5 Bcf/d from 10/13 to 10/16 (Criterion)
Cooler ambient temperatures have allowed nominations to move further up the temperature versus flow rate curve

There are hints in publicly observable data that Whistler’s pipeline expansion could be entering service
Modeled Permian production has edged higher by a variety of vendors. Permian basin supply may now be above 17 Bcf/d, according to Criterion Research
Interstate receipts from Whistler climbed from below 800 MMcf/d to over 1 Bcf/d in the past week
AEGIS notes that the Whistler pipeline, which travels from West Texas to Agua Dulce, TX, is an intrastate pipeline that makes it difficult to assess real-time gas flows
The expansion will add 500 MMCf/d of capacity from the Permian to the Gulf Coast, allowing more supply growth from a constrained basin
--------------------
At the time of this post:
> WTI was down $0.63 to $87.06
> HH ngas was down $0.14 to $3.10

[Fraser921]

Wow, NG is getting, dare I say, getting "crushed" today

[dan_s]

Closing Prices:
> Prompt-Month WTI (Nov 23) was down $-1.03 on the day, to settle at $86.66
> Prompt-Month Henry Hub (Nov 23) was down $-0.127 on the day, to settle at $3.109

As posted earlier, I am now using $85 WTI oil prices and $3.00 HH natural gas prices in all of my forecast models for Q4.

Actual prices for Q3 were close to $82 for WTI and $2.60 for HH ngas. All of our Sweet 16 are going to report solid Q3 results based on these prices.