Oil & Gas Prices - July 22
Posted: Fri Jul 22, 2022 8:50 am
Opening Prices:
> WTI is down $1.04 to $95.31/bbl, and Brent is down $0.61 to $103.25/bbl.
> Natural gas is up 15.8c to $8.09/MMBtu.
AEGIS Notes
Oil
China reported 826 new Covid cases on Wednesday and 935 on Tuesday, pushing the country's Covid-19 cases to a two-month high this week (BBG)
> While most of the outbreak has not affected big cities, lockdowns have been implemented in some neighborhoods, and as part of China's zero-Covid policy, major lockdowns and mass testing of large cities are anticipated to follow
> The lockdowns have hurt Chinese crude demand as the nation's June crude imports fell to a four-year low of 8.75 MMBbl/d which is 21.8% less than May imports of 45.83 MMBbl/d
India has increased its purchases of crude from Russia's far eastern ESPO blend, a grade that Chinese oil refiners typically prefer
> Four vessels are transporting Russian ESPO oil to India, compared to three vessels in June and one in April, according to Vortexa
> The trade is typically not appealing to Indian buyers due to the long distance from the Russian loading port of Kozmino and the fact that ESPO crude cargoes are often transported by smaller vessels
Natural Gas
Gas prices were trading almost 3% lower earlier this morning but have since rallied to eclipse $8
The near-term strips are trading higher week-over-week
> Summer 22: +13.1%, at $7.97
> Winter 22/23: +11.4%, at $7.67
> Summer 23: +2.4% at $4.941
> Winter 23/24: +2.2%, at $5.26
I have increased the ngas prices used in my forecast models to $7.00 for Q3, $7.50 for Q4 and $5.00 for 2023.
Yesterday, the EIA reported a 32-Bcf injection, which was another huge miss by analysts. The consensus analysts' estimate was 44 Bcf
> The build compared meekly to the 50 Bcf increase in the comparable week last year and a five-year average injection of 41 Bcf
> The total 32 Bcf build lifted working gas in storage to 2,401 Bcf, though stocks were 270 Bcf lower than a year earlier and 328 Bcf below the five-year average
Weather forecasts have backed off slightly over the week as the gas-weighted cooling degree day total for July is now at 386 CDDs from a high of 398 CDDs on July 14. The total would still come in as a top-three July going back to 2000, even with the recent decline in CDDs
The Nord Stream pipeline is back online, and flows are around 40% of capacity, the level before the pipeline was brought offline for ten days of planned maintenance.
Both, the JKM and TTF prices for LNG cargos are down by -2.5% (-68c), and -1.4% (-98.6c) week-over-week at around $38.095, and $46.60/MMBtu, respectively
Delfin seeks more time to construct an offshore LNG export facility
> Delfin LNG has asked federal regulators to extend the amount of time it has to put the onshore part of its proposed Gulf of Mexico floating LNG export project off Louisiana into service until September 2023, with the offshore part of the terminal expected to be operational in 2026
> Delfin is one of several North American LNG export projects that delayed decisions to start construction in recent years in part because coronavirus demand destruction made customers unwilling to sign long-term deals needed to finance the multibillion-dollar facilities. Delfin has struggled to secure sufficient support for the floating Deepwater terminal since proposing the project in 2013
> Earlier this month, trading firm Vitol took a stake in the project with a 15-year supply deal for 0.07 Bcf/d or 0.5 Mtpa. The total capacity of the facility is expected to be 1.8 Bcf/d
> However, the lower cost compared to other grades from the Persian Gulf and West Africa is what likely prompted the purchase
> WTI is down $1.04 to $95.31/bbl, and Brent is down $0.61 to $103.25/bbl.
> Natural gas is up 15.8c to $8.09/MMBtu.
AEGIS Notes
Oil
China reported 826 new Covid cases on Wednesday and 935 on Tuesday, pushing the country's Covid-19 cases to a two-month high this week (BBG)
> While most of the outbreak has not affected big cities, lockdowns have been implemented in some neighborhoods, and as part of China's zero-Covid policy, major lockdowns and mass testing of large cities are anticipated to follow
> The lockdowns have hurt Chinese crude demand as the nation's June crude imports fell to a four-year low of 8.75 MMBbl/d which is 21.8% less than May imports of 45.83 MMBbl/d
India has increased its purchases of crude from Russia's far eastern ESPO blend, a grade that Chinese oil refiners typically prefer
> Four vessels are transporting Russian ESPO oil to India, compared to three vessels in June and one in April, according to Vortexa
> The trade is typically not appealing to Indian buyers due to the long distance from the Russian loading port of Kozmino and the fact that ESPO crude cargoes are often transported by smaller vessels
Natural Gas
Gas prices were trading almost 3% lower earlier this morning but have since rallied to eclipse $8
The near-term strips are trading higher week-over-week
> Summer 22: +13.1%, at $7.97
> Winter 22/23: +11.4%, at $7.67
> Summer 23: +2.4% at $4.941
> Winter 23/24: +2.2%, at $5.26
I have increased the ngas prices used in my forecast models to $7.00 for Q3, $7.50 for Q4 and $5.00 for 2023.
Yesterday, the EIA reported a 32-Bcf injection, which was another huge miss by analysts. The consensus analysts' estimate was 44 Bcf
> The build compared meekly to the 50 Bcf increase in the comparable week last year and a five-year average injection of 41 Bcf
> The total 32 Bcf build lifted working gas in storage to 2,401 Bcf, though stocks were 270 Bcf lower than a year earlier and 328 Bcf below the five-year average
Weather forecasts have backed off slightly over the week as the gas-weighted cooling degree day total for July is now at 386 CDDs from a high of 398 CDDs on July 14. The total would still come in as a top-three July going back to 2000, even with the recent decline in CDDs
The Nord Stream pipeline is back online, and flows are around 40% of capacity, the level before the pipeline was brought offline for ten days of planned maintenance.
Both, the JKM and TTF prices for LNG cargos are down by -2.5% (-68c), and -1.4% (-98.6c) week-over-week at around $38.095, and $46.60/MMBtu, respectively
Delfin seeks more time to construct an offshore LNG export facility
> Delfin LNG has asked federal regulators to extend the amount of time it has to put the onshore part of its proposed Gulf of Mexico floating LNG export project off Louisiana into service until September 2023, with the offshore part of the terminal expected to be operational in 2026
> Delfin is one of several North American LNG export projects that delayed decisions to start construction in recent years in part because coronavirus demand destruction made customers unwilling to sign long-term deals needed to finance the multibillion-dollar facilities. Delfin has struggled to secure sufficient support for the floating Deepwater terminal since proposing the project in 2013
> Earlier this month, trading firm Vitol took a stake in the project with a 15-year supply deal for 0.07 Bcf/d or 0.5 Mtpa. The total capacity of the facility is expected to be 1.8 Bcf/d
> However, the lower cost compared to other grades from the Persian Gulf and West Africa is what likely prompted the purchase