Energy Prospectus

Opening Prices:
> WTI is down 62c to $72.46/Bbl, and Brent is down 53c to $74.66/Bbl.
> Natural gas is down 0.9c to $3.324/MMBtu.

AEGIS Notes
Crude Oil

Stockpiles of crude oil at Cushing, Oklahoma, could fall to historically low levels by the end of September as the demand rebound continues to outpace production (Bloomberg)
> Cushing, the delivery point for WTI fell about 4 MMBbl in the last two weeks, bringing stocks to the lowest levels since March 2020
> AEGIS notes that the strength at Cushing has helped tighten the Brent-WTI spread and flip WTI Midland to a discount to WTI at Cushing for the Aug and Sep differential contracts

A senior U.S. administration official said the U.S. is prepared to return to the seventh round of indirect talks with Iran on re-entering the 2015 nuclear deal once Tehran is ready (Bloomberg)
> On Wednesday, Iran said the U.S. had agreed to remove all sanctions on Iran’s oil and shipping, according to outgoing Iranian president Hassan Rouhani’s (Reuters)
> Late on Wednesday, U.S. negotiators reportedly denied that it agreed to remove sanctions on insurance, oil, and shipping, according to Forbes
MY TAKE: Any good negotiators would walk away from the deal now. Giving Iran any path to getting weapons grade uranium AND keeping their ballistic missiles is INSANE.

The EIA reported a 7.6 MMBbl draw in U.S. oil inventories on Wednesday for the week ended June 18
> The large draw was in line with industry estimates from the American Petroleum Institute’s (API) estimates
> U.S. gasoline stocks dropped by 2.9 MMBbl while distillate stocks rose by 1.7 MMBbl
> Refinery utilization fell 0.40%, remaining close to seasonal averages

Natural Gas

The prompt-month Henry Hub contract is up 10c from last Friday’s close as a pickup in LNG exports and record heat have helped drive the rally
Feedgas flows to LNG export facilities are up nearly 1 Bcf/d week-over-week, thanks, in part to record prices in Europe and Asia
The increase can be attributed to a pickup in flows to the Sabine Pass and Freeport LNG facilities
The rise in global prices has come as both European and Asian countries are vying for the same shipments, bidding up global benchmark prices

Weather models have remained hot for the U.S. West, and the heat is expected to carry through the second week of July, according to NatGasWeather.com

Rockies Express Pipeline LLC requested a two-year extension to place their Cheyenne Hub Enhancement Project in service
The company is seeking an extension until September 19, 2023, to place in service the last two compressor stations. The company has placed four of the six compressor stations for the project in service
The Cheyenne Hub enhancement project provides 600 MMcf/d of capacity from the Denver-Julesburg basin

Closing Prices;
> WTI prompt month (AUG 21) was up $0.22 on the day, to settle at $73.30/Bbl.
> NG prompt month (JUL 21) was up $0.085 on the day, to settle at $3.418/MMBtu. < DEC21 to FEB22 are now all over $3.56.

AR is a "Screaming Buy" up to $20 and a "Strong Buy" up to $30. EQT, CRK, RRC and XEC also look very attractive. The higher gas prices go, the better XEC's merger with COG looks.

Interior sec says no plan 'right now' to ban new oil, gas leasing . Reuters . U.S. Interior Secretary Deb Haaland on Wednesday told a congressional hearing that there is no plan to permanently ban new oil and gas drilling on federal land but her agency will soon release a report that will assess the future of the federal oil and gas leasing program.

Most U.S. upstream execs expect global oil supply gap by 2025 . S&P Global Platts . Underinvestment and a focus on the energy transition will create a global oil supply shortage in two to four years, according to three-quarters of US oil and natural gas executives surveyed by the Federal Reserve Bank of Dallas in June. One upstream executive said policies focused on limiting oil and gas growth, restrained capital budgets in favor of free-cash-flow generation, and continued consolidation could lead to an undersupply for growing demand.

Cash flow of world's oil drillers heads for record . Bloomberg . The world’s publicly traded independent oil producers will make record profits this year, surpassing the levels reached when crude hit an all-time high near $150 a barrel more than a decade ago, according to Rystad Energy. Combined free cash flow from the sector is expected to surge to $348 billion, beating the previous high of $311 billion in 2008, Rystad said.

U.S. oil inventories drop as demand ramps up and production dips, EIA says . Natural Gas Intelligence .
Stockpiles of U.S. crude fell to a 2021 low last week after production eased and demand for petroleum products continued to climb – another in a string of indicators pointing to a tightening oil market. Domestic commercial crude inventories in the week ended June 18, excluding those in the Strategic Petroleum Reserve, decreased by 7.6 million bbl from the previous week, the U.S. Energy Information Administration (EIA) said Wednesday.

U.S. oil imports increase, exports decrease in past week . MENAFN . On Wednesday, Jun. 23 the U.S. Energy Information Administration (EIA) stated that U.S. crude oil imports soared whereas exports plunged in the week concluding June 18. The Weekly Petroleum Status Report said that U.S. crude oil imports hovered 6.9 million barrels a day (b/d) in the past week, a rise by around 197,000 b/d from the prior week, whereas crude oil exports hovered about 3.7 million b/d, a decrease by around 233,000 b/d from the prior week.