Energy Prospectus

Opening Prices:
> WTI is down 40c to $75.58/Bbl, and Brent is down 24c to $78.70/Bbl.
> Natural gas is up 16.5c to $4.220/MMBtu.

AEGIS Notes
Oil

Oil prices are trading slightly lower ahead of EIA’s 9:30 am inventory report
> Yesterday, the American Petroleum Institute (API) reported a drawdown in inventories of 3.09 MMBbls
> If the EIA confirms the stat, then it would mark the fourth consecutive draw < During a month when crude oil inventories normally increase.
> According to Bloomberg, the EIA is estimated to report a draw of 3.16 MMBbls

Russian Deputy Prime Minister Alexander Novak says OPEC+ prioritizes mid-term strategy over consuming nation calls for more supply
> Novak said that the OPEC+ group had resisted calls from Washington to boost output because it wants to provide the market with clear guidance and not deviate from policy
> He also said that the release of strategic stockpiles from consuming nations will have a limited short-term impact on markets and that global demand will rise by around 4 MMBbl/d in ’22

State Department spokesman Ned Price says Iran ‘dragging its feet’ on return to the nuclear deal
> Iran has reportedly been slacking in talks to return to the accord while accelerating its nuclear program < "No kidding!" Iran is just using the "talks" to play Team Biden and gain more time to advance toward weapons grade uranium.
> European and U.S. diplomats are becoming increasingly skeptical they can offer the kind of sanctions relief Iran demands, and one European official said the window of opportunity has shrunk to a matter of weeks
> Even Iran’s advocates, China and Russia, suggest the new round might have just a month to succeed < Then what happens? Israel is preparing military strikes against Iran's nuclear facilities.

Natural Gas

NYMEX January '22 gas is up 16.5c to $4.220/MMBtu as it heads for expiry
> The last several gas contracts have all posted huge gains in their respective expiry sessions
> Production, rose to a year-to-date high of 96.2 Bcf/d this morning, after an overnight jump of 0.64 Bcf/d
> LNG feedgas demand is at 12.5 Bcf/d this morning, after levels deflated to 11.9 the previous day
> The January 2022 gas-weighted heating degree day total rose by 2 HDDs to 930

Russian gas continues to flow eastward via the Yamal-Europe pipeline (Reuters)
> The pipeline, which typically delivers gas to western Europe, sent flow back to Poland for the ninth consecutive day, according to Gascade
> TTF however, fell for the sixth straight day due to increased LNG supplies and decreased demand due to milder weather and industrial shutdowns across Europe
> The string of losses is the most for the TTF benchmark in over a year < TTF and JPM gas prices are still at a HUGE premium to U.S. natural gas prices.

Trading Economics:
"WTI crude futures rose more than 1% to above $77 a barrel on Wednesday before settling at $76.49, the highest price in nearly five weeks and extending gains for the sixth session, after EIA data showed US crude inventories fell more than expected last week and as investors welcome signs the omicron variant is less severe than initially expected. The EIA Petroleum Status Report showed US crude oil inventories fell by 3.576 million barrels last week, a 5th consecutive period of declines and compared with market forecasts of a 3.143 million drop. Also, investors grew confident there will be no need to impose more restrictions on movements amid more evidence Omicron is less severe than previous strains. Oil is on track to book a more than 50% gain for 2021, its strongest performance in more than a decade, amid rising demand and supply constraints. Traders now await the next OPEC+ meeting on January 4th, as the group is set to decide whether to go ahead with a planned 400,000 barrels per day production increase in February."

"Natural gas futures rose past $4.1 per million British thermal units, the highest since December 1st, in the last trading session before January contracts expire. Market participants weighed stronger demand prospects domestically against lower prices in Europe, which fell over 40% from record highs. According to data from Refinitive, demand is expected to increase over the next fortnight amid colder-than-usual temperatures in parts of the country but will remain slightly weaker compared with the season’s normal. US gas demand, including exports, is seen rising to 123.9 bcf/d in the first week of January, up from this week’s 108.8 bcf/d, with LNG exporting facilities already running at full capacity to meet soaring demand from Asia and Europe, where low inventories have underpinned recent rallies in natural gas prices."