Energy Prospectus

Opening Prices:
> WTI is down 93c to $83.72/Bbl, and Brent is down 88c to $85.52/Bbl.
> Natural gas is up 9.8c to $5.980/MMBtu.

AEGIS Notes
Oil

Oil prices retreated Wednesday morning after an industry report showed an increase in U.S. crude inventories
WTI fell by 1% as the API reported a rise in crude stocks of 2.32 MMBbl, while gasoline and distillate supplies also edged up
The API report, released on Tuesday afternoon, showed a large draw at Cushing, Oklahoma, at a time when the hub is under a microscope due to low inventories

Jet fuel has made a big recovery (Bloomberg)
The refined product suffered the most from the collapse in demand driven by the coronavirus pandemic but has soared in recent months
Airlines ramp up service as barriers to air travel in Asia start to fall away
Jet kerosene prices in Singapore – a proxy for jet fuel across the wider region – have surged back toward $100/Bbl. The highest level since late 2018

EIA crude oil inventory average estimates due at 9:30 AM
Bloomberg survey
U.S. crude oil inventories: +1,526 < October is when US crude oil inventories must build, so there is enough feed stock to rebuild distillate inventories.
U.S. gasoline inventories: -2,031
U.S. distillate inventory: -2,112\
U.S. refinery utilization (change) +0.43%

Natural Gas

Natural gas is up by 9.8c, around $5.98 on thin trading, as the contract is slated for expiry
Weather forecasts turned even cooler for the 11-15 day range, especially east of the Rockies
Nor’easter drenches Northeastern U.S., causes thousands of power outages
More than 275,000 customers were without electricity Wednesday morning in Massachusetts, Maine, Rhode Island, and New Hampshire, according to PowerOutage.US
The system was still strengthening on Tuesday afternoon and the winds are expected to get stronger, which could lead to even more power outages in the coming days

European gas prices fell as Russia increased flows to Germany, Nord Stream 2 nears certification
Flows via the Mallnow entry point to Germany rose to a two-week high on Wednesday
Germany’s Economy Ministry said certification of the Nord Stream 2 pipeline from Russia wouldn’t pose any risks to the security of supply

With northern cold and elevated exports, AGA says U.S. winter natural gas demand, prices to jump. NGI.
Demand for natural gas is expected to prove greater this winter than last, based on projections for colder temperatures in the northern United States and a higher overall level of heating degree days (HDD), analysts at the American Gas Association (AGA) said Tuesday. At the same time, demand for U.S. exports – both via pipeline to Mexico and liquefied natural gas (LNG) shipments to Europe and Asia – are elevated this year and are expected to remain so through the winter.

Climate spending in reconciliation could near $600B. E&E News.
The climate section of Democrats’ socialist spending package is starting to come into focus, but major question marks remain as lawmakers try to iron out the specifics before President Biden heads to Scotland for U.N. climate talks. While lawmakers are still negotiating top-line spending, the climate change provisions of the reconciliation package are likely to total more than $500 billion, a benchmark first reported by Axios last night.

Asia snaps up American shale gas to keep boilers, furnaces lit. Bloomberg.
Asian liquefied natural gas traders are rushing to secure shipments from the U.S., where the fuel is among the cheapest in the world despite what’s turning into the steepest price run in two decades. Firms in China and Japan, the two biggest importers, are seeking to procure LNG specifically from the U.S., and are in discussions with exporters and portfolio players to lock in deliveries through March, according to traders with knowledge of the matter. The companies want LNG linked to the Henry Hub index, the U.S. benchmark that’s trading at a fraction of prices in Asia and Europe.

Trading Economics:
"US natural gas futures extended gains to trade above $6 per million British thermal units, moving closer to a 13-year high of $6.3 reached on October 5th on forecasts for colder weather and higher heating demand over the next two weeks than previously expected. US gas demand, including exports, is expected to rise to 92.7 bcfd next week from 90.7 bcfd this week as more homes and businesses turn on their heaters. Still, output in the US Lower 48 states has averaged 92.3 billion cubic feet per day so far in October, up from 91.1 bcfd in September, according to Refinitiv. Meanwhile, the amount of gas flowing to US LNG export plants has averaged 10.5 bcfd so far in October, up from 10.4 bcfd in September."

Closing Prices:
> WTI prompt month (DEC 21) was down $1.99 on the day, to settle at $82.66/Bbl.
> In contrast, NG prompt month (NOV 21) was up $0.320 on the day, to settle at $6.202/MMBtu. < The DEC21 NYMEX contract becomes the "Front Month" tomorrow.