Oil & Gas Prices - June 27
Posted: Mon Jun 27, 2022 3:35 pm
Opening Prices:
> WTI is up $0.35 to $107.97/bbl, and Brent is up $0.55 to $113.67/bbl.
> Natural gas is down -2.1c to $6.199/MMBtu.
Closing Prices:
> Prompt-Month WTI (Aug 22) was up $1.95 on the day, to settle at $109.57
> Prompt-Month Henry Hub (Jul 22) was up $0.281 on the day, to settle at $6.501
AEGIS Notes from this morning
Oil
The G7 leaders have been discussing a potential price cap on Russian oil since their conference started on Sunday, but no agreement has yet been reached
> The proposed measures would limit the harm to foreign economies by placing restrictions on the insurance and transportation of Russian oil exports
> The U.S., Canada, and the U.K have already banned imports of Russian oil while EU leaders have agreed to an oil embargo that will fully take effect by the end of 2022
U.S. and Iran to resume talks to revive the 2015 nuclear deal in the "coming days", said EU’s chief diplomat Josep Borrell on Saturday (BBG)
> The EU will act as a mediator, while EU’s Josep Borrell expects talks “have to be finished” as they have been stalled since March
> Government officials from the EU and Iran stated that "two issues including one on sanctions remained to be resolved" as both parties remain committed to bringing Iranian crude onto the market
Natural Gas
U.S. natural gas futures are trading slightly lower this morning, near $6.199
> The gas-weighted cooling degree day total has fallen for seven consecutive days, while gas prices have fallen by 60c+ during that same period
> U.S. lower-48 dry gas production also hit a year-to-date high of 97.36 Bcf/d over the weekend
> Gas-fired power generation has continued to overperform, but last week we saw an aluminum smelter that consumed power temporarily close, which could be the first potential sign of demand destruction in the power sector
> AEGIS notes that we have been saying that associated and dry gas production remains the largest threat to gas prices. Production has retreated, so it could just be a temporary push higher, but we will continue to watch this
Russian gas disruption to Europe threatens the chemicals sector
> Germany hosts the world's largest integrated chemical complex, with nearly 200 plants, producing pretty much every chemical available, and consumes around 135 TWh of gas a year, with only 2-3 substitutable with alternative fuels
> Companies have relied on cheap and plentiful Russian natural gas to power their facilities for years. Now with the disruption to flows, prices have soared, and Europeans are facing severe gas constraints, particularly if they can't build inventories ahead of winter
> Chemical companies may be the most vulnerable industrial player because of how critical natural gas is for the bulk of their processes
> The chemicals sector is vertically integrated, so a chemical made by a company higher in the supply chain can be reformulated to create many different chemicals downstream. The impact would be universal, affecting everything from ammonia and fertilizers down to food prices
> WTI is up $0.35 to $107.97/bbl, and Brent is up $0.55 to $113.67/bbl.
> Natural gas is down -2.1c to $6.199/MMBtu.
Closing Prices:
> Prompt-Month WTI (Aug 22) was up $1.95 on the day, to settle at $109.57
> Prompt-Month Henry Hub (Jul 22) was up $0.281 on the day, to settle at $6.501
AEGIS Notes from this morning
Oil
The G7 leaders have been discussing a potential price cap on Russian oil since their conference started on Sunday, but no agreement has yet been reached
> The proposed measures would limit the harm to foreign economies by placing restrictions on the insurance and transportation of Russian oil exports
> The U.S., Canada, and the U.K have already banned imports of Russian oil while EU leaders have agreed to an oil embargo that will fully take effect by the end of 2022
U.S. and Iran to resume talks to revive the 2015 nuclear deal in the "coming days", said EU’s chief diplomat Josep Borrell on Saturday (BBG)
> The EU will act as a mediator, while EU’s Josep Borrell expects talks “have to be finished” as they have been stalled since March
> Government officials from the EU and Iran stated that "two issues including one on sanctions remained to be resolved" as both parties remain committed to bringing Iranian crude onto the market
Natural Gas
U.S. natural gas futures are trading slightly lower this morning, near $6.199
> The gas-weighted cooling degree day total has fallen for seven consecutive days, while gas prices have fallen by 60c+ during that same period
> U.S. lower-48 dry gas production also hit a year-to-date high of 97.36 Bcf/d over the weekend
> Gas-fired power generation has continued to overperform, but last week we saw an aluminum smelter that consumed power temporarily close, which could be the first potential sign of demand destruction in the power sector
> AEGIS notes that we have been saying that associated and dry gas production remains the largest threat to gas prices. Production has retreated, so it could just be a temporary push higher, but we will continue to watch this
Russian gas disruption to Europe threatens the chemicals sector
> Germany hosts the world's largest integrated chemical complex, with nearly 200 plants, producing pretty much every chemical available, and consumes around 135 TWh of gas a year, with only 2-3 substitutable with alternative fuels
> Companies have relied on cheap and plentiful Russian natural gas to power their facilities for years. Now with the disruption to flows, prices have soared, and Europeans are facing severe gas constraints, particularly if they can't build inventories ahead of winter
> Chemical companies may be the most vulnerable industrial player because of how critical natural gas is for the bulk of their processes
> The chemicals sector is vertically integrated, so a chemical made by a company higher in the supply chain can be reformulated to create many different chemicals downstream. The impact would be universal, affecting everything from ammonia and fertilizers down to food prices