Energy Prospectus

Opening Prices:
> WTI is up $1.40 to $89.51/bbl, and Brent is up $1.73 to $95.38/bbl.
> Natural gas is up 11.4c to $9.358/MMBtu.

AEGIS Notes
Oil

First Look - U.S. crude-oil exports hit a record high

U.S. crude exports increased to a record level as European refiners rushed to stock up on supplies ahead of a ban on Russian imports
> Weekly crude exports hit 5 MMBbl/d, the highest on record, with an increase of 2.89 MMBbl/d from last week, according to EIA
> The increase in exports shows just how much the world is relying on U.S. oil and gas to meet their energy demands while supplies of both are decreasing due to geopolitical risks

President Biden was granted authority yesterday to temporarily halt energy leasing on federal waterways and lands, overturning an earlier appeal
> The decision was reached after 13 states sued President Biden to force him to restore federal leasing after Biden paused leasing
> What Team Biden is doing makes no sense to me. We are just at the beginning of a GLOBAL ENERGY CRISIS. Can we at least wait until the war in Ukraine is resolved before we continue the war on the U.S. fossil fuel industry???

China's exports of gasoline and diesel reached their highest level in three months after refiners were given more export quotas to help reduce overstocked inventories (BBG)
> Gasoline shipments in July increased to 0.237 MMBbl/d, up roughly 21% from a month earlier and the highest level since April
> Diesel exports rose 9% month over month to 0.360 MMBbl/d

Natural Gas

The EIA releases its weekly natural gas storage report today
> Median analyst expectations are for an injection of 31 Bcf, according to the Bloomberg survey
> The survey ranges from a low of 24 Bcf to a high of 45 Bcf
> This compares to last week's injection of 44 Bcf, and an injection of 46 Bcf this time last year < So if the actual storage build is just 31 Bcf it will increase the storage deficit to the 5-year average for this time of year to 353 BCF.

U.S. natural gas exports to Mexico are increasing at the West Texas border (EIA)
> Natural gas exports to Mexico from West Texas reached a new record and averaged 1.6 Bcf/d during May 2022, up 12% from January of this year
> The electric power sector and the industrial sector in Mexico have been leading growth in natural gas demand, with much of this demand being met by growth in U.S. pipeline exports
> While exports are increasing from Texas, total U.S. natural gas pipeline exports to Mexico have declined by 4% to an average of 5.7 Bcf/d over the past year

MY TAKE: When Freeport LNG comes back online at the end of October the U.S. will have total export capacity of close to 20 Bcf per day, which includes pipelines we have going into Eastern Canada.

Like everything that Team Biden does, this is very confusing to me.

Court clears path for Biden oil and gas leasing pause. E&E News.
Federal judges today struck down a court order that had barred the Biden administration from pausing new oil and gas leasing on public lands and federal waters. The 5th U.S. Circuit Court of Appeals found this morning that the order requiring the Interior Department to resume lease sale offerings “lacked specificity.” But the appeals court did not decide on the substance of the Biden administration’s arguments that it had the authority to stop new sales. “We cannot reach the merits of the Government’s challenge when we cannot ascertain from the record what conduct — an unwritten agency policy, a written policy outside of the Executive Order, or the Executive Order itself — is enjoined,” wrote Senior Judge Patrick Higginbotham in the 5th Circuit opinion.

Climate law may undermine Biden court win on oil leasing. E&E News.
A court ruling yesterday cleared the way for President Joe Biden to once again pursue one of his earliest climate actions: A pause on federal oil and gas leasing designed to give the government time to study the program’s contributions to planet-warming emissions. But can a new ban actually be implemented? Not likely, observers say, because yesterday’s decision from the 5th U.S. Circuit Court of Appeals came one day after the president signed the Inflation Reduction Act, a major climate law committing the federal government to millions of acres of new onshore and offshore lease sales. The act is a “legislative mandate that now needs to be followed by [the Department of the] Interior,” said Kyle Tisdel, climate and energy director at the Western Environmental Law Center.

Closing Prices:
> Prompt-Month WTI (Sep 22) was up $2.39 on the day, to settle at $90.50
> Prompt-Month Henry Hub (Sep 22) was down $-0.056 on the day, to settle at $9.188 < This little dip is just the paper traders harvesting big gains.

Remember the paper traders MUST CLOSE THEIR POSITIONS BEFORE THE FRONT MONTH CONTRACT CLOSES because they cannot take physical delivery of the gas.

Today's natural gas storage report was very bullish. The Bidding War will get a lot more fun when NOV22 is the front month contract.