Opening Prices:
> WTI is down 48c to $72.13/Bbl, and Brent is down 45c to $75.01/Bbl.
> Natural gas is down 17.7c to $5.283/MMBtu.
At the time of this post (10:45 AM CT) WTI was at $72.16 and ngas was at $5.305.
AEGIS Notes
Oil
Oil remained above $72/Bbl Thursday morning after U.S. crude stocks dropped to a two-year low
The EIA reported a 6 MMBbl declined in U.S. oil inventories on Wednesday
Gulf of Mexico oil producers are still struggling to return output more than two weeks after Ida made landfall
Overall output loss has risen to 27.3 MMBbl since the storm hit, making Ida the most damaging to oil production in 13 years
Brent call option volumes were the highest since July on Wednesday as prices moved higher (Bloomberg)
Just over a dozen of the most active options changing hands were calls, and the premium of Brent puts over bullish options was the smallest since April
AEGIS notes that the additional call-skew can make costless collars more attractive for producers
MY TAKE: Iran has selected a "hard liner" for the negotiations with Team Biden. After the debacle of the U.S. surrender to the Taliban in Afghanistan Iran sees weakness in this administration. They believe that the West will soon need their oil. If Team Biden gives in to Iran and gives them a clear path to weapons grade uranium, the risk to the world's oil supply goes up.
Natural Gas
Freeport LNG output remains offline for a second consecutive day as the company works to restore power following Hurricane Nicholas (S&P Global)
LNG feedgas flows remain 2.0 Bcf/d lower from Monday’s mark of 11.1 Bcf/d
Freeport is unable to provide a time schedule of when the terminal will return to service at this time
The spread between winter 21/22 and summer 22 blew out to $1.73/MMBtu yesterday during intraday trading, before settling at $1.68/MMBtu
The drastic spread between the two seasons could imply that the market is concerned about a short-term shortage of supply, which could lead to runaway prices should colder weather emerge
AEGIS notes that a colder-than-normal winter could exacerbate the current storage situation and potentially boost prices heading into summer 22
Oil & Gas Prices - Sept 16
Oil & Gas Prices - Sept 16
Last edited by dan_s on Thu Sep 16, 2021 11:01 am, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Sept 16
The number came in at 83
Oct NG initially sold off to 5.228 but has since bounce back to 5.31 at 10:43 am est
Oct NG initially sold off to 5.228 but has since bounce back to 5.31 at 10:43 am est
Re: Oil & Gas Prices - Sept 16
Read the last paragraph. We are going to see MASSIVE INFLATION in 2022. The last thing Washington should be doing is raising taxes to fund a $3.5 Trillion spending plan. Inflation is good for commodity prices, but not at the expense of lowering our standard of living.
Energy Report: It's A Supply Thing
By Phil Flynn (Sep 16, 2021 08:47AM ET)
Oil prices surged to the highest level since July after the Energy Information Administration (EIA) reported that US crude oil supplies fell for the 6th week in a row. The EIA reported that U.S. commercial crude oil inventories fell by 6.4 million barrels putting inventories are about 7% below the five-year average for this time of year.
Hurricane Ida and now Hurricane Nicholas are both a factor in those falling supplies but the trend of falling supplies began well before the storms. The comeback of oil and gas production from the storms is the slowest recovery in the history of hurricanes. We did see some significant progress reported yesterday.
The Bureau of Safety and Environmental Enforcement (BSEE) reported that 29.52% of Gulf oil production is still shut in. That is the equivalent of 537,193 barrel per day. For natural gas it is 39.40% of production that is still shut in or 878.70 MMCFD.
This situation shows that we have a very tight supply versus demand situation because the supplies are not coming back online fast enough. We’re probably going to see a continued price squeeze. Crude oil prices did pull back from the Bolinger band resistance area so more than likely we may consolidate a bit but we are still on the path to move higher.
We have been warning for a long time that there has been significant upside risk in oil prices and we’re starting to see that happen now. We are still in the shoulder season and that is giving us a little bit of cover but that does not take away the fact that we are on a path to being undersupplied this winter. Demand is strong but right now it’s a supply thing. It is unlikely that the supply will keep up with demand. That means higher prices until demand cools off. Sharply higher prices for energy is becoming a risk to the European economy and the U.S. economy as well.
