Oil & Gas Prices - Oct 1

[dan_s]

Welcome to the 4th Quarter. Time seems to move faster the older that I get.

Opening Prices:
> WTI is down 42c to $74.61/Bbl, and Brent is down 31c to $78.00/Bbl. < Move back over $75 within minutes after the open.
> Natural gas is down 15.1c to $5.716/MMBtu.

AEGIS Notes
Oil

Oil prices fell Friday morning on the possibility that OPEC+ might hike production more than planned to ease supply concerns
OPEC and its allies will meet on Monday
On Thursday, commentary from OPEC+ sources said the group was looking at going beyond an existing deal to add 400 MBbl/d each month (Reuters)
A rising dollar has also put near-term pressure on crude oil as a stronger greenback makes oil more expensive for holders of other currencies

Fuel oil stocks in Asia’s storage hub of Singapore dipped to their lowest level since September 2019 amid more demand from the power sector (Bloomberg)
Inventories fell as South Asian nations bought more fuel oil for electricity generation instead of costlier LNG, wrote energy consultancy FGE in a note
The tighter supplies in SE Asia are reflective of trends in other major hubs like the U.S., ARA, Fujairah, and Japan

Natural Gas

The EIA reported an 88-Bcf build in inventories for the week ending September 24
The build was the largest since June and the fourth largest of the current injection season
The build was more than the five-year average of 72 Bcf and last year’s 74 Bcf injection during the corresponding week
U.S. inventories increased to 3.170 Tcf and now stand 575 Bcf, or 15.4%, less than the year-ago level of 3.745 Tcf and 213 Bcf, or 6.3%, less than the five-year average of 3.383 Tcf

$40 call options have seen some volume, as the recent surge in gas prices has traders betting on a winter supply-shock blowout
The $40 call options are well out of the money, and gas prices would have to surge 6x from current levels to allow holders to exercise
The call skew present in the options market right now has not been seen in years. The Jan ’22 50 day call option strike is currently around $7.00.

[dan_s]

Closing Prices:
> WTI prompt month (NOV 21) was up $0.85 on the day, to settle at $75.88/Bbl.
> NG prompt month (NOV 21) was down $0.248 on the day, to settle at $5.619/MMBtu.

Gas posts a 47.9c weekly gain to finish at $5.619; WTI picks up $1.90 on the week

[uberCOAT]

Dan,

Any possible scenario that gets us to pricing similar to that of 2004-2005, 2005-2006?

[dan_s]

A cold start to December will take this Bidding War to a whole different level. We have already seen double-digit regional price spikes and winter hasn't even started. The entire world is now "short gas" and I have never seen that before.

The ngas price spike in 2008 was also fueled by the spike in WTI to $147/bbl.