Energy Prospectus

Opening Prices:
> WTI is up 94c to $76.51/Bbl, and Brent is up 80c to $79.40/Bbl.
> Natural gas is down 5.1c to $4.009/MMBtu.

AEGIS Notes
Oil

Brent crude traded just shy of $80/Bbl despite the global surge of the Omicron variant
Analysts cite support from production disruptions in Libya, Ecuador, and Nigeria, and the expectation of another large crude inventory drop in the U.S. (UBS)

U.S. airline travel continues to see cancellations due to staffing shortages
> More than 1,000 flights were canceled on Monday
> Dr. Fauci, the U.S.government’s infectious disease expert, said a vaccine mandate for domestic air travel should be considered < IMO Fauci should be fired today! He is been wrong over and over.
> The CDC said Monday it was shortening the recommended isolation time for infected Americans to five days from 10 days previously if they are asymptomatic. A move that could help airlines mitigate staff shortages (Reuters)

Natural Gas

The prompt-month TTF contract fell to a three-week low as LNG cargoes arrive to ease energy crunch
> The January ’22 contract settled at $35.48 yesterday, extending its losing streak. The contract is now 40%, $24/MMBtu removed from last week’s high of $59.55
> The number of U.S. LNG cargoes heading toward Europe jumped by 33%, to 20 cargoes over the holiday weekend. Another 14 vessels were headed in Europe’s general direction, likely awaiting final orders
> European weather is expected to be mild over the next week; however, inventory levels are still 23% below their five-year average

U.S. natural gas futures are trending lower this morning after a promising showing during yesterday’s trading session
> Near-term weather forecasts shifted warmer yet again; however current projections show cooler temps for the weeks ending Jan 7 and Jan 14. The first half of January looks much more promising than what has been observed so far in the 2021 heating season
> U.S. lower-48 production is holding near the 95.5-96 Bcf/d range, its highest since the end of November. The increase mirrors last year’s supply push headed into year-end. December production is averaging nearly 4 Bcf/d higher, year-over-year
> Production has been particularly high in the Marcellus and Utica shales, increasing to a record-high of over 34.8 Bcf/d in December

This is why I believe WTI will go over $100/bbl within six months.

"Oil and gas firms are having their worst year for new fossil fuel discoveries in decades and reserves are dwindling. The oil and gas industry is on track to discover just 4.7 billion barrels of oil equivalent (boe) by the end of 2021, its worst performance in 75 years, according to the research firm Rystad Energy. Globally, 40% of all petroleum ever discovered has been found in 900 oil and gas fields. But the industry has made few such discoveries this year."

Read this: https://qz.com/2107452/oil-and-gas-disc ... ince-1946/

The global oil market is HUGE. It is easy to get lost in the BIG NUMBERS. The world consumes about 100 million barrels of oil-based product per day. 100 million X 365 days = 36.5 billion barrels per year.

In Team Biden's "Woke World" we are on a clear path to "Peak Oil" because there isn't much oil supply upside outside of the shales. Yes, there is still a lot of oil in the ground, but it takes lots of money and many years to bring it to market.

LONDON (Reuters) -Oil prices extended gains on Tuesday, with Brent crude trading near $80 a barrel despite the rapid spread of the Omicron coronavirus variant, supported by supply outages and expectations that U.S. inventories fell last week.

Brent crude rose by 55 cents, or 0.7%, to $79.15 a barrel by 1410 GMT, after hitting a session high of $79.85. U.S. West Texas Intermediate (WTI) crude rose 73 cents, or 1%, to $76.30, after rising to $76.92.

Both contracts traded at their highest in a month.

"Support comes as well from high aggregated production disruptions in Ecuador, Libya and Nigeria and the expectation of another large drop in U.S. crude inventories," said UBS oil analyst Giovanni Staunovo.

The three oil producers declared force majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.

Meanwhile, a preliminary Reuters poll showed on Monday that U.S. crude oil inventories are likely to have dropped for the fifth week in a row, while gasoline inventories were seen mostly unchanged last week. [EIA/S] < This is counter-seasonal. This is the point in each year where crude oil inventories need to build because refiners will need a lot of raw material to produce summer blend gasoline and diesel starting in April.

England will not face any new COVID-19 restrictions before the end of 2021, British health minister Sajid Javid said on Monday, as the government awaits more evidence on whether the health service can cope with high infection rates.

U.S. President Joe Biden, meanwhile, pledged to ease a shortage of COVID-19 tests as the Omicron variant threatens to overwhelm hospitals and stifle travel plans.

Omicron-induced staff shortages led to thousands of flights cancellations over the Christmas weekend in the United States.

China's symptomatic coronavirus cases rose for a fourth consecutive day on Monday, with Xian reporting more infections in a flare-up that has put the city's 13 million residents under lockdown. < If Omicron symptoms are mild and not putting more people in the hospital, IMO it really doesn't matter how high the number of new cases is. Just more political noise being used to control the population.

Investors are awaiting an OPEC+ meeting on Jan. 4, at which the alliance will decide whether to go ahead with a planned production increase of 400,000 barrels per day in February.

At its last meeting, OPEC+ stuck to its plans to boost output for January despite Omicron.

Russia is unlikely to hit its May target of pre-pandemic oil output levels due to a lack of spare production capacity but could do so later in the year, analysts and company sources said on Tuesday. < OPEC+ cannot produce at their current quota and now Russia is admitting they are out of spare capacity. This is why I see oil going to $100/bbl in 1H 2022.

Money managers raised their net long U.S. crude futures and options positions in the week to Dec. 21, the U.S. Commodity Futures Trading Commission said on Monday. The speculator group raised its combined futures and options position in New York and London by 4,634 contracts to 259,093 during the period.