Energy Prospectus

Opening Prices:
> WTI is up 48c to $68.02/Bbl, and Brent is up 66c to $71.71/Bbl.
> Natural gas is down 2.6c to $3.870/MMBtu.

AEGIS Notes
Oil

Oil prices continue to edge higher following the biggest two-day advance since November
Brent moved above $70/Bbl on Tuesday and up to nearly $72 on Wednesday morning, after China reportedly brought its latest virus outbreak under control

Pemex plans to resume all lost production following a fire at a platform in the Gulf of Mexico
> Mexico’s Pemex will return 421 MBbl/d from 125 oil wells soon
> The state-owned producer expects to resume all oil production by Aug. 30
> About 25% of Mexico’s total production has been offline since Sunday, when a fire claimed five lives on an offshore platform

EIA crude oil inventory estimates:
EIA's weekly petroleum report will be out around 10:30AM ET
Bloomberg Survey
> U.S. crude oil inventories: -2,331 MMBbl
> U.S. gasoline inventories: -1,556 MMBbl
> U.S. distillate inventory: -852 MMBbl
> U.S. refinery utilization: -0.06%

Natural Gas

Natural gas futures are trading lower as overnight weather forecasts cooled
> The 6-10 day forecast shows cooler temperatures in the U.S. West
> Temperatures are expected to set record highs in certain parts of the country through this weekend; however, gas futures have been undeterred.
> September forecasts have shifted cooler, which is cause for some of the weakness

Global benchmark prices had a strong showing during yesterday’s trading session, with the prompt-month TTF contract (Europe) climbing $1.125 (7.8%) to $15.743, while the JKM contract (Asia) gained $0.51 (3.1%) to settle at $16.85

A sustained rally in the Winter 2021/2022 strip has lost momentum (Platts)
> The strip price for NOV21 to MAR22 has fallen from $4.25 to $4.05 since August 5, after rallying $1.40 over the course of four months < Note that this is still much higher than the gas prices I'm using in my forecast models.
> Bearish, long-range weather forecasts have dampened sentiment around winter pricing, and the last several storage reports showed a narrowing deficit to the five-year average
> The U.S. National Weather Service last week released its latest winter outlook, which showed a 30-40% chance of above-average temperatures in states stretching from Maine to Florida, across the entire Southeast and Texas, as well as the Desert Southwest. < FWIW these are the same people that said all of the polar bears would be dead by now. Weather is always a big driver of natural gas prices, but this coming winter will include a lot more demand for LNG and industrial demand than last winter.

Phil Flynn's take

Oil came roaring back! The crude oil market regained most of its losses after the big 7-day swoon. Demand expectations are rising as the covid scare in China is passing and its ports are reopening. There are expectations that pent up demand in China may offset demand losses in Japan, another covid hot spot. Argus Media reports, “China’s airlines are starting to resume some previously suspended flights in a short-term boost for domestic jet fuel demand, as some Chinese cities reduce the number of higher risks Covid-19 regions to medium or low risk.

Oil prices also did get support from the platform fire in the Gulf of Mexico. Today Bloomberg is reporting that Petroleos Mexicanos plans to resume full crude production by Monday after an offshore platform accident that cut the company’s output by a quarter. About 71,000 barrels a day has already restarted.

From the supply side, things are still supportive. MarketWatch reports that the American Petroleum Institute reported late Tuesday that US crude supplies fell by 1.6 million barrels for the week ended Aug. 20, according to sources. The API report also showed inventory declines of 985,000 barrels for gasoline and 245,000 barrels for distillate supplies. Crude stocks at the Cushing, Ok storage hub, meanwhile, edged down by 485,000 barrels for the week, sources said.

Peak gas demand? Maybe but it won’t happen without much higher gasoline prices. Reuters reports that the fourth-largest U.S. refiner Phillips 66 on Tuesday said it has put the smaller of its two Louisiana refineries up for sale amid continued losses and an uncertain future for motor fuels. The company is holding talks with a potential buyer on the sale of its 255,600 barrel-per-day (bpd) Alliance refinery in Belle Chasse, Louisiana, according to two people familiar with the matter.

The identity of the potential buyer could not immediately be learned. U.S. refiners have closed or sold oil processing plants as the COVID-19 pandemic slashed demand for gasoline and jet fuel, generating losses for the industry. Top automakers are accelerating their shift to electric vehicles, signaling tougher times ahead.” My advice is to fill up your tank.”

The China re-opening should give oil a big demand boost. OPEC is going to more than likely delay its production increase at its meeting next week. Keep an eye on OPEC plus news. The bottom for oil should be in so buy breaks.

Natural gas is looking good. Late heat wave along with subpar production should give futures a boost.

>FWIW these are the same people that said all of the polar bears would be dead by now

>” My advice is to fill up your tank.”

Oct crude in 2 1/2 trading days made up 100 % of the $ 6 dollar loss last week

Closing Prices:
> WTI prompt month (OCT 21) was up $0.82 on the day, to settle at $68.36/Bbl.
> NG prompt month (SEP 21) was up $0.001 on the day, to settle at $3.897/MMBtu. < Keep in mind that for most of the Wall Street Gang, natural gas is "off the radar screen" thru September. There is no shortage of natural gas today, but if we have a normal December we could see MUCH HIGHER ngas prices than $4.00

After reading the Book "Unsettled" I am convinced the "Climate Change Agenda" is all about the money. FEAR is a powerful emotion and the wackos we have in Washington are using Global Warming Fear for power and money. One of the conclusions at the end of Unsettled is that if the U.S. totally eliminated carbon emissions it will have close to zero impact on the Earth's climate because China and India are not going along with this crap because they cannot afford it. Another conclusion is that humans are very adaptive creatures and we can easily adjust to a 2 degree increase in the Earth temperature. I urge all of you to read the book. Don't let FEAR control you.

PS: Increased CO2 levels are very good for trees and they turn CO2 back into oxygen. God created a self-adjusting system for Earth.