Oil & Gas Prices - Dec 23

[dan_s]

Opening Prices:
> WTI is up 4c to $47.06/Bbl, and Brent is up 5c to $50.13/Bbl.
> Natural gas is down 6.0c to $2.720/MMBtu.

Aegis Hedging Solutions morning notes:
Crude Oil:

Oil rally and fuel glut push Asian refiners’ margins below break-even
Asian demand has rebounded sharply from its lows reached in April; Still, a large glut of product stocks remains as inventories in the East of Suez region are at their highest levels since June, according to Bloomberg
The rally in crude prices has caused further strain on Chinese refinery margins as processing costs have risen. Complex refining margins in the Asian oil hub of Singapore, a proxy for the region, fell from $1.22/Bbl at the end of October to as low as -2 cents earlier this month, according to Bloomberg

President Trump signals he may not sign the stimulus bill, describing it as “wasteful spending”
The sitting president targeted the stimulus checks under the current legislation, saying they should be changed from $600 to $2,000. House Speaker Nancy Pelosi (D-CA) lauded the initiative and said Democrats would be ready to pass the measure unanimously later this week. < My Take: The Democrats are getting negative feedback from all sides on this 5500 page insane bill that is loaded with pork. The American people have had enough of Washington's wasteful spending while tens of millions of families are pushed into poverty.
President Trump has not said whether he would veto the bill, though the late change in the administration’s position will likely complicate the package’s future

EIA weekly data is due at 9:30 am CST. Here is what the market is expecting.
U.S. Crude Inventories: – 2,899 MBbls (Avg. Bloomberg surveys)
U.S. Gasoline Inventories: + 248 MBbls
U.S. Distillate Inventories: – 1,538 MBbls
U.S. Refinery Utilization: + 0.52% change

Natural Gas
Strong LNG and ResComm demand combined with lower U.S. natural gas production last week, likely resulted in another gas storage withdrawal of over 100 Bcf in mid-December
A survey of analysts expect the EIA to report a 162 Bcf withdrawal from inventory for the week ended December 18 (Bloomberg)
The EIA plans to release its storage report one day early this week at 9:30 CT on December 23, 2020
A 162 bcf draw would be about 30 bcf greater than the five-year average

Permian gas flows are shifting as associated gas production has been reduced and new infrastructure starts service
A 3.8 Bcf/d or about 30%, decline in Permian gas production came as the oil-market crumbled in 2020 (Platts)
Lower pipeline utilization rates, in combination with higher Waha gas prices, have and are changing Permian market dynamics, according to Platts
Gas flows out of Waha have seen a reduction in flows headed North, the market of last resort for some producers in the Permian
The start-up of Kinder’s Permian Highway Pipeline has recently added 2.1 Bcf/d of capacity from Waha to the Houston area < Which pays close to Henry Hub prices.

[dan_s]

At 12:45 ET

WTI crude futures rose 2% to near $48 a barrel on Wednesday, following two sessions of losses after the latest EIA report showed stocks of crude oil in the US dropped by 0.562 million barrels in the week ended December 18th. A day earlier, API data had shown a surprise crude oil inventory build in the US. Still, EIA figures came well below market expectations of 3.186 million barrels draw. Sentiment was also supported by an agreement to reopen the UK-French border to allow accompanied freight services and some passenger services to resume between the two countries slightly lifted optimism about the short-term fuel demand outlook. The oil market has been under pressure amid persistent concerns over weakening demand in the light of a worsening pandemic and as President Donald Trump threatened to not sign a long-awaited US Covid-19 relief bill.