Oil & Gas Prices - Dec 15
Posted: Wed Dec 15, 2021 9:46 am
Opening Prices:
> WTI is down 86c to $69.87/Bbl, and Brent is down 74c to $72.96/Bbl.
> Natural gas is up 13.5c to $3.882/MMBtu.
AEGIS Notes
Oil
WTI traded below $70/Bbl Wednesday morning, the third day of declines, as global markets shift into a supply surplus and Omicron uncertainty remains (Bloomberg) < I believe this oil price weakness is more based on FEAR than reality. Above ground inventories of refined products are very low; we are a long way from a "supply surplus".
> There is a growing consensus that the inventories are on the rise and will accumulate more rapidly next year amid curbs on travel. A view the IEA stated on Tuesday
> Oil’s curve structure recently flirted with contango for the prompt month spread, a sign that signals oversupply
The world’s largest independent oil trader Vitol warns that crude prices will rise in 2022, with the market remaining volatile due to a lack of investment in new production < This is the "reality".
> “It’s going to be up there at the top of the range, “ said Chris Blake, managing director at Vitol
> Over the longer term, the world “will feel the impact” of insufficient spending on new upstream projects over the last few years and “in sustaining oil production,” he said (BBG)
> Saudi Arabia’s energy minister Abdulaziz bin Salman said earlier in the week that the world is heading “toward a phase that could be dangerous” if spending on new oil and gas production doesn’t ramp up
Natural Gas
Natural gas is up 13.5c to $3.882/MMBtu
> Production is down by about 0.5 Bcf/d this morning, near a four-week low of 94.1 Bcf/d
> LNG feedgas demand is also down by 0.57 Bcf/d, near 10.9 Bcf/d
> The gas-weighted heating degree day forecast for December increased by 3.2 HDDs to 720.6 HDDs
The New York City Council is expected to ban natural gas in new buildings, making it the largest city to do so
> The law would apply to new buildings under seven stories high at the end of 2023, and those over seven stories beginning in 2027
> "Using gas to produce power and then subsequently heat buildings is less efficient than using gas for heating directly," analysts at energy consultancy EBW Analytics Group said < New York and California seem to do the opposite of what they should be doing.
Europe is facing record-low gas storage by winter end
> European inventory levels could hit their lowest level on record by the end of the heating season due to an early cold spell and depressed Russian flows, which would prolong the duration of record-high prices
> Gas prices have surged this week as cold weather hits, and the timeline for flows on the Nord Stream 2 pipeline are prolonged. Some analysts are not expecting the pipeline to enter full-service until September 2022
> Inventory levels are currently around 63% full, a level typically seen in mid-January, data from Gas Infrastructure Europe shows < This means that if colder than normal Q1, they could run out of natural gas for space heating. Homeowners will be forced to buy electric space heaters or burn wood. They will also learn the stupidity of their leaders and the stupidity of Paris Climate Accord.
> WTI is down 86c to $69.87/Bbl, and Brent is down 74c to $72.96/Bbl.
> Natural gas is up 13.5c to $3.882/MMBtu.
AEGIS Notes
Oil
WTI traded below $70/Bbl Wednesday morning, the third day of declines, as global markets shift into a supply surplus and Omicron uncertainty remains (Bloomberg) < I believe this oil price weakness is more based on FEAR than reality. Above ground inventories of refined products are very low; we are a long way from a "supply surplus".
> There is a growing consensus that the inventories are on the rise and will accumulate more rapidly next year amid curbs on travel. A view the IEA stated on Tuesday
> Oil’s curve structure recently flirted with contango for the prompt month spread, a sign that signals oversupply
The world’s largest independent oil trader Vitol warns that crude prices will rise in 2022, with the market remaining volatile due to a lack of investment in new production < This is the "reality".
> “It’s going to be up there at the top of the range, “ said Chris Blake, managing director at Vitol
> Over the longer term, the world “will feel the impact” of insufficient spending on new upstream projects over the last few years and “in sustaining oil production,” he said (BBG)
> Saudi Arabia’s energy minister Abdulaziz bin Salman said earlier in the week that the world is heading “toward a phase that could be dangerous” if spending on new oil and gas production doesn’t ramp up
Natural Gas
Natural gas is up 13.5c to $3.882/MMBtu
> Production is down by about 0.5 Bcf/d this morning, near a four-week low of 94.1 Bcf/d
> LNG feedgas demand is also down by 0.57 Bcf/d, near 10.9 Bcf/d
> The gas-weighted heating degree day forecast for December increased by 3.2 HDDs to 720.6 HDDs
The New York City Council is expected to ban natural gas in new buildings, making it the largest city to do so
> The law would apply to new buildings under seven stories high at the end of 2023, and those over seven stories beginning in 2027
> "Using gas to produce power and then subsequently heat buildings is less efficient than using gas for heating directly," analysts at energy consultancy EBW Analytics Group said < New York and California seem to do the opposite of what they should be doing.
Europe is facing record-low gas storage by winter end
> European inventory levels could hit their lowest level on record by the end of the heating season due to an early cold spell and depressed Russian flows, which would prolong the duration of record-high prices
> Gas prices have surged this week as cold weather hits, and the timeline for flows on the Nord Stream 2 pipeline are prolonged. Some analysts are not expecting the pipeline to enter full-service until September 2022
> Inventory levels are currently around 63% full, a level typically seen in mid-January, data from Gas Infrastructure Europe shows < This means that if colder than normal Q1, they could run out of natural gas for space heating. Homeowners will be forced to buy electric space heaters or burn wood. They will also learn the stupidity of their leaders and the stupidity of Paris Climate Accord.