Oil & Gas Prices - July 21

[dan_s]

Opening Prices:
> WTI is down $4.15 to $95.73/bbl, and Brent is down $4.05 to $102.87/bbl.
> Natural gas is down -23.1c to $7.776/MMBtu.

AEGIS Notes
Oil

Libya's National Oil Corp on Wednesday said that crude production had resumed at several oilfields after the lifting of force majeure on oil exports last week
> Libya's oil and gas minister said that the current production is at 600,000 Bbl/d and expects oil production to return to "normal" levels of 1.2 MMBbl/d in a week to ten days
> He added that oil in storage is being exported, and pumping from oil fields has started, which will allow Libya to boost exports with "Three tankers are expected to begin exporting more than 2 MMBbl"

U.S. Deputy Treasury Secretary Wally Adeyemo on Wednesday said that a price cap on Russian oil should go into effect alongside the December implementation of the EU's ban on shipping insurance
> "They introduced the idea of looking to do a price cap, but they also said that by December they plan to put in place their insurance ban" while the "goal is to make sure that as that insurance ban is going into place, we're in a position where this is a price cap that can be joined on to that that is a global one" said Adeyemo

China's apparent gasoline demand rose back above pre-pandemic levels last month as the nation cautiously eased Covid restrictions (BBG)
> Gasoline demand climbed to 3 MMBbl/d in June, which was 7.4% higher than June 2019 levels
> Diesel consumption dipped to 3.5 MMBbl/d but was still 27% higher than June 2019 levels

Natural Gas

Natural gas prices are down this morning after touching $8 yesterday
> The EIA is expected to report a 44-Bcf injection for the week ending July 15
> Estimates range from increases of 39 Bcf to 59 Bcf. The average forecast compares with a 50-Bcf increase in storage last year and a 41-Bcf five-year-average rise

Baker Hughes management sees years of growth ahead for U.S. natural gas, and LNG sectors
> The company said, “We also believe that a significant increase in natural gas and LNG infrastructure investment is required over the next five to 10 years in order to make natural gas a more affordable and reliable baseload fuel source that can be paired with intermittent renewable power sources.” On its 2Q22 earnings call
> Halliburton mentioned that drilling rigs for the company are fully leased through the end of the year, corroborating some of the anecdotal stories we have heard

Gazprom restarts flows on its Nord Stream 1 pipeline following maintenance
> The pipeline had been closed since July 11 for maintenance after having reduced flows to 40% of capacity, leading to fears in Europe of a complete stoppage of Russian gas
> Russia has indicated that yet more repair work on the pipeline will mean that the amount delivered is likely to drop to around 20% of normal levels. The EU will continue to push ahead with contingency plans in case of a full shutdown in gas supplies, with the commission telling the 27 EU nations that they need to cut their gas consumption by 15% until March
> The NS1 pipeline provides about a third of Europe’s natural gas, and with the flows reduced, European countries are scrambling to fill gas storage and find alternative fuel sources before winter
> Dutch TTF natural gas futures fell 5% in early trading following the announcement

[dan_s]

Closing Prices:
> Prompt-Month WTI (Sep 22) was down $-3.53 on the day, to settle at $96.35
> Prompt-Month Henry Hub (Aug 22) was down $-0.075 on the day, to settle at $7.932

Keep in mind that as we approach the end of each month the "paper traders" that own the vast majority of NYMEX futures contracts must close their positions unless they want to take physical delivery (1,000 bbls for oil contracts). When there are more Longs than Shorts it pushes down the price for a few days.