Energy Prospectus

Opening Prices:
> WTI is down $0.68 to $91.67/bbl, and Brent is down $0.11 to $96.73/bbl.
> Natural gas is up 4.6c to $4.544/MMBtu.

Closing Prices:
> Prompt-Month WTI (Apr 22) was down $-0.25 on the day, to settle at $92.10
>Prompt-Month Henry Hub (Mar 22) was up $0.125 on the day, to settle at $4.623 < The 12 month strip is trading in a tight range of $4.592 for APR22 to $$5.039 for JAN23. My advice to our gassers is to layer on collars with $4.00 floors and $5.10 ceilings.



AEGIS Notes
Oil

Oil futures were off their seven-year highs as traders weighed U.S. sanctions on Russia and Iran nuclear talks
> President Biden announced targeted sanctions on Russia, covering the nation’s sale of sovereign debt abroad and the country’s so-called “oligarchs.”
> Iran has come into more focus after the country’s Foreign Minister said on Wednesday that it hopes to settle the remaining issues in the coming days

The Biden administration has delayed issuing permits for new oil and gas drilling on federal land (Bloomberg)
> Some officials were confident the move would have a minimal short-term impact on domestic production in part because operators already have thousands of unused permits they can tap
> The Interior Department warned of delays in new drilling permits after a federal district judge blocked the Biden admin’s method for determining how its permit approvals affect climate change

Iran is moving more oil onto ships in order to speed exports upon a successful nuclear deal (BBG)
> Oil on tankers has surged by 30 MMBbl since early December to 103 MMBblm, according to Kpler
> “Additional barrels will, of course, put downward pressure on prices,” said Carole Nakhle, CEO of consultants Crystol Energy

Natural Gas

Natural gas prices are up slightly this morning, despite warmer weather forecasts overnight
> Lower-48 dry gas production is now below 93 Bcf/d as freezing temperatures cause freeze offs in the South Central region, particularly the Anadarko Basin
> LNG feedgas demand is still depressed at around 10.4 Bcf/d

Putin pledges uninterrupted gas supplies as countries began unveiling sanctions
> On Tuesday, Germany halted the certification of the Nord Stream 2 pipeline as Russia deployed troops to two breakaway regions in Eastern Ukraine
> "Russia aims to continue uninterrupted (gas) supplies, including liquefied natural gas, to the world markets, improve related infrastructure and increase investments in the gas sector," Putin said in written remarks for a gas summit in Qatar on Tuesday
> AEGIS notes that Russian energy does not seem to be a target for sanctions as the spillover effects would threaten U.S. and European economies. Russia exports nearly 3.5 MMBbl/d of crude oil and products to the EU, U.K. and U.S., according to Reuters

Trading Economics:
"WTI crude futures were changing hands around $93.50 per barrel on Wednesday morning, a dramatic reversal from its daily lows of $90.70 amid fresh concerns over the crisis in Ukraine. Several countries announced more sanctions on Russia while Ukraine introduced a state of emergency, a new sign that tensions are far from over and a diplomatic solution seems less likely, which, in turn, exacerbated fears of supply disruptions. On top of that, the potential return of Iranian crude also weighed on prices after several diplomats signalled that a decision to revive the Iran nuclear deal is likely to be made this week. A potential agreement could add more than 1 million barrels a day of supply to the market."

"US natural gas futures rose more than 4% to around $4.70/MMBtu, approaching an almost three-week high of $4.86 hit in the prior session, as frigid weather continued to move across most of the US, boosting gas demand for heating. On top of that, worries of escalating tensions between Russia and Ukraine lent further optimism to bulls. Both EU and UK gas prices surged more than 10% on such fears. The West imposed a new set of sanctions on Moscow after President Putin ordered troops into Ukraine following the recognition of two separatist republics. EIA data showed that the United States supplied more than half of all LNG imports into Europe in January 2022, and it grew from 3.4 billion Bcf/d in November 2021 to a record 6.5 Bcf/d in the first month of the year."
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MY TAKE:
Oil prices will continue to take us on a "Wild Ride". Potential for a new "Give Iran a Nuke Deal" to bring on more oil supply is the only thing keeping WTI under $100. With or without more oil from Iran, the global oil market is under-supplied. Demand for oil-based products is over 100 million bpd NOW and likely to go over 102 million bpd within 3 months.
Natural gas prices are going to react with each weather forecast, but the U.S. gas market is also extremely tight. Gas in storage should be close to 300 Bcf below the 5-year average on March 31st. As long as Europe's thirst for U.S. LNG stays high, HH gas prices should stay over $4.00. If this La Nina winter drags on into April, we could see an average gas price this year in the $4.50 to $5.00 range.