Energy Prospectus

Opening Prices:
> WTI is up 95c to $67.43/Bbl, and Brent is up 78c to $69.82/Bbl.
> Natural gas is up 0.6c to $4.066/MMBtu.

AEGIS Notes
Oil

Oil prices rebounded from three-week lows earlier this morning, following a 4% selloff over the past two trading days
> Traders continue to weigh the impact of curbs on movement due to the spreading Delta variant versus a forecast of a tight oil market through the remainder of 2021
> A large portion of COVID related restrictions reside in China, where crude refining is set to be scaled back, and air travel has relaxed

China’s biggest refiner is paring back operations as Beijing’s COVID response reduces demand for oil products (Bloomberg)
> State-owned Sinopec is cutting run rates at some plants by 5% to 10% this month as compared with July levels, Jean Zou, a researcher at ICIS-China, said in an interview
> Chinese airline carriers have reduced the number of seats offered by the most since early in the Covid-19 pandemic. Seat capacity plunged 32% in one week, according to data from aviation specialist OAG (Bloomberg)

Natural Gas

The prompt-month natural gas contract lost ground yesterday to fall near $4.06, where the price held steady overnight
> While temperatures are expected to remain hot throughout this week, the forecast for next week moderated slightly
> Temperatures will still be well above average, just not as hot as previously forecast
> In addition, feedgas flows to LNG facilities fell to a two-month low of 9.4 Bcf/d

In the tropics, a tropical cyclone has emerged and is likely to be named Tropical Storm Fred later today
This development could be a threat to the Florida Panhandle or perhaps Louisiana next week, which could knock GOM production, LNG feedgas flows offline
It may also hamper oil tanker traffic

European natural gas futures set new record highs amid renewed concerns that inventories will be inadequate headed into winter
The benchmark has more than doubled this year to attract cargoes to help the country replenish its gas inventories before the start of Europe’s heating season
Global LNG buying has pushed several benchmark prices higher as Asia and South America are vying for the same cargoes

Feedgas flows to LNG facilities measured near its two-month low of 9.4 Bcf/d – Bloomberg
The reduction in flows can be attributed to Sempra’s Cameron LNG facility and Cheniere’s Sabine Pass LNG facility
Freeport LNG had reduced flows last week because of a compressor trip but has since returned to capacity

Late Summer Natural Gas Prices Hit Multi-Year Highs
Read article: https://www.texasstandard.org/stories/l ... ear-highs/

"Natural gas prices rallied last week, hitting multi-year highs that inspired an article from Bloomberg News which made the proclamation “The era of cheap natural gas is over.”

Oil Demand in India

- July fuel demand in India rebounded to its highest since April as New Delhi cleared restrictions and lockdowns, netting a 3% month-on-month increase to a total of 16.83 million tons.

- The rebound might have been even more pronounced, were it not for fuel prices rising to all-time highs, triggered by a chaotic taxation regime.

- In India, petroleum products are not included in the goods and services tax regime, meaning every state can set its own fuel tax levies and they have been on the rise throughout 2021, up 20% year-on-year already.

- Analysts anticipate India surpassing its pre-pandemic consumption readings in Q4-2021, with fuel pricing remaining the primary factor in the extent of demand recovery.

- Crude imports in June-July dropped to average 2014-2015 levels of 3.5 mbpd, but August loadings have surged to a healthy 4.2 mbpd on the back of demand recovery.

Closing Prices:
> WTI prompt month (SEP 21) was up $1.81 on the day, to settle at $68.29/Bbl.
> Also, NG prompt month (SEP 21) was up $0.029 on the day, to settle at $4.089/MMBtu.

The oil price "Roller Coaster" will continue with FEAR of the Delta Variant vs the tightening of the global oil market.