Oil & Gas Prices - Oct 12

[dan_s]

Opening Prices:
> WTI is down 38c to $80.14/Bbl, and Brent is down 28c to $83.38/Bbl.
> Natural gas is down 12.6c to $5.219/MMBtu. < Compares to the Q4 ngas price of $4.75 that I am using in all of my forecasts.

We have a live webinar today at 10AM CT

AEGIS Notes
Crude Oil

Oil futures were little changed Tuesday morning after closing 1.5% higher on Monday
> A demand boost to oil is being triggered by a need for alternative power generation fuels like diesel and fuel oil
> OPEC+’s conservative approach to adding back supply is also adding upward pressure to price

UBS increased its oil-price forecasts by $5/Bbl across all tenors (Bloomberg)
> WTI is seen at about $77/Bbl over the next 12 months, wrote analysts including Giovanni Staunovo
> The bank said with oil inventories seen falling at a fast pace over the coming weeks; Brent could re-test Oct. 2018’s high of $86.74/Bbl
> Gas-to-oil switching could add 500,000 Bbl/d of demand and a boost from more flights to the U.S. could add 100,000 Bbl/d of demand in 4Q 2021 and 1Q 2022

Natural Gas

The prompt-month (Nov ’21) natural gas contract is trading 10c lower, near $5.223, its lowest intra-day mark since September 24
> Current weather forecasts for October have it pegged as the warmest going back to 2005, which has caused Residential-Commercial demand forecast to come in well below normal
> The warm weather has added, by our estimates, another 100-Bcf to the end-of-season storage forecast. Our current estimate is somewhere between 3.6 and 3.65 Tcf

Bidding War:
> The prompt TTF contract lost 81.5c, or 2.7 %, to trade near $28.924/MMBtu, while JKM gained 3.2%, or $1.02 to $33.080, during yesterday’s trading session
> Feedgas demand at U.S. LNG facilities is up by about 0.3 Bcf/d today, at around 10.44 Bcf/d.
> Cove Point LNG seems to be back online as flows have increased by 0.7 Bcf/d, which was partially offset by a reduction of 0.5 Bcf/d to Freeport LNG
> European inventories are filling up fast, thanks to mild weather
> Over the last ten sessions, strong flows into European natural gas storage facilities have been higher at this stage than any year in the past decade
> The TTF price has now fallen more than 25% over the last week from $39.45 to $28.92, as storage inventories inch closer to healthy levels

[dan_s]

Trading Economics:
"WTI crude futures traded around $80.6 a barrel on Tuesday morning, remaining close to Monday's seven-year high of $82, amid prospects of stronger demand due to energy shortages across the globe and restrained supplies from major producers. Switching to oil for power generation due to record natural gas and coal prices is seen lifting demand for crude by between 250,000 to 750,000 barrels per day, while OPEC+ decided last week to maintain a steady and gradual increase in production. Elsewhere, investors are still worried about slowing global growth as inflationary pressure mount and major central banks move towards tapering."

[dan_s]

Closing Prices:
> WTI prompt month (NOV 21) was up $0.12 on the day, to settle at $80.64/Bbl.
> NG prompt month (NOV 21) was up $0.160 on the day, to settle at $5.505/MMBtu.

This is significant: The NYMEX strip for HH gas in 2022 is now at an average price of $4.38/MMBtu. That was unthinkable six weeks ago.