Oil & Gas Prices - Aug 11
Posted: Thu Aug 11, 2022 9:34 am
Opening Prices:
> WTI is up $1.38 to $93.31/bbl, and Brent is up $1.40 to $98.80/bbl.
> Natural gas is up 25.0c to $8.452/MMBtu.
AEGIS Notes
Oil
The IEA increased its forecasts for global crude demand growth in 2022 by 380 MBbl/d to 2.1 MMBbl/d from 1.7 MMBbl/d in its August monthly report
> "Natural gas and electricity prices have soared to new records, incentivizing gas-to-oil switching in some countries," said the agency
> Global oil demand is now anticipated to reach 99.7 MMBbl/d in 2022 from 99.2 MMBbl/d earlier this year
> In addition, the group projects an increase in global stockpiles of 900 MBbl/d through year's end, citing numerous emergency SPR releases along with more resilient Russian crude production < Keep in mind that commercial oil inventories are going up at the expense of draining SPR's. IMO that is not an "increase" in stockpiles.
> An EU import embargo will cause Russia's oil production to decline by about 20% by the beginning of 2023 < This is going to hurt Europeans much more than it hurts Putin.
> The agency added that if Russia reduces its refining output, gradual monthly declines will begin as early as this month and accelerate when the embargo takes effect < Firewood sales are soaring in the EU!
> Although output has recently experienced a robust rebound, it anticipates that close to 2 MMBbl/d will be shut in by the beginning of 2023
OPEC cut its forecast for oil demand growth in 2022, citing expectations for a resurgence of COVID-19 restrictions and continued geopolitical concerns
> The bloc cut its estimate of 2022 demand growth to 3.1 MMBbl/d from a previous forecast of 3.4 MMBbl/d
They left the forecast for world oil demand growth in 2023 unchanged at 2.7 MMBbl/d, with total oil demand averaging 102.7 MMBbl/d
U.S. average retail gasoline prices fell below $4/Gal to the lowest level since early March, according to data from AAA (BBG)
> Prices continued to decline, dropping to $3.99/Gal, according to data released on Thursday
> Meanwhile, nationwide gasoline demand has been falling, and oil prices have fallen by nearly $10/bbl since June
Natural Gas
The EIA releases its weekly natural gas storage report today
> The median estimate is for an injection of 40 Bcf, while the survey ranges from 30-44 Bcf
> The prior week saw an injection of 41 Bcf which brought the total storage to 2,457 Bcf
> Total working gas in storage is currently 337 Bcf below the five-year average but within the five-year historical range
Freeport LNG retracts force majeure, widening losses for gas buyers (Reuters)
> Top U.S. gas exporter, Freeport LNG, has retracted the force majeure it initially declared after an explosion in June, a development that could cost its buyers billions of dollars in losses
> The force majeure would have allowed Freeport’s LNG buyers to exit their agreements to deliver gas to end users. Instead, they are facing a collective loss of up to $8 billion as they source alternative supplies at elevated spot market prices
> Without the force majeure, the company needs to pay compensation to its gas buyers, and the buyers still need to supply end users.
> The outage leaves a hole of about 80 cargoes based on an October restart date
> WTI is up $1.38 to $93.31/bbl, and Brent is up $1.40 to $98.80/bbl.
> Natural gas is up 25.0c to $8.452/MMBtu.
AEGIS Notes
Oil
The IEA increased its forecasts for global crude demand growth in 2022 by 380 MBbl/d to 2.1 MMBbl/d from 1.7 MMBbl/d in its August monthly report
> "Natural gas and electricity prices have soared to new records, incentivizing gas-to-oil switching in some countries," said the agency
> Global oil demand is now anticipated to reach 99.7 MMBbl/d in 2022 from 99.2 MMBbl/d earlier this year
> In addition, the group projects an increase in global stockpiles of 900 MBbl/d through year's end, citing numerous emergency SPR releases along with more resilient Russian crude production < Keep in mind that commercial oil inventories are going up at the expense of draining SPR's. IMO that is not an "increase" in stockpiles.
> An EU import embargo will cause Russia's oil production to decline by about 20% by the beginning of 2023 < This is going to hurt Europeans much more than it hurts Putin.
> The agency added that if Russia reduces its refining output, gradual monthly declines will begin as early as this month and accelerate when the embargo takes effect < Firewood sales are soaring in the EU!
> Although output has recently experienced a robust rebound, it anticipates that close to 2 MMBbl/d will be shut in by the beginning of 2023
OPEC cut its forecast for oil demand growth in 2022, citing expectations for a resurgence of COVID-19 restrictions and continued geopolitical concerns
> The bloc cut its estimate of 2022 demand growth to 3.1 MMBbl/d from a previous forecast of 3.4 MMBbl/d
They left the forecast for world oil demand growth in 2023 unchanged at 2.7 MMBbl/d, with total oil demand averaging 102.7 MMBbl/d
U.S. average retail gasoline prices fell below $4/Gal to the lowest level since early March, according to data from AAA (BBG)
> Prices continued to decline, dropping to $3.99/Gal, according to data released on Thursday
> Meanwhile, nationwide gasoline demand has been falling, and oil prices have fallen by nearly $10/bbl since June
Natural Gas
The EIA releases its weekly natural gas storage report today
> The median estimate is for an injection of 40 Bcf, while the survey ranges from 30-44 Bcf
> The prior week saw an injection of 41 Bcf which brought the total storage to 2,457 Bcf
> Total working gas in storage is currently 337 Bcf below the five-year average but within the five-year historical range
Freeport LNG retracts force majeure, widening losses for gas buyers (Reuters)
> Top U.S. gas exporter, Freeport LNG, has retracted the force majeure it initially declared after an explosion in June, a development that could cost its buyers billions of dollars in losses
> The force majeure would have allowed Freeport’s LNG buyers to exit their agreements to deliver gas to end users. Instead, they are facing a collective loss of up to $8 billion as they source alternative supplies at elevated spot market prices
> Without the force majeure, the company needs to pay compensation to its gas buyers, and the buyers still need to supply end users.
> The outage leaves a hole of about 80 cargoes based on an October restart date