Energy Prospectus

Trading Economics:

Oil
"WTI crude futures fell nearly 3% to below $89 per barrel on Tuesday, extending the decline from the one-month high of $93 with pressure from a continuously appreciating dollar and demand woes from major consumers. The greenback extended its rally on expectations that the US Federal Reserve will push ahead with its aggressive tightening plans, making dollar-priced oil more expensive for buyers holding other currencies. Elsewhere, Covid detections in major Chinese cities rose to levels not seen since August after the week-long holiday, driving local governments to announce stricter testing until mid-November and significantly increasing worries that the world’s second largest oil consumer could face fresh lockdowns. Fears of inactivity added to the worsening macroeconomic backdrop, as recession likelihoods increase in large economies. Still, oil prices remain supported by the OPEC+ decision to cut output and an ongoing energy standoff between Russia and the West."

Natural Gas
"US natural gas futures remained below $7/MMBtu for a 10th consecutive session, close to the 3-month low of $6.3/MMBtu hit on October 3rd and much below the 14-year high of $9.65/MMBtu hit on August 22nd as output remains at record levels and milder than usual weather is allowing utilities to inject more gas into storage. The EIA reported the largest on record increases in domestic inventories, with US utilities adding 129 billion cubic feet (bcf) of gas to storage in the week ended September 30th, above market expectations of a 113 bcf build. Meanwhile, average gas output in the US Lower 48 states rose to 100.1 bcfd so far in October from a record 99.4 bcfd in September, according to Refinitiv. Also, weighing on gas prices was a drop in demand from power outages due to Hurricane Ian and reduced LNG exports."
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MY TAKE:
> There is will continue to be a lot of "noise" that keeps pressure on the price of oil, but the tight global oil market will get a lot tighter as we move closer to year-end. When the SPR draws end in mid-Nov, I expect WTI to move over $100/bb.
> The US natural gas market is also very tight and winter weather is just a few weeks away.
> Oil and ngas markets are totally different. Regional fundamentals drive the natural gas prices. Natural gas prices are $44/MMBtu in Europe and $34/MMBtu in Japan/Korea.

The implications of U.S. SPR withdrawals. Oil Price.com
"This year’s SPR withdrawal constitutes the largest-ever withdrawal on record. An argument can be made here that the U.S. government has taken proactive measures of economic sanctions on Russia and was quite aware of the consequences. Whatever the argument, the message is clear to OPEC and Russia that if they try to manipulate oil production for higher oil prices, the U.S. will counter it by releasing crude from its SPR. The only danger is how much SPR can be released risk-free, from a strategic perspective, and how long will it take to replenish SPR reserves. Surely, it will take many years or decades to refill the SPR to roughly 700 million barrels. The speed of replenishment depends on many factors. However, the biggest factors are oil prices and the development of domestic inflation. Excessive withdrawals could be risky, as Russia could intentionally prolong the conflict with Ukraine. This strategy provides more leverage to OPEC to manipulate oil production to push oil prices even higher."
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MY TAKE: Drawing down the SPR will keep oil prices higher for longer because it must be refilled, adding to future demand. The SPR is a vital piece of our national security. Only a really stupid administration would keep draining it for political reasons.

He shuts down pipelines from Canada, Michigan Democrat fights to shut line 5 down, won't approve new pipes or delay to study mating habits of turtles , won't allow drilling, then whines that Saudi cut production

Stupid stupidity

and outside of FOX no one in the media seems to notice the utter stupidity of what Team Biden is doing.

I pray that we are not just a year behind going off the cliff like Europe.

Closing Prices:
> Prompt-Month WTI (Nov 22) was down $-1.78 on the day, to settle at $89.35
> Prompt-Month Henry Hub (Nov 22) was up $0.161 on the day, to settle at $6.596

HANG ON TO YOUR GASSERS. Winter temps coming early to Chicago THIS WEEK.