Oil & Gas Prices - Aug 15
Posted: Mon Aug 15, 2022 9:00 am
Opening Prices (The Year of "The Roller Coaster Ride" continues)
> WTI is down $4.98 to $87.11/bbl, and Brent is down $5.18 to $92.97/bbl.
> Natural gas is down -24.5c to $8.523/MMBtu.
AEGIS Notes
Oil
Iran announced that it will inform the EU this evening of its position on its draft text for the finalized nuclear deal
> "Our answer will be given to the EU tonight at 12 midnight...There are three issues that if resolved, we can reach an agreement in the coming days," said Iran’s foreign minister
> The move comes after months of negotiations and could potentially result in the introduction of more Iranian crude into the market
MY TAKE: This is another issue that IMO is more "FEAR Based" than a potential for an over-supplied oil market because (a) Iran has likely been selling a lot of oil despite the sanctions since they have no fear of Biden and (b) draws from US SPR will end soon & EU sanctions against Russian oil will likely offset any additional barrels that Iran can put on the market.
The world’s top oil importer is showing signs of renewed weakness as China's refiners process less crude and apparent consumption declines (BBG)
> China's crude demand dropped by 9.7% (12.16 MMBbl/d) last month compared to -5.65% (13.041 MMBbl/d) in June, reaching its lowest point since March 2020 after the country reopened major cities from COVID lockdowns
> The country's refinery output slipped to 12.53 MMBbl/d in July compared with 13.37 MMBbl/d in June, according to data from the National Bureau of Statistics
> Prolonged outages at large state-run refineries such as Sinopec Shanghai Petrochemical Corp's 0.320 MMBbl/d crude facility and PetroChina Wepec's 0.200 MMBbl/d plant weighed on national production
Natural Gas
Unaffordable LNG prices undermine rapid demand growth forecasts in key Asian markets (IEEFA)
> A new IEEFA report finds that sustained high prices over the past year have eroded the economic case for LNG and hurt LNG sales in key Asian markets
> LNG markets are already seeing a major realignment of demand away from Asia. Should price spikes and volatility continue over the next several years, downward pressures on Asian LNG demand may accelerate, permanently impairing long-term regional demand growth, said Sam Reynolds, author of the report
> LNG sales in Asia through July 2022 have fallen more than 6% compared to last year. In China and India, two of the largest potential LNG growth markets, LNG imports have fallen 20% and 10% year-over-year, respectively
> As a result, numerous forecasting agencies have begun cutting estimates for Asia’s medium-term LNG demand growth
Germany needs to cut gas use by 20% to stave off the winter crisis (EU Observer) < IMO Eastern Europe is totally screwed this winter
> If it fails to reach 20 percent gas savings, the country is at "serious risk" of an energy crunch, Klaus Müller, head of the federal network agency (BNA) and responsible for managing German gas supplies, told the Financial Times
> European Union countries formally adopted the bloc's plan to curb gas use by 15 percent on Friday to save fuel for a winter of uncertain Russian supplies
> Tank operators are required by law to fill up storage to 95 percent by 1 November. Even if all tanks are filled, they will only have enough gas for two and a half months in the case of a Russian gas cutoff and will increase the chance of another gas crunch next winter
> Benchmark gas prices have been pushed to $62/mmbtu, up from $20/mmbtu at the beginning of the year
MY PRAYER: "Please Lord open the eyes of the idiots we have elected to run this Great Country to the FACT that the Paris Climate Accord and the Green New Deal are not going to work. Please bring some common sense to Washington, DC. before we follow in the footsteps of the morons running Europe. Amen!"
> WTI is down $4.98 to $87.11/bbl, and Brent is down $5.18 to $92.97/bbl.
> Natural gas is down -24.5c to $8.523/MMBtu.
AEGIS Notes
Oil
Iran announced that it will inform the EU this evening of its position on its draft text for the finalized nuclear deal
> "Our answer will be given to the EU tonight at 12 midnight...There are three issues that if resolved, we can reach an agreement in the coming days," said Iran’s foreign minister
> The move comes after months of negotiations and could potentially result in the introduction of more Iranian crude into the market
MY TAKE: This is another issue that IMO is more "FEAR Based" than a potential for an over-supplied oil market because (a) Iran has likely been selling a lot of oil despite the sanctions since they have no fear of Biden and (b) draws from US SPR will end soon & EU sanctions against Russian oil will likely offset any additional barrels that Iran can put on the market.
The world’s top oil importer is showing signs of renewed weakness as China's refiners process less crude and apparent consumption declines (BBG)
> China's crude demand dropped by 9.7% (12.16 MMBbl/d) last month compared to -5.65% (13.041 MMBbl/d) in June, reaching its lowest point since March 2020 after the country reopened major cities from COVID lockdowns
> The country's refinery output slipped to 12.53 MMBbl/d in July compared with 13.37 MMBbl/d in June, according to data from the National Bureau of Statistics
> Prolonged outages at large state-run refineries such as Sinopec Shanghai Petrochemical Corp's 0.320 MMBbl/d crude facility and PetroChina Wepec's 0.200 MMBbl/d plant weighed on national production
Natural Gas
Unaffordable LNG prices undermine rapid demand growth forecasts in key Asian markets (IEEFA)
> A new IEEFA report finds that sustained high prices over the past year have eroded the economic case for LNG and hurt LNG sales in key Asian markets
> LNG markets are already seeing a major realignment of demand away from Asia. Should price spikes and volatility continue over the next several years, downward pressures on Asian LNG demand may accelerate, permanently impairing long-term regional demand growth, said Sam Reynolds, author of the report
> LNG sales in Asia through July 2022 have fallen more than 6% compared to last year. In China and India, two of the largest potential LNG growth markets, LNG imports have fallen 20% and 10% year-over-year, respectively
> As a result, numerous forecasting agencies have begun cutting estimates for Asia’s medium-term LNG demand growth
Germany needs to cut gas use by 20% to stave off the winter crisis (EU Observer) < IMO Eastern Europe is totally screwed this winter
> If it fails to reach 20 percent gas savings, the country is at "serious risk" of an energy crunch, Klaus Müller, head of the federal network agency (BNA) and responsible for managing German gas supplies, told the Financial Times
> European Union countries formally adopted the bloc's plan to curb gas use by 15 percent on Friday to save fuel for a winter of uncertain Russian supplies
> Tank operators are required by law to fill up storage to 95 percent by 1 November. Even if all tanks are filled, they will only have enough gas for two and a half months in the case of a Russian gas cutoff and will increase the chance of another gas crunch next winter
> Benchmark gas prices have been pushed to $62/mmbtu, up from $20/mmbtu at the beginning of the year
MY PRAYER: "Please Lord open the eyes of the idiots we have elected to run this Great Country to the FACT that the Paris Climate Accord and the Green New Deal are not going to work. Please bring some common sense to Washington, DC. before we follow in the footsteps of the morons running Europe. Amen!"