Oil & Gas Prices - Oct 17

[dan_s]

Opening Prices:
> WTI is down $0.14 to $86.52/bbl, and Brent is down $0.03 to $89.62/bbl.
> Natural gas is down -1.4c to $3.095/MMBtu.

AEGIS Notes
Oil

Oil trades lower the US eases Venezuela sanctions and bolsters Middle East diplomacy

Prompt-month Brent and WTI fell over $1 yesterday, influenced by diplomatic talks concerning the Israel-Hamas conflict and reports of the US reaching a deal to ease sanctions on Venezuela < So we can import more of the world's dirtiest oil.

President Biden is set to visit Israel on Wednesday as the nation prepares for a potential ground offensive into Gaza
The ripple effect of the ongoing conflict hits crude freight costs, as freight rates on 16 global trade routes rose by an average of over 50% this week (Bloomberg)

Additionally, Russia's oil exports are increasing, with seaborne exports rising by 0.26 MMBbl/d for the week ending Oct 15 to reach 3.51 MMBbl/d (Bloomberg)

U.S. reaches deal to ease sanctions on Venezuela (Bloomberg)
Venezuela and the US are expected to sign a deal on Tuesday permitting previously banned opposition candidates to participate in the 2024 Venezuelan presidential elections
Sanction relief from the US will be initiated after the pact between Maduro's administration and the opposition is finalized
In September, Venezuela exported 0.81 MMBbl/d, and the sanctions relief could ease some restrictions to allow exports to reach 1.1 MMBbl/d

Natural Gas

Natural gas prices fall further to $3.10/MMBtu after yesterday’s 13c decline
The Winter ‘23/’24 and Summer ’24 strips have both moved lower recently, with the nearby winter strip falling 18c since October 11 and the summer strip losing 6c over the same period < DEC23 NYMEX contract at $3.46 this morning.

Pacific Northwest pipeline expansion facing difficulties (BBG)
The GTN Xpress project will increase the capacity of the Gas Transmission Northwest pipeline by 150 MMcf/d, which sends gas from the Canadian border to markets in California, Oregon, and Washington
The project has been delayed due to local opposition and removal from a recent FERC meeting discussion
FERC has the project listed on the agenda for their October 19 meeting, but it is unclear if it will be approved at that time
Gas markets in California and the Pacific Northwest are prone to supply issues in times of peak demand, which this expansion could help reduce, as well as allow more Canadian gas to enter the US

US continues to add natural gas power plants (EIA)
So far this year, ten gas-fired power plants have entered service in the Lower 48, with a combined generating capacity of 6.8 GW, or the equivalent of 761 MMcf/d of gas consumption, adjusted for capacity factor and assuming an average heat rate
By the end of the year, an additional six plants will come online, with the ability to generate another 1.8 GW and consume about 200 MMcf/d
In 2024 and 2025, 20 gas-fired plants are expected to come online, generating 7.7 GW and consuming 860 MMcf/d
Most power plant additions have been in the Southeast, Midwest, and Texas Gulf Coast regions
Demand for U.S. natural gas continues to increase at a much faster rate than global demand for oil. By 2028, the U.S. will have more than 30 Bcfpd of LNG export capacity, up from ~14 Bcfpd of export capacity today. The U.S. will need to expand natural gas storage capacity to balance domestic demand and to keep utilities, industrial users and LNG exporters adequately supplied.

[dan_s]

Closing prices:
> Prompt-Month WTI (Nov 23) finished the day unchanged, to settle at $86.66
> Prompt-Month Henry Hub (Nov 23) was down $-0.030 on the day, to settle at $3.079