Energy Prospectus

Opening Prices:
> WTI is up $1.14 to $91.50/bbl, and Brent is up $1.04 to $97.52/bbl.
> Natural gas is up 7.4c to $9.754/MMBtu. < A 14 year high!

AEGIS Notes
Oil

WTI rose $1/Bbl to nearly $92 as tight supply moved back into focus
> Oil recovers from yesterday's losses after Saudi Arabia's Oil Minister said that OPEC+ might cut production to stabilize a volatile market

Saudi Oil Minister Prince Abdulaziz bin Salman said yesterday that "extreme" volatility and a lack of liquidity in the futures market are creating a gap between crude pricing and fundamentals (BBG)
> He highlighted the fact that futures prices do not reflect the fundamentals of supply/demand
> He added that OPEC+ may be compelled to interfere and may need to consider production cuts while discussing output targets at their meeting next month
> The move follows a drop in crude prices of over $30/bbl from highs reached following Russia's invasion of Ukraine
MY TAKE: OPEC+ production has been below their official quotas for 8 months. The cartel is out of spare capacity, so why keep raising production quotas when they can't reach the ones that they already have in place?

Iran has given up some of its main demands for renewing the 2015 Iran nuclear deal, according to a senior U.S. official (Reuters)
> These demands include Iran's insistence that international inspectors end some investigations into its atomic program
> The official added, "We think they have finally crossed the Rubicon and moved toward possibly getting back into the deal on terms that President Biden can accept," signaling the likelihood of being closer to an agreement
> The U.S. is currently preparing to respond to a draft deal that was put forth by the EU last week
Europe is forced to make deals with "The Devils" to survive the winter. This is where the Wackos that signed the Paris Climate Accord have left us.

Natural Gas

Daily U.S. electricity generation from natural gas hit a record in mid-July (EIA)
> Demand for natural gas for electricity generation has been strong throughout July due to above-normal temperatures, reduced coal-fired electricity generation, and recent natural gas-fired capacity additions.
> Before this year, the previous daily peak for natural gas-fired electricity generation had occurred on July 27, 2020
> Typically, when natural gas prices are high, coal will be substituted, however, continued retirements of coal-fired power plants, relatively high coal prices, and below-average coal stocks have limited coal consumption for power generation < This is one of the primary reasons that I believe we may see HH gas prices spike to $15 in Q4.
> New capacity has increased the availability and use of natural gas-fired electricity. Over the past 10 years, developers have added about 62 Gw of combined-cycle gas turbine capacity

European LNG prices hit record discount to Dutch TTF gas (Reuters)
> European prices of LNG have hit a record discount to gas prices at the Dutch TTF hub, which rose sharply on the news of more planned maintenance on the main Russian pipeline to Europe
> LNG cargoes for October delivery into Northwest Europe were seen priced at $60.183/mmBtu. That marked a record discount of $24/mmBtu to the TTF contract for October delivery of $84/MMBtu, according to S&P Global Commodity Insights
> "While TTF (prices) jumped significantly versus Friday’s close, LNG prices slipped slightly on an outright basis in Europe for October deliveries, as the two markets split apart further," said Ciaran Roe, global director of LNG at S&P Global Commodity Insights

The Average US Household Pays 47% More For Electricity Than A Year Ago | ZeroHedge

Americans are going to pay for the stupidity of Europe's leaders that got us into the Paris Climate Accord. WE MUST GET COMMON SENSE BACK IN CHARGE.

Read: https://www.zerohedge.com/personal-fina ... y-year-ago

Endless demand spurs U.S. natural-gas prices to shale-era highs. Wall Street Journal.
The 14-year highs reached this week by U.S. natural-gas futures show the unceasing demand for U.S. shale gas across the Atlantic—and likely point to higher prices ahead. The latest price spike came in response to Russia’s plans to shut down one of Europe’s main fuel arteries for a few days at the end of the month. The shutdown announced Friday is either the latest episode of unplanned maintenance along the vital Nord Stream gas pipeline or an act of economic warfare on Russia’s part in retaliation for Western Europe’s support for Ukraine. Surging prices in Europe, weather that remains hotter than normal in much of the country and the heart of hurricane season, when storms can knock out production platforms in the Gulf of Mexico, threaten to send prices higher, analysts and traders say.

US strategic oil reserves have hit their lowest level since 1985 after Joe Biden's record sales. Markets Insider.
The US's strategic oil reserves fell to their lowest level in 37 years last week as the releases ordered by President Joe Biden continued. Strategic petroleum reserve (SPR) stockpiles fell to 453.1 million barrels in the week to Friday, according to Department of Energy data. That's the lowest level since January 1985. Stockpiles have fallen by more than 160 million barrels this year after the White House ordered the release of record amounts of crude oil in an effort to cool sky-high gasoline prices and tamp down on inflation. The Biden administration is proposing to refill the stockpiles under a plan that is likely to see it order 60 million barrels this fall, for delivery at an unspecified time in the future.

'Limited' oil and gas capacity could send prices higher in 2023, analyst says. Yahoo Finance.
Oil prices could spike again by the beginning of 2023, says one analyst. "Domestically, whether it's oil or it's gas, these companies have very very limited incremental capacity at this time," Truist Securities Managing Director of Energy Research Neal Dingmann told Yahoo Finance Live. U.S natural gas prices rallied on Monday to new 14-year highs over reserve concerns and the energy crisis in Europe. Oil prices declined during the session amid worries of a global slowdown and the prospects of a nuclear deal with Iran, which would translate into more crude entering the market. Dingmann believes oil could fall to about $80 per barrel this year, before jumping to $110 in early next year. "We're seeing the same thing from OPEC+. All these areas have very very little incremental capacity which makes for me the chance for a spike, whether that be for gas or oil very very possible by early next year," said Dingmann.

US natural gas futures pared early gains and dropped to below the $9.2/MMBtu mark in a volatile session on Tuesday, after Freeport LNG announced that it will delay the restart of its Quintana export plant to November, backtracking previous statements of an October restart. The pushback of the resumption of flows from the export plant to outside the US prevents the earlier withdraw of natural gas from storage for outbound shipments. Earlier in the session, futures topped the $10/MMBtu mark for the first time in over 14 years, supported by expectations of increased demand for US LNG exports amid increasingly large concerns of shortages in Europe. Russia's Gazprom said it would halt flows through the Nord Stream 1 pipeline to Europe for three days of maintenance at the end of August. The main channel between Russia and Europe was already running at 20% capacity, putting pressure on the region as it seeks to refuel ahead of winter to avoid a natural gas shortage.

OilPrice.com

It seems highly likely that September-October will see a diesel price surge, considering record low diesel inventories in Europe (as continuous backwardation discourages storage) and the nearing of harvest and heating seasons.

Considering that U.S. middle distillate stocks are some 20 million barrels below the 5-year range, as well as the coming into effect of European sanctions vs Russia in February 2023, it should not come as a surprise that diesel futures contracts have been the most actively traded ones lately.

Closing Prices:
> Prompt-Month WTI (Oct 22) was up $3.38 on the day, to settle at $93.74

> Prompt-Month Henry Hub (Sep 22) was down $-0.487 on the day, to settle at $9.193

Please read the following link to read more about Freeport LNG's update on the restart timeline

http://freeportlng.newsrouter.com/news_ ... tAcc_ID=77

Dan, what is the low / high range for this Thursday's Storage report. I have the 5-year average at +45. Thanks....

I have not seen any guess at this week's ngas build.