Energy Prospectus

Opening Prices:
> WTI is up 41c to $73.32/Bbl, and Brent is up 33c to $75.01/Bbl.
> Natural gas is up 10.4c to $3.697/MMBtu.

AEGIS Notes
Crude Oil

Oil prices moved lower yesterday as the Delta COVID variant prompts countries across the Asia-Pacific region to shut down and impose stay-at-home orders
The variant is affecting countries from Australia and Bangladesh to South Africa and Germany
The restrictions are laxer than earlier in the pandemic, as most countries have restricted travel from high-risk countries with an unvaccinated population

OPEC’s joint technical committee (JTC) forecasts 2H2021 oil demand will be 5 MMBbl/d higher than in 1H2021
The June Monthly Oil Market Report (MOMR) estimated that crude demand would grow by 6 MMBbl/d in 2021
OPEC+ is reportedly eyeing a 500 MBbl/d increase in supply, though they have not reached a consensus
The Ministerial Meeting will take place on July 1

Natural Gas

The August '21 Henry Hub contract is up 10 cents this morning to $3.69 in its first trading day as the prompt contract

Scorching heat continues throughout the Pacific Northwest region, driving gas demand
Portland, Oregon reached 112 °F Sunday, breaking the all-time temperature record of 108 °F, which was set just a day earlier (AP)
These high temperatures saw a new single-day record for gas-fired power demand in the Northwest which surged to 1.72 Bcf/d on June 28, sending US power burn to 38.3 Bcf/d – within striking distance of the seasonal highs already recorded earlier this month (Platts)

Germany could halt gas flow via Nord Stream 2 if Moscow pressures Ukraine according to Armin Laschet, the conservative chancellor candidate favored to take over for Chancellor Angela Merkel (Reuters)
Laschet said in a televised foreign policy debate that the 95% completed pipeline should be finished, but if Russia used the pipeline against Ukraine, he said, "We can always discontinue this project, even after the pipeline is finished"
Angela Merkel will step down as chancellor after September's election

China purchased more LNG over the past 12 months than any other nation, topping Japan to become the world's largest buyer of LNG
Japan had been the world’s largest LNG importer for decades and purchases from Tokyo, have been in long-term decline
Japan is aiming to halve its carbon emissions by 2030 and the resumption of nuclear power generation in recent years has reduced its LNG imports

OilPrice.com
Tuesday, June 29, 2021

Oil edged up on Tuesday after posting a loss on Monday due to demand concerns.

New Covid restrictions. The spread of the Delta variant is raising some red flags, with new restrictions on visits implemented in Hong Kong, Spain, and Portugal in recent days. New flareups in cases have occurred in the UK and Australia, among other places. The Delta variant could pose some oil demand risks, and oil prices have tapped on the brakes as a result.

OPEC+ optimistic ahead of meeting. OPEC+ says that the overall conditions in the oil market have significantly improved in recent months. The group was optimistic as this week’s meetings began, with a decision on whether they will ease the production cuts further expected on July 1.

U.S. shale still showing restraint. Despite WTI hitting a two-year high, shale drillers are not rushing back with a wave of new drilling. “I'm still confident the producers will not respond” to the run-up in prices, said Scott Sheffield, CEO of Pioneer Natural Resources (NYSE: PXD).

Energy Report: Will OPEC+ Save The Global Oil Market?
By Phil Flynn Jun 29, 2021 09:13AM ET

The global oil market is tightening at a frantic pace and the big question is, will OPEC+ rise to the occasion and save the world from an oil price spike?

While the oil market started the week on a down note as concerns about China raising the retail cost of both gasoline and diesel and concerns about the “delta variant” of COVID-19 spreading is raising concerns about its potential to hurt demand, the reality is that the global oil market is facing a looming supply deficit.

China’s move to raise prices is a desperate attempt to slow demand as they spin out of control. The delta variant of COVID-19 could become a real issue but it may still be too early to tell. Experts are mixed on this issue and whether or not it will lead to another round of economic shutdowns. So for now while the risk is there and should be watched, it is too early to decide whether or not this will have any meaningful impact on oil demand growth.

Now while those concerns about demand may be well-founded, the reality is that right now in the here and now, oil demand is through the roof! That is why oil traders are going to be watching very closely what OPEC+ decides to do. They must respond to higher demand as we’ve been warning for months because the world is facing a potential supply deficit unless OPEC+ decide to raise output. We heard earlier that OPEC+ was going to raise production in the area of 500,000 barrels a day. Now there is talk that the increase could be as much as a million barrels a day by the end of August.

The reality is that we probably need the higher end of what OPEC is talking about to have a chance to keep oil prices under control and supplies ample enough for where they are needed.

In the U.S. we expect to see crude supplies fall once again. I expect that we could see oil supplies fall by 5.5 million barrels this week.

We also expect to see a drop in gasoline supplies to the tune of about 3,000,000 barrels. We expect a drop of 2,000,000 barrels for distillates and as far as refinery runs, we look for them to bounce back by at least one percentage point.

