Energy Prospectus

Sept & Oct is the "Shoulder Season", when the largest natural gas storage builds usually keep a lid on natural gas and NGL prices. This makes the BIG SURGE in energy prices a bit strange and tell us the "Paradigm Shift" that can take stock prices a lot higher is now firmly in place.

Opening Prices:
> WTI is up 43c to $75.88/Bbl, and Brent is up 25c to $79.78/Bbl.
> Natural gas is up 30.2c to $6.008/MMBtu.

AEGIS Notes
Oil

Brent crude rallied for the sixth day, briefly trading over $80/Bbl in early Tuesday trading
Oil’s latest run comes amid signs that demand is getting ahead of supply, accompanied by a batch of bullish price predictions from banks and oil traders
The oil market is headed for a supply shock, Hess COO Greg Hill Said at a recent Platts conference
Goldman Sachs has raised their Brent forecast to $90/bbl by December.
Lack of supply will come from under-investment in fossil fuel projects amid a push toward cleaner energy, said Hill
The amount of money used in global upstream projects has plunged to near $300 billion, less than half of the $650 billion seen before the pandemic (Bloomberg). We aren't completing enough new wells to keep U.S. oil production flat and the DUC inventory is way down.

Europe has a gas problem, and also a gasoline problem, the petrol kind
Gas stations ran dry in British cities on Monday as fuel was rationed due to trucking supply-chain issues (Reuters)
A shortage of truckers has sown chaos for everything from food to fuel
Panic buying is being blamed for the fuel shortage as major fuel industry leaders claim there is plenty of fuel at UK refineries and terminals

Natural Gas

The prompt-month Henry Hub contract (Oct ’21) is up by 30.2c this morning, trading near $6.00
Most option contracts expired yesterday, however; the prompt contract will likely be extra volatile today as trading volume is thin ahead of expiry

According to Vitol, the recent volatility in natural gas and LNG prices is here to stay through at least the next few months
The company said that weather will be the ultimate determining factor for natural gas and LNG, and Vitol sees a 20-30% chance for a cold winter
Weatherbell's winter forecast is for a colder than normal winter in the Great Lakes Regions, which is the largest consumer of natural gas for space heating.
Read the Weatherbell forecast here: https://www.weatherbell.com/premium/

The PennEast Pipeline has been cancelled following repeated regulatory and legal setbacks
The PennEast Pipeline would have carried 1 Bcf/d of dry gas from the Marcellus shale region in Pennsylvania to New Jersey
The Leidy South Expansion project should be completed by the end of this year, which will bring an additional 457 MMcf/d of takeaway capacity
The Appalachian region has been starved for takeaway capacity as demonstrated by weakening diffs.
The Mountain Valley pipeline is the only infrastructure project expected to bring new takeaway capacity in 2022

Bloomberg -- Natural gas futures surged for a second straight day in New York, gaining 10% amid a global supply crunch and increasing concern that inventories will get even tighter over the next few months.
Gas for October delivery surged as much as 57 cents to $6.28 per million British thermal units in early trading on Nymex on Tuesday. That’s the first time since 2014 it has traded above $6, and follows an 11% gain posted Monday.
Demand for the fuel is increasing worldwide as the global economy continues to recover from the coronavirus pandemic, driving up the need for electricity. Increased consumption is making it hard to replenish U.S. stockpiles that were left depleted by summer heat waves that kept air conditioners humming across
the country. Hurricane Ida also took a lot of gas coming from the Gulf of Mexico offline.
Energy prices are also surging in Europe, with gas prices there also jumping by more than 10% on Tuesday, while coal and carbon gained.
Potentially fueling the rally in the U.S, are traders closing bearish positions this week before October options and futures expire. < Those traders shorting ngas in September have been hammered.

Note from Jay R. Young and King Operating Company:

"I wrote an article this afternoon on the energy crisis and there is not any one country, or political leader to blame. This energy crisis is due to every world government and their failure to watch out for their citizens. While this may sound harsh we have data to back this up. In the article, we cover many key issues and have links to our sources.

Bloomberg published “Brent Rises to Highest Since 2018 on Global Energy Crunch”. Several key points were brought out in the video interview. “Observable inventory draws are the largest on record,” Goldman Sachs analysts including Damien Courvalin wrote in a note to clients. “This deficit will not be reversed in coming months, in our view, as its scale will overwhelm both the willingness and ability of OPEC+ to ramp up.”

Irina Slav from Oil Price.com published “China Oil Consumption Seen Peaking in 5 Years”. There are some great points in this article and Irina does a great job pointing them out. China’s oil consumption could peak in five years at a daily level of around 16 million barrels, a senior Sinopec executive has forecast, as quoted by Reuters."
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MY TAKE: World leaders are "Energy Ignorant" and they refuse to listen to anyone in the oil & gas industry. Plus, CEOs of large-cap oil & gas companies (especially the majors) are afraid to say out loud what they really think of the Climate Change Wacko crowd for FEAR of market / shareholder retaliation. Let this sink in: Within nine month, all of OPEC+ spare production capacity will be gone. There will be no option other than raising refined product prices to drive out demand in order to balance global supply & demand for oil based productions by Q3 2022. It will take crude oil prices well above $100/bbl to do it.

Link to the article he wrote: https://kingoperating.com/world-energy- ... -gas-bill/

Closing Prices:
> WTI prompt month (NOV 21) was down $0.16 on the day, to settle at $75.29/Bbl.
> In contrast, NG prompt month (OCT 21) was up $0.135 on the day, to settle at $5.841/MMBtu.

Q1 is going to be very profitable for the "gassers".

where's Lee Raymond when you need him...


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MY TAKE: World leaders are "Energy Ignorant" and they refuse to listen to anyone in the oil & gas industry. Plus, CEOs of large-cap oil & gas companies (especially the majors) are afraid to say out loud what they really think of the Climate Change Wacko crowd for FEAR of market / shareholder retaliation. Let this sink in: Within nine month, all of OPEC+ spare production capacity will be gone. There will be no option other than raising refined product prices to drive out demand in order to balance global supply & demand for oil based productions by Q3 2022. It will take crude oil prices well above $100/bbl to do it.

Link to the article he wrote: https://kingoperating.com/world-energy- ... -gas-bill/[/quote]