Oil & Gas Prices - Jan 6
Posted: Wed Jan 06, 2021 9:19 am
Opening Prices:
> WTI is up 17c to $50.10/Bbl, and Brent is up 40c to $54.00/Bbl.
> Natural gas is down 3.9c to $2.663/MMBtu.
Aegis Hedging Solutions morning notes
Crude Oil
OPEC+ reached a consensus as the cartel’s De-Facto leader, Saudi Arabia, in a surprise move announced it would reduce output further
The decision to cut an additional 1 MMBbl/d was made unilaterally by Crown Prince Mohammad Bin Salman and showed the kingdoms willingness to be a team player and support the oil markets
The deal will allow Kazakhstan and Russia to increase output by 750 MBbl/d
AEGIS notes the price response was ecstatic as many assumed the cartel would increase output; WTI even eclipsed the major psychological level of $50/Bbl during intra-day trading
The race for the majority in the U.S. Senate heats up; (D) Raphael Warnock wins the first U.S. senate seat
A winner has not been called in the second runoff between (R) David Perdue and (D) Jon Ossoff, though Ossoff holds a narrow lead, according to an AP tally on Wednesday morning
If the Democratic party wins both runoff races, then that would remove a potential hurdle to legislation for the incoming Biden administration
Saudi cuts imply future demand concerns for oil (Goldman Investment Research – GIR)
According to Goldman, the cuts were a surprise move for several reasons, including global demand beating expectations in December, the risk of encouraging the return of more U.S. shale production, and Saudi Arabia undermining its own efforts to have every OPEC+ member implement similar cuts
AEGIS notes the move came as a shock as the kingdom has said that it would no longer pick up the slack for member countries. The compensatory cuts will allow Russia and Kazakhstan to increase output and have accurately been called a “new years gift” to the oil market by Russian Oil minister, Alexander Novak
Natural Gas Market
JKM (Japan/Korea index) spot prices climbed to $18.33/MMBtu on Tuesday, and are approaching the record high of $20.20 set in February 2014 as demand from colder winter weather in the region has outpaced available supplies
State-owned PetroChina Co. sold a cargo to Trafigura Group at $21.70/MMBtu for Feb. 9-13 delivery to Tangshan, China, via the S&P Global Platts Market on Close. The deal is $1.50 above the record high for the regional benchmark, Platts’ Japan-Korea Marker, and is among the costliest LNG cargoes ever (Bloomberg)
EQT ramps up hedging program for 2021 to protect itself against downside risk for gas
The largest natural gas producer in Appalachia recently said that it has already hedged roughly 80% of its annual production in a move to protect itself from price swings
Appalachia has recorded record output levels this winter after colder weather lifted prices in November as production has reached over 33 Bcf/d in the Marcellus and Utica
Looking ahead to Q1 however, the US National Weather Service revised it’s month-ahead weather outlook, stating that it expects to see above-average temperatures in January (Platts)
Double E seeks U.S. approval for Permian-to-Waha gas pipeline
Project owners Double E Pipeline LLC, owned by Summit Midstream Partners and Exxon Mobil, have asked U.S. energy regulators for permission to start building their Double E natural gas pipeline. The project would run 135 miles from the Delaware Basin in New Mexico to the Waha hub in west Texas’ Permian Basin and transport 1.35 Bcf/d
> WTI is up 17c to $50.10/Bbl, and Brent is up 40c to $54.00/Bbl.
> Natural gas is down 3.9c to $2.663/MMBtu.
Aegis Hedging Solutions morning notes
Crude Oil
OPEC+ reached a consensus as the cartel’s De-Facto leader, Saudi Arabia, in a surprise move announced it would reduce output further
The decision to cut an additional 1 MMBbl/d was made unilaterally by Crown Prince Mohammad Bin Salman and showed the kingdoms willingness to be a team player and support the oil markets
The deal will allow Kazakhstan and Russia to increase output by 750 MBbl/d
AEGIS notes the price response was ecstatic as many assumed the cartel would increase output; WTI even eclipsed the major psychological level of $50/Bbl during intra-day trading
The race for the majority in the U.S. Senate heats up; (D) Raphael Warnock wins the first U.S. senate seat
A winner has not been called in the second runoff between (R) David Perdue and (D) Jon Ossoff, though Ossoff holds a narrow lead, according to an AP tally on Wednesday morning
If the Democratic party wins both runoff races, then that would remove a potential hurdle to legislation for the incoming Biden administration
Saudi cuts imply future demand concerns for oil (Goldman Investment Research – GIR)
According to Goldman, the cuts were a surprise move for several reasons, including global demand beating expectations in December, the risk of encouraging the return of more U.S. shale production, and Saudi Arabia undermining its own efforts to have every OPEC+ member implement similar cuts
AEGIS notes the move came as a shock as the kingdom has said that it would no longer pick up the slack for member countries. The compensatory cuts will allow Russia and Kazakhstan to increase output and have accurately been called a “new years gift” to the oil market by Russian Oil minister, Alexander Novak
Natural Gas Market
JKM (Japan/Korea index) spot prices climbed to $18.33/MMBtu on Tuesday, and are approaching the record high of $20.20 set in February 2014 as demand from colder winter weather in the region has outpaced available supplies
State-owned PetroChina Co. sold a cargo to Trafigura Group at $21.70/MMBtu for Feb. 9-13 delivery to Tangshan, China, via the S&P Global Platts Market on Close. The deal is $1.50 above the record high for the regional benchmark, Platts’ Japan-Korea Marker, and is among the costliest LNG cargoes ever (Bloomberg)
EQT ramps up hedging program for 2021 to protect itself against downside risk for gas
The largest natural gas producer in Appalachia recently said that it has already hedged roughly 80% of its annual production in a move to protect itself from price swings
Appalachia has recorded record output levels this winter after colder weather lifted prices in November as production has reached over 33 Bcf/d in the Marcellus and Utica
Looking ahead to Q1 however, the US National Weather Service revised it’s month-ahead weather outlook, stating that it expects to see above-average temperatures in January (Platts)
Double E seeks U.S. approval for Permian-to-Waha gas pipeline
Project owners Double E Pipeline LLC, owned by Summit Midstream Partners and Exxon Mobil, have asked U.S. energy regulators for permission to start building their Double E natural gas pipeline. The project would run 135 miles from the Delaware Basin in New Mexico to the Waha hub in west Texas’ Permian Basin and transport 1.35 Bcf/d