Oil & Gas Prices - July 20

[dan_s]

My SWAG (Scientific Wild Ass Guess) is that this "correction" of the oil price will end tomorrow when EIA reports another large draw from U.S. oil inventories. Of course FEAR is a powerful emotion and the word "pandemic" is working for those in charge.

Opening Prices:
> WTI is down 2c to $66.40/Bbl, and Brent is down 14c to $68.48/Bbl.
> Natural gas is up 2.6c to $3.805/MMBtu. < At the time of this post, the JAN22 NYMEX contract is trading at $4.02/MMBtu

AEGIS Notes
Oil

Oil prices continued moderately lower Tuesday morning following Monday’s carnage that saw prices tumble to an eight-week low
Yesterday’s route in price was likely due more to concerns surrounding the fast-spreading delta variant of Covid-19 rather than OPEC+’s agreement to increase production
Multiple asset classes felt pain Monday in a total risk-off trading session that sent equities plunging

The 7.5% decline for WTI yesterday was the largest selloff since September
Crude oil time-spreads were reduced after prices dipped – WTI moved into the weakest backwardation for the prompt spread since June 30
WTI August-September spread’s backwardation sunk 18c to +7c/Bbl on Monday. The August WTI contract rolls off the board today after the close
The twelve-month time-spread tightened by $1.10 to +$4.95/Bbl yesterday

Natural Gas < Read my post about RRC under the Sweet 16 Tab

The prompt-month Henry Hub contract is up 2.6c this morning after climbing 10.5c yesterday to settle at its highest mark in 2.5 years
Weather in the U.S. East and Midwest is expected to heat up in the 6-10 day range, while forecasts for the U.S. South have also gotten warmer, including TX
The total number of U.S. gas-weighted degree days has increased by 8.9 CDDs since Friday, July 19, according to CWG

The U.S. is slated to issue new pipeline cyber rules in wake of Colonial Pipeline incident (Bloomberg)
The rules are expected to be announced by the Transportation Security Administration, and represent a move further from the industry’s historically lax self-reporting system
TSA officials are expected to brief the industry of the new rules on Monday
AEGIS notes the new rules could increase the overhead costs for midstream companies and will likely cause the companies to hike their transportation fees

[dan_s]

NGI: U.S. natural gas ‘off to the races’ on strong LNG, Mexico demand and producer discipline
U.S. natural gas demand and prices are “off to the races,” driven by a convergence of supply and demand-related factors as the world emerges from Covid-19, IHS Markit’s Jack Weixel, senior director, said Monday. Liquefied natural gas (LNG) exports to the global market, pipeline exports to Mexico, and capital discipline by upstream producers all have contributed to a “whiplash” in prices from below $2.00/MMBtu in late 2020 to current prices well above $3.00, Weixel told the LDC Gas Forums Northeast Forum in Boston.

World Pipelines: US continued to lead global petroleum and natural gas production in 2020
The EIA reports that more petroleum and natural gas was produced in the United States than in any other country during 2020 (a trend that began in 2014), despite year-on-year declines from the record-high production in 2019. US petroleum and natural gas output in 2020 totaled 66.9 quadrillion Btu (quads), which was more than both Russia’s 45.5 quads and Saudi Arabia’s 26.5 quads of petroleum and natural gas production.

Team Biden's "War on Pipelines" makes no sense and is the opposite of what should be done if Washington actually cared about the environment.