Energy Prospectus

Opening Prices:
> WTI is down 10c to $75.13/Bbl, and Brent is down 8c to $75.76/Bbl.
> Natural gas is down 0.5c to $3.656/MMBtu.

AEGIS Notes
Crude Oil

OPEC ministerial meeting was postponed until Friday (today) as disagreements emerge on the plan to return output
Saudi Arabia and Russia supported an output hike of 400 MBbl/d per month through December, though the plan met resistance from the UAE
OPEC+ sources said the UAE wants to have baseline production set at 3.8 MMBbl/d versus the current 3.168 MMBbl/d number, thereby increasing its output quota, according to Reuters

OPEC boosted output last month to match recovering demand (Bloomberg)
The production increase was the largest in over a year, as total output rose by 855 MBbl/d to 26.47 MMBbl/d in June
12 of the 13 member countries increased output last month, with Saudi Arabia accounting for 490 MBbl/d of the increase
MY TAKE: Whatever OPEC+ does, demand for oil exceeds supply and US and OECD oil inventories will keep falling, so oil prices will go up.

Natural Gas

The prompt-month Henry Hub contract is up 15c from last Friday’s close to $3.65 as rising world LNG prices, record heat in the western U.S., and pipeline outages reducing production have helped extend this month’s rally
Dry gas nominations show a production drop of 1.66 Bcf/d from Wednesday, according to PointLogic data, following the MarkWest processing plant failure that forced several pipelines offline in the U.S. northeast, including Columbia Gas

Cheniere requested approval from FERC on June 30 to increase production capacity of their Corpus Christi facility by 108.16 Bcf/y, from 767 Bcf/y to 875.16 Bcf/y (PointLogic)
According to FERC, Cheniere believes operating Trains 1 and 2 has provided them with more knowledge of the actual production capacity limits of the liquefaction trains
Of the 3 trains at Corpus Christi, Train 1 is in service, Train 2 is complete, and Train 3 has an expected completion date of 2H2021, with each train expected to produce roughly 0.66 Bcf/d < This is good news for the Eagle Ford companies because their wells have the closest access to CC.

The EIA reported a 76-Bcf injection for the week ending June 25, which was larger than the 63-Bcf build expected by Platts
Inventories for the U.S. are now at 2.558 TCF, a deficit of 510 Bcf to last year and a deficit of 143 Bcf to the five-year average

Western U.S. Gas prices fall, following demand as heat in the region backs away from record levels
SoCal City-Gate prices have dropped $2.56 from it’s weekly high 2 days ago to $4.505 < A reminder that natural gas prices are set by sub-region demand.

The National Weather Service downgraded its excessive heat warning that issued over the last few weeks to a heat advisory in Southern California. Temperatures were still expected to remain near triple digits throughout the weekend however

MarketWatch: Oil could top $100 as commodities boom shifts away from China, says top economist
Prices for commodities ranging from corn to copper to oil soared in the first half of 2021 on a combination of pent-up demand and supply bottlenecks resulting from the COVID-19 pandemic. The dynamics of the rally are changing, but further, broad-based gains look set to continue, said Saad Rahim, chief economist at Trafigura, one of the world’s largest commodity-trading firms. The commodities rally in the first six months of the year was driven in large part by China. It was “goods-intensive and it was metals-intensive,” Rahim told MarketWatch in a wide-ranging phone interview on Wednesday. “And now it is U.S.-EU-intensive, it is services-intensive and oil intensive.”

While the copper rally has slowed, “oil has the bit between its teeth” and is off to the races, Rahim said, in an illustration of the shifting demand dynamics.

Oil is trading near its highest levels since October 2018, with global benchmark Brent crude BRN00, -0.32% up more than 40% in the year to date, while its U.S. counterpart, West Texas Intermediate crude CL00, -0.47% CL.1, -0.48%, is up more than 50%. Both grades have rallied more than 80% over the last 12 months.

Read More: https://www.marketwatch.com/story/oil-c ... 1625144052

Closing Prices:
> WTI prompt month (AUG 21) was down $0.07 on the day, to settle at $75.16/Bbl.
> In contrast, NG prompt month (AUG 21) was up $0.039 on the day, to settle at $3.700/MMBtu.

These prices are much higher than I had hoped for just a few months ago. I've lived through many oil price cycles, but it still amazes me how quickly we go from a surplus to a shortage.