Oil & Gas Prices - Sept 10

[dan_s]

Trading Economics with my comments in blue.

Oil
WTI crude oil futures dropped over 4% to $65.7 per barrel on Tuesday, approaching their lowest level since November 2021, after OPEC cut its demand forecasts for the second time in two months. OPEC now expects global oil demand to grow by 2 million barrels per day (bpd) in 2024, which is 80,000 bpd lower than its previous estimate. < WTI moved off the low and closed at $66.31/bbl.
> For 2025, OPEC revised its demand growth forecast to 1.7 million bpd, down by 40,000 bpd from earlier projections. < These are "tiny" adjustments to OPEC's demand forecast. Keep in mind that global demand for oil is now close to 105,000,000 bpd.
> These cuts are driven by weaker oil consumption in China, especially as the rise in electric vehicle sales reduces traditional fuel demand. < No mention that India's demand for oil keeps increasing.
> The prospect of OPEC+ increasing production in December adds further pressure, with analysts predicting a potential surplus in 2025.
> Despite the overall bearish tone, losses were somewhat limited by concerns over Tropical Storm Francine, which threatens oil and gas production as well as refinery operations along the Gulf Coast.

Natural Gas
US natural gas futures closed at $2.24, gaining $0.07 today.
> With a hurricane expected to hit Louisiana this week which could lower demand by causing power outages and disrupting LNG exports.
> The National Hurricane Center forecasts a hurricane will form in the Gulf of Mexico and hit Louisiana, home to several major LNG plants. Unlike past hurricanes that threatened supply when offshore production was higher, today’s storms mostly reduce demand, as most US gas now comes from inland shale basins like Appalachia and the Permian.
> Prices have also been pressured by an oversupply of gas after a mild winter, with storage levels about 10% above average.
> Production cuts have helped limit recent injections to storage.
MY TAKE: The U.S. natural gas market is getting tighter real fast. The surplus to the 5-year average in storage will disappear by mid-November.