China is starting to get nervous about rising food prices and energy prices. China is committed to using its strategic petroleum reserve to try to cool off energy prices but I think they’re going to have a very hard time because it only adds to the demand side of the equation. China thinks they have an answer for that according to Reuters. China will toughen punishments for regions that fail to meet targets aimed at controlling energy use, the state planning agency said in new policy guidelines published on Thursday. China has been cracking down on high-energy consuming projects after 20 of its 30 provinces and regions failed to meet energy consumption targets in the first half of the year. National Development and Reform Commission (NDRC) said it would hold local officials accountable for limiting absolute energy use and for meeting targets to cut energy intensity – or the amount of energy used per unit of GDP. The NDRC also said China would improve its mechanisms for setting overall consumption targets and ensure they are distributed fairly across regions. China then will have to balance that clampdown on “excessive demand” and with slowing economic growth.
I think it’s clear that China is having a problem with inflation pressures and the fear it’s going to hurt their economy. They’re getting socked with sharply higher food prices and that’s only going to get worse when they have to come in and start buying more of the U.S. crops. As far as energy goes, China’s experiment with trying to control prices will ultimately fail and create a situation that is going be a bigger problem for China. In the future, these actions will either lead to sharply higher prices for oil and natural gas or it’s going to create a recession. I don’t know which way I’d be rooting if I was China right now.
Another explosive day for natural gas! Production in the Gulf of Mexico is adding to a potential supply shortage around the globe. U.S. futures again had another rocketing higher day before the market pulled back a bit and it’s not just natural gas that is on fire. < MY TAKE: The U.S. only has a few more weeks to get natural gas in storage up to the level necessary to get through a normal winter. The 5-year average amount of natural gas in storage at the beginning of the winter heating season (mid-November) is 3,735 Bcf, 729 Bcf higher than where storage was on September 10th. There is NO CHANCE that storage will get to the 5-year average before Old Man Winter arrives. PLUS, demand for U.S. gas will be much higher than the 5-year average thanks to our rapidly expanding LNG export capacity.
Propane prices have hit the highest level since 2014. For those that haven’t filled up their propane tanks, it’s going to be extremely expensive. We better hope and pray that we don’t get a cold winter this year. Propane prices have risen almost 60% so far and this is small compared to other commodities. Natural Gas: +126%, Heating Oil: +97%, Gasoline: +95%, WTI Crude: +89%, Brent +86%, Aluminum: +61%, Sugar: +61%, Coffee: +52%, Copper: +42%, Corn: +39%, Cotton: +39%, Soybeans: +29%, Wheat: +26%. On the downside, Lumber has fallen -2% and Gold: -9%, Palladium:-11%, Silver Silver: -13%.
Energy Report: It's A Supply Thing
By Phil Flynn (Sep 16, 2021 08:47AM ET)
Oil prices surged to the highest level since July after the Energy Information Administration (EIA) reported that US crude oil supplies fell for the 6th week in a row. The EIA reported that U.S. commercial crude oil inventories fell by 6.4 million barrels putting inventories are about 7% below the five-year average for this time of year.
Hurricane Ida and now Hurricane Nicholas are both a factor in those falling supplies but the trend of falling supplies began well before the storms. The comeback of oil and gas production from the storms is the slowest recovery in the history of hurricanes. We did see some significant progress reported yesterday.
The Bureau of Safety and Environmental Enforcement (BSEE) reported that 29.52% of Gulf oil production is still shut in. That is the equivalent of 537,193 barrel per day. For natural gas it is 39.40% of production that is still shut in or 878.70 MMCFD.
This situation shows that we have a very tight supply versus demand situation because the supplies are not coming back online fast enough. We’re probably going to see a continued price squeeze. Crude oil prices did pull back from the Bolinger band resistance area so more than likely we may consolidate a bit but we are still on the path to move higher.
We have been warning for a long time that there has been significant upside risk in oil prices and we’re starting to see that happen now. We are still in the shoulder season and that is giving us a little bit of cover but that does not take away the fact that we are on a path to being undersupplied this winter. Demand is strong but right now it’s a supply thing. It is unlikely that the supply will keep up with demand. That means higher prices until demand cools off. Sharply higher prices for energy is becoming a risk to the European economy and the U.S. economy as well.
