Oil & Gas Prices - June 29
Posted: Wed Jun 29, 2022 9:32 am
Have you noticed that since the beginning of this year, each time oil prices pull back we see it bounce off a higher low and move higher. That's because we truly have a global ENERGY CRISIS. This world is short oil, natural gas, NGLs and even coal. There is no Quick Fix for the shortages that our clueless leaders have created.
AEGIS Flash: "First Look - Political crisis disrupts Ecuador and Libyan oil production"
Opening Prices:
> WTI is up $2.09 to $113.85/bbl, and Brent is up $2.02 to $120.00/bbl.
> Natural gas is up 16.5c to $6.716/MMBtu.
AEGIS Notes
Oil
Political unrest in Ecuador and Libya is impacting oil production
> Libya's state oil company suspended shipments from two important eastern ports, and the nation's output has dropped by half to 600 MBbl/d since April
> Ecuador's oil output has fallen more than 50% below the typical 520 MBbl/d and is likely to stop entirely within 48 hours, according to the Energy Ministry
> The drop in Libya and Ecuador’s oil production could tighten supply further < There is no "could". If this much oil supply goes off the market for an extended period of time, I predict that Brent will exceed Goldman Sachs' forecast of $140/bbl by the end of Q3.
China may provide refiners with subsidies in an effort to shield consumers from cost increases if crude prices rise beyond $130/Bbl
> The move aims to ensure the secure and steady supply of oil products while also reducing economic costs and easing consumer burdens according to the Ministry of Finance
> Refiners and fuel traders who make or import gasoline and diesel will be given subsidies for as long as two months if crude prices breach the targeted ceiling < This will actually extend the Energy Crisis as it will encourage more demand of oil-based transportation fuels.
U.S. oil inventory data for the past two weeks will be released later on Wednesday
> Before the EIA released its statistics, API data revealed that U.S. oil stockpiles at the key storage hub in Cushing, OK, continued to decline, signaling tightness in supplies
> For the week ending June 24, the API estimated a draw of 3.8 MMBbl and a 5.6 MMBbl build in oil inventories for the week ending June 17th
Natural Gas
Shell CEO says spare oil & gas production capacity is very low, and uncertainty in global oil and gas markets could remain for some time
> Chief Executive Officer Ben van Beurden also said, "At the same time, the world's oil refining system is running flat out, van Beurden said, driving up refining margins and prices of gasoline and diesel."
> Russian gas exports have also fallen because of reduced flows on Nord Stream 1. European gas prices have surged in response to levels not reached since the winter. < Bids for LNG imports are approximately $40/MMBtu in Europe and $37/MMBtu in Japan/Korea.
> Europe has tried to displace Russian gas with LNG import. "I think it will be impossible to cover the entire pipeline gas capacity out of Russia with LNG," van Beurden said
> Shell also announced that its Prelude LNG facility would be down for at least two weeks at a time when global supplies are already strained
Natural gas futures are up by 16.5c this morning near $6.716
> Forecasts show the Texas low moving inland, but it is expected to remain low, but there is a slight chance it could become a tropical depression and touch down near Corpus Christi, Texas
> Right now, the forecast isn't causing concern, but if it strengthens, then vital LNG export infrastructure could lie directly in the storm's path
> Lower-48 dry gas production has remained subdued after touching a year-to-date high of 96.7 Bcf/d over the weekend
> LNG feedgas demand is down near 11 Bcf/d and has been averaging around 2 Bcf/d lower since the Freeport LNG outage on June 8 < HOT weather across the SE quarter of the U.S. has increased ngas demand for power generation.
AEGIS Flash: "First Look - Political crisis disrupts Ecuador and Libyan oil production"
Opening Prices:
> WTI is up $2.09 to $113.85/bbl, and Brent is up $2.02 to $120.00/bbl.
> Natural gas is up 16.5c to $6.716/MMBtu.
AEGIS Notes
Oil
Political unrest in Ecuador and Libya is impacting oil production
> Libya's state oil company suspended shipments from two important eastern ports, and the nation's output has dropped by half to 600 MBbl/d since April
> Ecuador's oil output has fallen more than 50% below the typical 520 MBbl/d and is likely to stop entirely within 48 hours, according to the Energy Ministry
> The drop in Libya and Ecuador’s oil production could tighten supply further < There is no "could". If this much oil supply goes off the market for an extended period of time, I predict that Brent will exceed Goldman Sachs' forecast of $140/bbl by the end of Q3.
China may provide refiners with subsidies in an effort to shield consumers from cost increases if crude prices rise beyond $130/Bbl
> The move aims to ensure the secure and steady supply of oil products while also reducing economic costs and easing consumer burdens according to the Ministry of Finance
> Refiners and fuel traders who make or import gasoline and diesel will be given subsidies for as long as two months if crude prices breach the targeted ceiling < This will actually extend the Energy Crisis as it will encourage more demand of oil-based transportation fuels.
U.S. oil inventory data for the past two weeks will be released later on Wednesday
> Before the EIA released its statistics, API data revealed that U.S. oil stockpiles at the key storage hub in Cushing, OK, continued to decline, signaling tightness in supplies
> For the week ending June 24, the API estimated a draw of 3.8 MMBbl and a 5.6 MMBbl build in oil inventories for the week ending June 17th
Natural Gas
Shell CEO says spare oil & gas production capacity is very low, and uncertainty in global oil and gas markets could remain for some time
> Chief Executive Officer Ben van Beurden also said, "At the same time, the world's oil refining system is running flat out, van Beurden said, driving up refining margins and prices of gasoline and diesel."
> Russian gas exports have also fallen because of reduced flows on Nord Stream 1. European gas prices have surged in response to levels not reached since the winter. < Bids for LNG imports are approximately $40/MMBtu in Europe and $37/MMBtu in Japan/Korea.
> Europe has tried to displace Russian gas with LNG import. "I think it will be impossible to cover the entire pipeline gas capacity out of Russia with LNG," van Beurden said
> Shell also announced that its Prelude LNG facility would be down for at least two weeks at a time when global supplies are already strained
Natural gas futures are up by 16.5c this morning near $6.716
> Forecasts show the Texas low moving inland, but it is expected to remain low, but there is a slight chance it could become a tropical depression and touch down near Corpus Christi, Texas
> Right now, the forecast isn't causing concern, but if it strengthens, then vital LNG export infrastructure could lie directly in the storm's path
> Lower-48 dry gas production has remained subdued after touching a year-to-date high of 96.7 Bcf/d over the weekend
> LNG feedgas demand is down near 11 Bcf/d and has been averaging around 2 Bcf/d lower since the Freeport LNG outage on June 8 < HOT weather across the SE quarter of the U.S. has increased ngas demand for power generation.