Energy Prospectus

Opening Prices:
> WTI is down 61c to $78.32/Bbl, and Brent is down 57c to $81.99/Bbl.
> Natural gas is down 21.0c to $6.102/MMBtu.

AEGIS Notes
Oil

Oil prices traded lower on Wednesday morning following an over $3/Bbl rally from Friday’s close
> The U.S. dollar gained strength, adding pressure on commodities
> The American Petroleum Institute (API) on Tuesday reported another surprise build in crude stocks of nearly 1 MMBbl
> Government data is due at 9:30 AM CST < Remember that October is the peak of "Shoulder Season" when inventories normally build for both oil and gas.

The French government said it might step in to protect households if gasoline and diesel prices keep soaring, Finance Minister Bruno Le Marie said (Bloomberg)
> Europe's energy crunch is putting European governments under pressure from consumers to alleviate the surge in energy costs
> France has already announced a temporary freeze in regulated gas prices for households

Iraq’s Oil Minister, a member of OPEC, said an oil price at $75/Bbl to $80/Bbl would be fair for all (Bloomberg)
> Crude at $100/Bbl wouldn’t be a “steady state” for the market, Ihsan Abdul Jabbar said during the Energy Intelligence Forum < Even Iraq's Oil Minister will not be able to hold down oil prices if OECD inventories keep falling.
> AEGIS notes that on Monday, OPEC+ decided not to supply the globe with more than its previously agreed-upon 400 MBbl/d hikes, despite calls for more of their crude amid a tight oil market

Natural Gas

Gas prices are trading around 22c, or 3.5% lower, after posting a 54.6c gain yesterday
> Yesterday's settle of $6.312/MMBtu was the highest finish in over twelve years
> According to Bloomberg, U.S. Lower-48 dry gas production fell to a three month low on Wednesday
> Weather forecasts have held steady over the last two days, with the gas-weighted heating degree day total forecast for October at 192, and the gas-weighted cooling degree day total at 59

European energy crisis intensifies by the day as prices soar to a new record high
> On Wednesday, The prompt-month TTF contract jumped by 20% to finish at $40.09/MMBtu
> Data from Gas Infrastructure Europe shows Europe's gas stocks could now be declining, just as the panic around the energy crisis intensifies
> Many companies are trying to increase their energy efficiency, though to little avail. Any gains are being more than offset by surging prices
> Options to alleviate the shortage seem limited at this time. If the issue persists, then government intervention may be required to limit consumption by "non-essential" businesses
> The Japan-Korea Marker spot price posted its largest single-day move ever to finish at $56.326/MMBtu in an attempt to lure cargoes away from Europe

This is the MOTHER OF ALL BIDDING WARS and it is going to get a lot worse if Europe gets a cold start to winter in late November. It looks like Russia has their own gas supply problems and will not be able to bail them out this winter. The Germans might be burning furniture this winter to heat their homes. I wonder how they feel about Global Warming now. Welcome to "Woke Energy Plans".

Propane inventories FELL in todays report!

Europe is worse than I thought. This is going to damage their economy.

LONDON, Oct 6 (Reuters) - Europe’s gas and electricity prices are setting record highs on a daily basis and rising at an accelerating rate as the market tries to destroy enough demand to protect depleted inventories ahead of the winter.

Gas storage sites in the European Union and United Kingdom are currently just under 76% full, compared with a ten-year seasonal average of almost 90%, according to data compiled by Gas Infrastructure Europe.

In the last decade, storage has emptied by an average of 57 percentage points over winter, but depletion is highly variable, ranging from a minimum of 38 points in 2013/14 to a maximum of 71 points in 2017/18.

If this winter sees an average drawdown, storage sites would be reduced to just 19% full by next spring, the second lowest for a decade, leaving the region with a persistent gas shortage next year.

If the winter sees a moderately strong draw, in the 75th percentile, storage would be reduced by 68 percentage points to a record low of just 8% next spring, increasing the probability supply will actually run out in some areas.

If the winter sees a maximum draw, similar to 2017/18, storage would be almost exhausted by next spring, making local shortages almost inevitable.

Futures prices are rising to avert this threat by rationing demand now to conserve inventories and reduce the risk of running out later in the winter.

Sharply rising prices are the reason wholesale markets (such as European gas) rarely run into physical shortages, unlike retail markets (U.K. gasoline and diesel) where price rises are typically more limited for commercial and political reasons.

Europe’s gas and electricity prices are likely to remain elevated until there is clear evidence that they have begun to reduce demand and conserve inventories.

There are tentative signs the inventory situation has already improved slightly since late August in response to much higher prices, but the market may need a much stronger signal of conservation before prices fall.

The most likely early signs of conservation are temporary factory closures (especially energy-intensive users); reductions in central and local government energy consumption (street lighting and building temperatures); and reductions in commercial and residential consumption (building temperatures). Until there is a clear signal consumers have begun to respond by reducing gas use, prices are likely to remain exceptionally high to avert a much worse situation early next year. < Welcome to "Woke Energy World."

Closing Prices:
> WTI prompt month (NOV 21) was down $1.50 on the day, to settle at $77.43/Bbl.
> NG prompt month (NOV 21) was down $0.637 on the day, to settle at $5.675/MMBtu.

MY TAKE: We are transitioning to higher energy prices, but there are going to be lots of ups and downs along the way because speculative day traders in NYMEX futures contracts tend to over-react to headlines and the weekly storage reports. This morning EIA reported a 2.3 million barrel increase in U.S. crude oil in storage. That is a small build (less ~2% of U.S. refinery weekly throughput) during a period when we normally and MUST see crude oil inventories build. EIA is going to report a large build in U.S. natural gas storage tomorrow morning, again because we are in the "Shoulder Period" when we always and MUST see big builds in natural gas to make it thru the winter heating season. Just remember that winter is just a few weeks away. We live in "Climate The Same World" and I promise that we are going to get another cold winter.

I think it is ironic that the European Climate Change Wackos that tell everyone that the Earth is warming are now worried because they don't have enough home heating fuels to make it through another "colder than normal winter like they had last year". I think Western politicians live in "Upside Down World" and all of their fear mongering to justify higher taxes seems to be wrong. Why do citizens keep believing their BS? I look at the sky each day and the air looks clear and it isn't falling.

Imagine a world where there's an honest Press! Instead, we have .... The Twilight Zone.... where a dishonest/biased media control the narrative. They use catchy terms like "Democracy Dies in Darkness"