Energy Prospectus

Opening Prices:
> WTI is down $0.68 to $116.91/bbl, and Brent is down $0.36 to $119.45/bbl.
> Natural gas is up 0.8c to $7.472/MMBtu.

AEGIS Notes
Oil

The Biden administration is considering limiting fuel exports amid soaring prices of gasoline and diesel (BBG) < MY TAKE: This is another very bad idea. It will hurt Central and South American countries and make supply chain problems worse. They need to understand that the GLOBAL PETROLEUM MARKET is a big deal and upsetting it can result in BAD consequences.
> Options like waiving anti-smog rules and using the Defense Production Act's emergency wartime powers to "lower costs at the pump" are also being discussed
> The move comes as President Biden last week voiced concerns to US E&P and refining corporations about profits, crude production, and refining capacity
> Energy Secretary Jennifer Granholm is set to meet with oil refiners on June 23 to discuss the issue

The U.S. imposed sanctions on Chinese, Emirati, and Iranian firms that help export Iran’s petrochemicals
> The "petrochemical industry and its products have long been subject to sanctions, but our sales have persisted through numerous channels and shall continue to do so," said Iran's deputy foreign minister adding that the sanctions were ineffective
> The move comes as efforts to revive the 2015 Iran nuclear deal have come to a standstill, and it may put more pressure on Tehran to do so

Natural Gas

The EIA reported an injection of 92 Bcf for the week ending June 10
> Responses to the survey ranged from 78 Bcf to 96 Bcf
> It was larger than the five-year average injection of 79 Bcf and the 28 Bcf addition reported during the corresponding week in 2021
> Current inventory levels sit at 2.075 Tcf, while the deficit to last year narrowed to 324 Bcf, and the deficit to the five-year average is 317 Bcf

China’s national oil majors are In advanced talks with Qatar for stake in gas field, LNG offtake (Reuters)
> China in 2021 imported nearly 9 million tonnes of LNG from Qatar, or 11% of the country's total LNG imports
> The Qatari supply deal will help China create a buffer against spot price volatility and diversify its imports

Trading Economics:
"WTI crude futures tumbled almost 6% to below $111 per barrel on Friday, the lowest in three weeks and widening the weekly loss to over 8%, the first weekly decline since mid-April, on growing concerns about a global recession that could hit fuel demand following numerous rate hikes around the world this week. Central banks across the world have raised interest rates this week, led by the Federal Reserve’s 75 basis point rate hike amid a global fight against surging inflation. Analysts argued that drastic action was needed to get ahead of rising prices, but warned of a higher risk of recession. The International Energy Agency also warned on Wednesday that soaring oil prices and weakening economic forecasts dimmed the future demand outlook. Meanwhile, investors remained watchful of supply tightness after the US announced new sanctions on Iran. This added to concerns about production shortfalls among OPEC members and disruptions caused by unrest in Libya and Russia’s war in Ukraine."

On the date that I wrote my May newsletter WTI closed at $110.20/bbl.

Oil Volatile, Gold Shines
By MarketPulse (Ed Moya)Commodities7 hours ago (Jun 17, 2022 02:15AM ET)

‘Buy the dip’ might be dead for the stock market, but it probably should still work for energy traders. ​Despite all the fears of aggressive central bank tightening of monetary policy and the slower economic growth that will ensue, the oil market remains very tight.

