Energy Prospectus

Opening Prices:
> WTI is down 53c to $86.43/Bbl, and Brent is down 44c to $88.00/Bbl.
> Natural gas is down 10.1c to $3.930/MMBtu.

AEGIS Notes
Oil

Oil prices retreated from seven-year highs as President Biden pledged to continue trying to lower oil prices and an API report that showed a modest increase in U.S. crude inventories (BBG)
> Despite the promise to lower oil prices, Biden admitted that increasing supplies is “going to be hard” < Old Joes doesn't have a clue.
> EIA inventory data is due out later today, a day later than usual, due to the Monday holiday

For the first time in a year, China disclosed its Iranian oil imports (Bloomberg)
> A total of 1.9 MMBbl arrived in December, according to customs data on Thursday
> The disclosure comes at a delicate time, with the eighth round of multilateral talks underway to revive the 2015 nuclear accord
> President Biden said on Wednesday, “its not time to give up” on reviving the accord with Iran as progress has been made
> AEGIS notes that an unsanctioned Iran has the potential to add about 1.5 MMBbl/d to the global supply

Natural Gas

Gas prices have continued to slide as the prompt contract (Feb ’22) is down by 10.1c this morning, near $3.93
> The recent cold spell has knocked U.S. lower-48 dry gas production to a year-to-date low of 91 Bcf/d. The Permian basin drove the declines, totaling 1 Bcf/d, but the drop should be temporary as the region sees warmer temperatures this weekend
> Survey estimates ranged from -176 Bcf to – 250 Bcf
> The gas-weighted heating degree day total decreased by 11.5 HDDs to a total of 983.7 HDDs for January

The EIA is expected to report a 198-Bcf draw for the week ending January 14 - Bloomberg
> If confirmed, that would mark the largest draw of the heating season so far
> The ICE end-of-season, a proxy for where traders see inventory levels exiting the heating season, has fallen 0.15 Tcf since the start of the year and is now at 1.46 Tcf
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All of my stock valuations are based on WTI averaging $80/bbl in 2022 and 2023 AND natural gas averaging $3.50 in 2022 and 2023.

Oil prices will surge to $100 this year, Goldman Sachs warns. CNN.
Goldman Sachs is now calling for oil prices to hit $100 a barrel later this year and continue rising in 2023, signaling higher prices at the pump are on the way. In a Monday evening report to clients, the Wall Street bank backed up its bullish call by citing "robust fundamentals" in the oil market, a "surprisingly large" supply deficit and diminishing firepower from OPEC and its allies. Goldman Sachs (GS) also pointed to diminished appetite to invest in oil due to the energy transition. By summer, the bank expects oil inventories in advanced economies will sink to their lowest level since 2000.

Oil nears $87 after Keystone Pipeline canceled one year ago. Fox Business.
Joe Biden was inaugurated on Jan. 20, 2021, and within hours the new president could not wait to sign a slew of executive orders. Yet the one that has set the tone for his presidency and perhaps laid the groundwork for his plunging popularity and surging inflation was canceling the permit for the Keystone XL Pipeline. The Biden administration thought the cancellation was a way to get back at the previous administration that approved it after the Obama administration killed it and was a signal about its commitment to the environment. Yet it was read by the industry and those that invest in the sector as a knock-on America’s oil and gas industry. It also created a domino effect across the fossil fuel space that helped a massive surge in the price of oil and gasoline we are seeing today.