Energy Prospectus

Oil prices rise as traders look to EIA to confirm large API inventory draw

Opening Prices:
> WTI is up 92c to $71.41/Bbl, and Brent is up 99c to $75.35/Bbl.
> Natural gas is up 1.6c to $4.821/MMBtu.

AEGIS Notes
Oil

Oil prices received a lift on the expectation that U.S. oil stocks will record another large draw
The American Petroleum (API) reported a crude inventory draw of 6.1 MMBbl on Tuesday for the week ended Sept. 17
U.S. government data is due later this morning, with the average Bloomberg survey estimate calling for a 3.0 MMBbl draw

ConocoPhillips purchase of Shell’s Permian assets will make it the second-largest producer in the basin, according to Enverus
The acquisition included about 225k net acres in Texas, in addition to over 600 miles of operated crude, gas, and water pipelines and infrastructure (Argus)
ConocoPhillips plans to boost non-core asset sales to $4-$5 billion by 2023 from the previous goal of $2-$3 billion – mostly from the Permian

OPEC nations are warning of the knock-on impact on oil markets as the globe deals with a natural gas crunch (Bloomberg)
Iraq expects higher demand for crude as the shortfall of gas forces consumers to look for alternative fuels, Oil Minister Ihsan Abdul Jabbar said today
Nigeria’s state oil firm predicts that petroleum demand could be boosted by 1 MMBbl/d, with prices potentially gaining over $10/Bbl for the next six months

Natural Gas

The prompt-month (October ’21) Henry Hub contract is trading slightly higher, after losing 18c yesterday to finish at $4.80
Gas futures have fallen for four consecutive sessions, retreating from a seven-year high
Prices are seeing pressure as high prices dent domestic demand, while feedgas demand at LNG facilities is down thanks to maintenance
According to Bloomberg, feedgas demand at U.S. LNG facilities is up by 200 MMcf/d this morning at 10 Bcf/d.
Freeport LNG is back running at capacity after reduced flows due to electrical outages from Hurricane Nicholas
Cameron LNG is undergoing maintenance on one of its trains, which is why flows to the site are down 0.6 Bcf/d to 1.4 Bcf/d

China escalates its LNG purchases for winter, exacerbating a global supply shortage
China is struggling to secure enough coal for power and heating this winter and is now facing a supply crunch like Europe
Many of China’s LNG buyers temporarily paused purchasing cargoes once prices began to surge, hoping prices would subside.
Now that rates are steady, buyers are starting to increase purchases once again
LNG prices are surging: Dutch TTF is $25.90 and JKM is $27.19 < As long as demand for LNG stays high, U.S. natural gas prices will stay high. This is going to be a very profitable winter for the gassers.

ConocoPhillips CEO sees pre-covid oil demand returning in months. Bloomberg.
ConocoPhillips sees oil demand returning to pre-pandemic levels by early next year as crude consumption rises around the world, supporting higher commodity prices, Chief Executive Officer Ryan Lance said on Bloomberg TV. Oil supply, on the other hand, will remain constrained both from OPEC+, U.S. shale fields and major oil companies embracing the energy transition, he said.

Oil edges up, as investors worry about global demand. Reuters.
Oil prices rose modestly in a see-saw session on Tuesday, as concerns about the global consumption outlook counterbalanced the struggle by big OPEC producers to pump enough supply to meet growing demand. Both benchmarks were at one point up by $1 per barrel, but Brent crude pared gains and settled just up 44 cents at $74.36 a barrel, after falling by almost 2% on Monday. < 2/3rds of the OPEC+ members are producing oil at or below their quotas. Spare capacity is now in the hands of just a few countries. OPEC+ will be out of spare capacity within nine months. Just in time for the next summer demand surge.

Closing Prices:
> WTI prompt month (NOV 21) was up $1.74 on the day, to settle at $72.23/Bbl.
> In contrast, NG prompt month (OCT 21) was unchanged $0.000 on the day, to settle at $4.805/MMBtu.

Weekly storage report will impact the ngas price tomorrow. Just remember that we are now in the "Shoulder Season" when ngas moved into storage is the highest of the year. We are going to need every mcf we can get to make it thru a cold winter.