With gasoline prices surging above $5 per gallon, the Biden administration’s call for oil companies to ramp up refining capacity was easily met with an explanation that they will need the government to provide policies that support the industry domestically. ​Even if the government were to change its stance on energy, and provide some capital investment that won’t have an impact on prices before the midterm elections in November. The oil market will remain very tight until crude demand destruction becomes more noticeable in the fall.
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I am terrible at timing the market, so take this with a grain of salt. Our favorite upstream companies were cheap before this selloff began and they are extremely oversold today. Why?
> The global energy crisis was not solved yesterday. Oil, gas and NGL markets are extremely tight.
> U.S. and OECD petroleum inventories (crude oil and refined products) are way below the 5-year average.
> Unless there are massive layoffs, people will still be driving back and forth to work.
> The July 4th weekend always causes a spike in gasoline demand.
> U.S. natural gas inventory is over 300 Bcf below the 5-year average and this heat wave has created a spike in demand for power generation. Even if the Freeport LNG export facility remains offline thru year-end, there is little hope that storage will get back to the 5-year average this year. Plus, less available LNG makes the situation in Europe even worse. Recent prices for delivered LNG are $38.34/MMBtu in Europe and $23.40/MMBtu in Japan/Korea.
> Last but not least: My Q2 forecasts are based on WTI averaging $105/bbl and HH ngas averaging $7.50/MMbtu. All of our Sweet 16 and Small-Cap Growth Portfolio companies will report strong Q2 results, including lots of free cash flow from operations.

NEW YORK (Reuters) -Oil prices tumbled about 5% to a three-week low on Friday, led by a slump in U.S. gasoline futures, as investors worried interest rate hikes from major central banks could slow the global economy and cut demand for energy.

Also pressuring prices, the U.S. dollar this week rose to its highest since December 2002 against a basket of currencies. A stronger dollar makes oil more expensive for buyers using other currencies.

Brent futures fell $5.85, or 4.9%, to $113.96 a barrel by 11:02 a.m. EDT (1502 GMT). U.S. West Texas Intermediate (WTI) crude fell $6.66, or 5.7%, to $110.93. Both were on track for their lowest closes since May 25.

There will be no U.S. trading on Monday, June 20, for the Juneteenth holiday. < I did not know that we made "Juneteenth" a national holiday.

Brent was headed for its first weekly dip in five weeks, and WTI for its first weekly decline in eight weeks. < We were just due for a pullback.

"With the central banks making pretty substantial moves to limit growth via interest rate hikes and monetary tightening is showing up here in the petroleum complex," said John Kilduff, partner at Again Capital LLC in New York, noting slower economic growth should cut energy demand.

U.S. gasoline futures slid about 6% with analysts worried high pump prices will reduce demand.

Automobile group AAA said the price of diesel at the pump hit a record high $5.798 per gallon on Friday, while the price of gasoline hit its record of $5.016 earlier in the week.

Global central bankers who quickly loosened monetary policy during the pandemic to avoid a depression, are now trying to fight inflation.

"The influence of the macro environment has started to take over from oil-specific fundamentals in recent days," said Investec's head of commodities Callum Macpherson.

The Federal Reserve this week hiked rates by the most in more than a quarter of a century and signaled it will stay focused on fighting inflation.

With the Fed expected to keep raising interest rates, open interest in WTI futures on the New York Mercantile Exchange fell on Thursday to its lowest since May 2016 as investors cut back on risky assets.

The global oil market continues to show signs of "turbulence", Russian Deputy Prime Minister Alexander Novak said, blaming uncertainties over oil production recovery in Libya, Iran and Venezuela and a lack of energy infrastructure.

The market's turbulence has increased since Russia invaded Ukraine on Feb. 24.

Russian gas flows to Europe fell short of demand on Friday as an early heatwave in the south boosted demand for air-conditioning.

The European Union's executive recommended that Ukraine and Moldova become candidates for membership in the world's largest trading bloc.

Why are they celebrating Juneteenth on June20eeenth?

Now the financial markets will be closed on Monday. What will I do with myself?

Just another day where gov't has a day off for full pay

We just needed another 3 day weekend. I thought it was just a Texas holiday.

Brandon signed this holiday into law. Since ift falls on June 19th, a Sunday, it will be observed on June 18th, a Monday.

Closing Prices:
> Prompt-Month WTI (Jul 22) was down $-8.03 on the day, to settle at $109.56
> Prompt-Month Henry Hub (Jul 22) was down $-0.520 on the day, to settle at $6.944

Holiday weekend + June options expiring today + U.S. dollar moving up caused today's selloff.
No fundamental reason for it. Global oil market is still under supplied.