Energy Prospectus

Opening Prices:
> WTI is up 43c to $83.74/Bbl, and Brent is up 59c to $86.86/Bbl.
> Natural gas is down 7.4c to $3.953/MMBtu.

AEGIS Notes
Oil

Oil prices were part of a “risk-off” event that took place most of the day Monday but pared most losses, as did equities
> The Dow Jones Industrial Average was down about 1,000 points mid-day yesterday before finishing 100 points higher at market close
> A variety of asset classes were whiplashed as the U.S. Federal Reserve prepared the ground for interest-rate increases (BBG)

Tensions between Russia and Ukraine remain high as oil and gas investors contemplate the impact of a possible Russian incursion
> The risk of that happening in the next few weeks stands at more than 50%, according to RBC Capital Markets analysts Helima Croft
> Disruption to oil flows from Russia could easily send prices to $120/Bbl, JPMorgan Chase & Co. wrote last week (BBG)

Natural Gas

The prompt-month Henry Hub contract is trading 7.4c lower, near $3.953, after it eked out a small 2.8c gain during yesterday’s trading session
> The January gas-weighted heating degree day forecast gained 4 HDDs to 993 HDDs, while the February forecast fell by 5.5 to 754 HDDs
LNG feedgas demand is still above 13 Bcf/d
> Calcasieu Pass (the next big LNG export facility to come online in the US) commissioning is progressing as flows hit a record-high of around 77.36 MMcf/d on January 24. Last spring, Venture Global had suggested the first export could occur by the end of 2021, a year ahead of its original schedule. < US LNG export capacity will soon be over 14 Bcfpd.

Qatar wouldn’t be able to significantly ramp up gas exports to Europe in the event of a Russian invasion
> U.S. President Joe Biden’s has spoken to several major gas producers in case a Russian invasion of Ukraine interrupts gas flows ( I bet they were very impressed by Old Joe's deep knowledge of the world's energy markets!!!)
> Most of Qatar’s LNG cargoes are shipped to Asia under long-term contracts, and the country is already producing near capacity

At the time of this post, WTI moved over $85/bbl.

Trading Economics this morning:
"WTI crude futures climbed above $83 per barrel on Tuesday after falling more than 2% in the previous session, as rising geopolitical tensions in Eastern Europe and the Middle East stoked fears of supply disruptions. NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets, in a move that was denounced by Russia. In the Middle East, the Iran-aligned Houthi movement launched a missile attack at the UAE on Monday that targeted a base hosting the US military, but was thwarted by US-built Patriot interceptors. Oil prices have gained more than 10% since the start of the year to reach 7-year highs last week, as strong demand and supply constraints significantly tightened the market. However, a combination of profit-taking and a Fed-driven risk-off sentiment led to a correction in oil markets on Monday. Meanwhile, traders await industry data from API on Tuesday for the latest weekly estimate of US oil inventories."