China is starting to get nervous about rising food prices and energy prices. China is committed to using its strategic petroleum reserve to try to cool off energy prices but I think they’re going to have a very hard time because it only adds to the demand side of the equation. China thinks they have an answer for that according to Reuters. China will toughen punishments for regions that fail to meet targets aimed at controlling energy use, the state planning agency said in new policy guidelines published on Thursday. China has been cracking down on high-energy consuming projects after 20 of its 30 provinces and regions failed to meet energy consumption targets in the first half of the year. National Development and Reform Commission (NDRC) said it would hold local officials accountable for limiting absolute energy use and for meeting targets to cut energy intensity – or the amount of energy used per unit of GDP. The NDRC also said China would improve its mechanisms for setting overall consumption targets and ensure they are distributed fairly across regions. China then will have to balance that clampdown on “excessive demand” and with slowing economic growth.
I think it’s clear that China is having a problem with inflation pressures and the fear it’s going to hurt their economy. They’re getting socked with sharply higher food prices and that’s only going to get worse when they have to come in and start buying more of the U.S. crops. As far as energy goes, China’s experiment with trying to control prices will ultimately fail and create a situation that is going be a bigger problem for China. In the future, these actions will either lead to sharply higher prices for oil and natural gas or it’s going to create a recession. I don’t know which way I’d be rooting if I was China right now.
Another explosive day for natural gas! Production in the Gulf of Mexico is adding to a potential supply shortage around the globe. U.S. futures again had another rocketing higher day before the market pulled back a bit and it’s not just natural gas that is on fire. < MY TAKE: The U.S. only has a few more weeks to get natural gas in storage up to the level necessary to get through a normal winter. The 5-year average amount of natural gas in storage at the beginning of the winter heating season (mid-November) is 3,735 Bcf, 729 Bcf higher than where storage was on September 10th. There is NO CHANCE that storage will get to the 5-year average before Old Man Winter arrives. PLUS, demand for U.S. gas will be much higher than the 5-year average thanks to our rapidly expanding LNG export capacity.
Propane prices have hit the highest level since 2014. For those that haven’t filled up their propane tanks, it’s going to be extremely expensive. We better hope and pray that we don’t get a cold winter this year. Propane prices have risen almost 60% so far and this is small compared to other commodities. Natural Gas: +126%, Heating Oil: +97%, Gasoline: +95%, WTI Crude: +89%, Brent +86%, Aluminum: +61%, Sugar: +61%, Coffee: +52%, Copper: +42%, Corn: +39%, Cotton: +39%, Soybeans: +29%, Wheat: +26%. On the downside, Lumber has fallen -2% and Gold: -9%, Palladium:-11%, Silver Silver: -13%.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Sept 16
Chevron CEO warns of high energy prices. Bloomberg.
The world is facing high energy prices for the foreseeable future as oil and natural gas producers resist the urge to drill again, according to Chevron Corp.’s top executive. “There are things that are interfering with market signals right now that we haven’t seen before. Eventually things work out, but eventually can be a long time,” Chief Executive Officer Mike Wirth said Wednesday in an interview at Bloomberg News headquarters in New York.
Would Biden’s oil freeze increase emissions? E&E News.
Oil industry backers are bringing an Obama-era report to their playbook against the Biden administration’s drilling policies, warning that a federal leasing freeze could increase greenhouse gas emissions. The argument, from a 2016 Interior Department analysis, is that if the U.S. doesn’t develop oil offshore, where emissions from production are comparatively low, someone else will — potentially with a dirtier oil and gas drilling record.
The world is facing high energy prices for the foreseeable future as oil and natural gas producers resist the urge to drill again, according to Chevron Corp.’s top executive. “There are things that are interfering with market signals right now that we haven’t seen before. Eventually things work out, but eventually can be a long time,” Chief Executive Officer Mike Wirth said Wednesday in an interview at Bloomberg News headquarters in New York.
Would Biden’s oil freeze increase emissions? E&E News.
Oil industry backers are bringing an Obama-era report to their playbook against the Biden administration’s drilling policies, warning that a federal leasing freeze could increase greenhouse gas emissions. The argument, from a 2016 Interior Department analysis, is that if the U.S. doesn’t develop oil offshore, where emissions from production are comparatively low, someone else will — potentially with a dirtier oil and gas drilling record.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group