Energy Prospectus

Opening Prices:
> WTI is up 28c to $45.92/Bbl, and Brent is up 38c to $49.09/Bbl.
> Natural gas is up 0.9c to $2.516/MMBtu.

Update on natural gas strip from Aegis Energy: https://aegis-hedging.com/insights/natu ... the-curve/

Aegis Energy morning notes:
Crude Oil

WTI is up 28c to $45.92/Bbl, and Brent is up 38c to $49.09/Bbl
WTI has pared losses from earlier this week and is on track for its third consecutive weekly advance

OPEC+ reaches a consensus on oil output cuts, providing oil price reassurance
WTI has also received support from a weakening U.S. Dollar, which reached a 30-month low on Thursday

OPEC+ reaches a compromise on oil cuts
After five days of turbulent negotiations, the group members came to a consensus to return 500 MBbl/d of output next month. Members will convene each month after that to decide whether the output cuts should be eased or strengthened based on the state of demand
AEGIS notes this announcement contrasts with the previously expected move of an outright delay of output hikes by three months. Still, oil prices rallied on the news, signaling that the market is content with the agreement

The U.S. Dollar reached a 30-month low as investors direct capital towards riskier assets

As news of a vaccine reassures global markets, oil demand optimism has taken off.
The vaccine and its impact on a demand recovery are luring investors towards more risky assets instead of holding the safer currency
Hopes of an agreement on a stimulus package pressured the U.S. Dollar further.
A bipartisan, $908 billion coronavirus aid package gained momentum in Congress as lawmakers on both sides of the aisle express support

A recent Bloomberg New Energy Finance (BNEF) report says that shale production costs have been falling, with E&P companies operating in the lowest-cost U.S. basin, Permian and Delaware, posting breakeven levels of ~$33 a barrel, down from a $40 per barrel just a year ago.

In an earlier report, Citigroup and Goldman Sachs projected that oil prices might hit $60 a barrel by the end of 2021. Given the high efficacy that the Covid-19 vaccines have so far demonstrated, do not be surprised if Bank of America’s prediction that oil prices will hit $60 during the first half of 2021 proves to be accurate. In other words, the majority of U.S. shale companies could turn cash flow positive in a matter of months.

Aramco sees higher oil prices. Oil prices are set to see a meaningful recovery in the second half of next year as the worst for producers, and the market is behind us, the CEO of Saudi Aramco , said at an industry event this week.