The natural gas injection may only be 55 BCF and anybody that’s been watching the natural gas market realizes this market has been supported with the record-breaking hot temperatures that we’ve seen in many parts of the country. The pace at which we are seeing U.S. oil inventories fall should be a wake-up call. The U.S. is becoming more dependent on oil imports as U.S. producers fail to respond to higher prices. Energy independence, that was so hard to win, is now being lost. < Thanks to Good Old Joe's puppet masters.

Energy independence being lost is for environmentalists a win because they believe that to save the planet we have to reduce our usage of fossil fuels and one way the Biden administration proposes to do that is the electrification of the government auto fleet and pushing towards a nation with more green electric cars. The problem is that there are more reports that electric cars aren’t necessarily cleaner or better for the environment than the cars that we are driving now according to the latest report from Reuters.

Reality Sucks

Reuter’s analysis of the data from a model that calculates the lifetime emissions of vehicles is suggesting that electric cars are not as climate-friendly as you might think. The model was developed by the Argonne National Laboratory in Chicago and includes thousands of parameters from the type of metals in an electric vehicle (EV) battery to the amount of aluminum or plastic in a car. Reuters says that, “Argonne’s Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model is now being used with other tools to help shape policy at the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board, the two main regulators of vehicle emissions in the United States. Jarod Cory Kelly, the principal energy systems analyst at Argonne, said making EVs generates more carbon than combustion engine cars, mainly due to the extraction and processing of minerals in EV batteries and production of the power cells. But estimates as to how big that carbon gap is when a car is first sold and where the “break-even” point comes for EVs during their lifetime can vary widely, depending on the assumptions. Kelly said the payback period then depends on factors such as the size of the EV’s battery, the fuel economy of a gasoline car, and how the power used to charge an EV is generated.

Reuters plugged a series of variables into the Argonne model, which had more than 43,000 users as of 2021, to come up with some answers. The Tesla (NASDAQ:TSLA) 3 scenario above was for driving in the United States, where 23% of electricity comes from coal-fired plants, with a 54 kilowatt-hour (kWh) battery and a cathode made of nickel, cobalt, and aluminum, among other variables. It was up against a gasoline-fueled Toyota Corolla weighing 2,955 pounds with a fuel efficiency of 33 miles per gallon. It was assumed both vehicles would travel 173,151 miles during their lifetimes. But if the same Tesla was being driven in Norway, which generates almost all its electricity from renewable hydropower, the break-even point would come after just 8,400 miles. If the electricity to recharge the EV comes entirely from coal, which generates the majority of the power in countries such as China and Poland, you would have to drive 78,700 miles to reach carbon parity with the Corolla, according to the Reuters analysis of data generated by Argonne’s model.

The Reuters analysis showed that the production of a mid-sized EV generates 47 grams of carbon dioxide (CO2) per mile during the extraction and production process, or more than 8.1 million grams before it reaches the first customer. By comparison, a similar gasoline vehicle generates 32 grams per mile or more than 5.5 million grams. Michael Wang, the senior scientist, and director of the Systems Assessment Center at Argonne’s Energy Systems division said EVs then generally emit far less carbon over a 12-year lifespan. Even in the worst-case scenario where an EV is charged only from a coal-fired grid, it would generate an extra 4.1 million grams of carbon a year while a comparable gasoline car would produce over 4.6 million grams, the Reuters analysis showed.

My question then becomes that even though it is slightly better over time, is the difference in carbon emissions savings enough to make a wholesale change away from the internal combustion engine?
> Have we thought about the impact on the environment when we have to build all these batteries, mine for all these minerals?
> Is the net effect going to be worth the economic hardship it’s going to take on the average citizen?
> Have we thought about the waste that’s going to come from all these spent batteries?
In the meantime, the majority of the world is going to be using gasoline for the foreseeable future.
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MY TAKE: The Far Left is not open to "Reality" when it comes to Climate Change. No matter what the U.S. does, it will have very little impact on the Earth's climate. The Green New Deal isn't green and it is VERY EXPENSIVE. It will also lower the standard of living for our citizens.

The Hill: Oil and gas exports give the US a strategic geopolitical tool
Opinion.
The United States is blessed with an abundance of natural resources, among them plentiful reserves of oil and natural gas. We can either use these resources to our own advantage, both domestically and as exports, or we can cripple our own energy production, limiting our potential. In this decision, we must consider that exported fuel is not only a source of wealth; it is also a powerful tool of geopolitical influence. It can be tempting to dream of a world that uses less fossil fuel, but the Biden administration’s plan to halt lease sales would do nothing to further this aspiration. Rather, the Biden administration’s plan would curb only domestic oil and gas production, not consumption.

Read more: https://thehill.com/opinion/energy-envi ... -tool?rl=1

Closing Prices:
> WTI prompt month (AUG 21) was up $0.07 on the day, to settle at $72.98/Bbl. < Holding steady until API and EIA weekly storage reports come out and then waiting to hear from OPEC+.
> Natural Gas prices started this morning up around 5c, rocketed up another 15c, then retreated to finish the day 7c higher at $3.63. < All of our "gassers" (AR, CRK, EQT, RRC, GDP and SBOW) are still trading as if HH gas prices is stuck around $2.75. They are all STRONG BUYS at their current prices.