Oil & Gas Prices - July 26

[dan_s]

Opening Prices:
> WTI is up $1.53 to $98.23/bbl, and Brent is up $1.52 to $106.67/bbl.
> Natural gas is up 70.8c to $9.435/MMBtu.

AEGIS Notes
Oil

Libya increased oil production to over 1 MMBbl/d after production had been reduced by more than half since mid-April, touching a low of 560 MBbl/d
> The increase follows an agreement with protesters and heads of tribes reached more than a week ago to reopen fields and export terminals that had been largely shut since mid-April < One of my "Life's Rules" is "What gets rewarded gets done", so the tribes will protest and shut down exports the next time they need money.
> The market could receive some relief from the increase in production and exports, but things will likely remain uncertain as long as political unrest persists in the nation

Russian crude exports have decreased for five consecutive weeks, down by 480 MBbl/d, or 13% since mid-June (Bloomberg)
> Much of the export decline can be attributed to weakening demand from China and India, who had previously increased their oil purchases following Russia's invasion of Ukraine
> Chinese demand was down by 52 MBbl/d in the last four-week average compared to the prior period, and Indian demand fell by 18 MBbl/d
> Although both countries still take in nearly 55% of Russian seaborne oil exports, shipments to China and India are now down nearly 30% from their peak; the exact decrease depends on where the 4 MMBbl/d of Russian oil that is currently aboard tankers is sent

Natural Gas

Natural gas prices are up 8% this morning, trading around $9.45
> Henry Hub futures are at the highest level they have been this year
> Dry gas production has decreased 1.3 Bcf/d from yesterday, while demand has increased by 0.4 Bcf/d. LNG flows are up 1.2 Bcf/d, bringing total LNG flows to 11.1 Bcf/d < I'm not sure were AEGIS gets these daily numbers or how accurate they are, but they are very bullish for ngas prices.
> Weather forecasts for the Southeast and South Central have shifted higher and are indicating a warm start to August after initially forecasting a cooler start to the month

Europe continues to struggle with gas flows
> The Kremlin said on Tuesday that a repaired gas turbine for Nord Stream 1, Russia's biggest gas pipeline to Europe, had not yet arrived after maintenance in Canada and that a second turbine was showing defects.
> Nord Stream 1, the main source of Russian gas to Europe, has seen its flows reduced to 20% of capacity this week
> European Union countries agreed on Tuesday to an emergency regulation to curb their gas use this winter
> Germany is attempting to replace some gas flows with coal. The move could compensate for 1% to 2% of Germany's gas consumption, but energy operators have either declined to reactivate plants or are facing difficulties in acquiring the necessary coal. < The Germans need to realize that they are going to be defeated by Putin in the "Sanctions War". To avoid being labeled as dumber than Team Biden, they need to seek a negotiated settlement with Russia. When winter arrives, Putin will have all the leverage.

[dan_s]

Jet Fuel Demand

Bloomberg New Energy Finance is reporting that the number of domestic flights in China
is scheduled to jump 16% over the next four weeks as COVID-19 restrictions ease. In the
U.S., the four largest airlines are scheduled to increase the number of flights by 3% over
the next four weeks in the midst of the peak summer season as Americans continued
to roam despite four-decade-high inflation. The number of U.S. passengers in the week
of July 16-22 climbed 12% over the year-ago week.

Bloomberg is reporting that India raised crude oil imports in June vs. May levels by 1.2%
to 4.693 MMBopd (up 21% y/y), according to data from the Oil Ministry's Petroleum
Planning & Analysis Cell.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Sep 22) was down $-1.72 on the day, to settle at $94.98
> Prompt-Month Henry Hub (Aug 22) was up $0.266 on the day, to settle at $8.993 < SEP22 closed at $8.722

Paper Traders that shorted the AUG22 HH contract got killed today. Holding NYMEX contracts to the last week of trading is extremely risky business.