Oil & Gas Prices - Nov 25

[dan_s]

Trading Economics:
WTI Oil
WTI crude futures fell over 2% to $69.50 per barrel on Monday, amid reports suggesting that Israel and Hezbollah may be nearing a cease-fire agreement, potentially within days. While the news was cautiously welcomed by traders, many remain hesitant, awaiting further details and developments given previous announcements of potential cease-fires that ultimately failed to materialize.
> At the same time, traders continue to follow the situation in Ukraine after tensions with Russia escalated last week.
> In addition, Iran said it will expand its nuclear fuel-making capacity after it was censured by the UN atomic watchdog, as the OPEC member braces for possible sanctions under a second Trump administration.
> The next OPEC+ meeting on December 1st will also be on investors' radar as the cartel is expected to postpone planned output increases. < If OPEC+ extends their quotas through Q1, which I expect to happen, oil prices should firm up over $70/bbl.

U.S. Natural Gas
US natural gas prices were more than 5% higher to the $3.3/MMBtu mark on Monday ($3.42 at time of this post), hovering close to the one-year high of $3.35 from the end of last week as forecasts of colder weather and lower production drove utilities to expedite the start of storage withdrawing season.
> Data from the EIA showed that gas storage fell by 3 billion cubic feet on the week ending November 15th instead of expectations of a 5 billion cubic feet build, an expedited first drop of the season, as relatively low prices in the prior week drove producers to cut output.
> In turn, the most recent forecasts pointed to colder-than-usual temperatures on the West Coast and most of the nation besides the Gulf Coast.
> Additionally, supply concerns in Europe ahead of the turn of the year drove LNG feed gas flows to rise to a 10-month high. This is set to continue as uncertainty over the future of Russian gas supply increases the continent’s demand for LNG, lifting prices for natural gas in the US. < NGas prices in Europe and Asia are over $14/MMBtu

Bottomline: All of the Sweet 16 companies produce a lot of natural gas. In Q4 their realized oil prices will be down from $3 to $5 per barrel, but higher realized natural gas and NGL prices should more than offset the lower oil price.