Oil & Gas Prices - Dec 21

[dan_s]

Closing Prices:
> WTI front month contract (FEB24) closed today at $73.89
> HH front month contract (JAN24) closed today at $$2.572

Trading Economics:
Oil
> WTI crude oil futures fell below $74 per barrel on Thursday, ending a three-day climb due to divisions within OPEC.
> After 16 years, Angola's departure from OPEC heightened concerns about the organization's ability to stabilize global prices amidst disputes over oil production quotas.
> Oil prices are on track for their first annual decline since 2020, driven by soaring US production and doubts about OPEC's capability to tighten the market in the upcoming quarter.
> Energy Information Administration data confirmed that US daily output reached a record-breaking 13.3 million barrels last week. < Keep in mind that EIA's weekly numbers are "estimates".
> In addition, the Red Sea conflict involving Houthi attacks on ships has caused disruptions in international trade, although the impact on oil supply remains limited for now, as the bulk of Middle East crude is exported through the Strait of Hormuz. < Yes, but to get to Europe the tankers must now go all the way around Africa, which takes time and increases shipping costs.

Natural Gas
> US natural gas futures soared nearly 6% to the $2.6/MMBtu mark on Thursday, recovering from two sessions of losses after EIA reported a bigger-than-expected storage draw. Government data showed US utilities pulled 87 billion cubic feet of natural gas from storage last week, slightly more than market expectations of an 80 bcf decrease.
> Nevertheless, gas in storage remains 8.5% above the seasonal norm.
> Additionally, forecasts of milder weather and reduced heating demand next week indicate utilities will draw less gas from storage than usual until the end of December. < Colder weather in the eastern U.S. is now forecast by the end of December.
> On the production front, gas output is hitting record highs, averaging 108.6 bcfd this month.
> Moving forward, prices are expected to recover in the coming years with rising gas demand from new US LNG export plants in the US, Canada, and Mexico. However, delays at Exxon Mobil and Qatar Energy's LNG export plants in Texas, as well as Venture Global LNG\'s plant in Louisiana, may impact expectations for 2024. < Delays at these new LNG facilities is the primary reason the NYMEX strip prices for 2024 have come way down.