Oil & Gas Prices - Dec 5
Posted: Mon Dec 05, 2022 10:04 am
Opening Prices:
> WTI is up $2.47 to $82.45/bbl, and Brent is up $2.60 to $88.17/bbl.
> Natural gas is down -40.9c to $5.872/MMBtu.
AEGIS Notes
Oil
Oil reversed Friday’s losses on Monday morning
> WTI rose by $2.47/Bbl to trade above $82/Bbl amid supply concerns
> OPEC+ nations agreed to hold their output targets steady at their Sunday meeting
> The G7 nation’s price cap and the EU’s price cap on Russian crude kicked in today
China continues to ease Covid curbs (BBG)
> Cities, including Shanghai, Shenzhen, and Chengdu, have scrapped PCR testing for entry into parks or public transport from today
> Despite increased cases in some areas of China, health officials have removed many testing booths in Beijing
> China’s easing of covid curbs supports oil prices as it indicates an impending recovery in oil demand in the largest crude-importing nation
OPEC and its allies decided yesterday to maintain their current crude output cuts at 2 MMBbl/d through the end of 2023
> The move comes as OPEC+ anticipates a weaker global economy against a backdrop of interest rate hikes and increased inflation
> Al Mulla, Kuwait's Minister of Oil, also advised "continuous caution" amid this weaker backdrop
A price cap of $60/Bbl on Russian crude was enforced on Monday, December 5, by the G7 coalition and the EU, following their Friday agreement (Reuters, BBG)
> According to the price cap, Russia can only export crude oil, ship it, and insure it using the services of Western companies if it sells it for $60/Bbl or less
> Starting in mid-January, the cap policy will be reviewed every two months and includes a resetting cap of at least 5% below average market rates
> Every change must get the unanimous approval of all EU members
Moscow responded to the cap by saying it would not sell oil under the cap and that it was mulling an appropriate response
> "We are working on mechanisms to prohibit the use of a price cap instrument, regardless of what level is set, because such interference could further destabilize the market," said Russian Deputy Prime Minister Novak yesterday
> He also added, "We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little"
In addition to the price cap, the EU has imposed an embargo on maritime imports of Russian crude, effective today
> The EU ban on seaborne Russian oil imports is part of a package of sanctions passed in June
> It includes barring maritime services — such as shipping insurance and financial services — on any tanker carrying Russian crude
> Hungary and a couple of other countries can continue to import Russian oil through pipelines
MY TAKE: If you live in Europe, stock up on firewood.
Natural Gas
Natural gas prices are down 7% in the prompt month
> The Summer ’23 seasonal strip is down 20c to $4.80, and the Winter ‘23/’24 strip is lower by 15c to $5.37
> Weather forecasts shifted significantly warmer over the weekend
> The Lower 48 forecast gained 24 °F in the 1-15 day period
> The Northeast region gained 37 °F, and the Midwest gained 49 °F over the same period
Equitrans resumes gas flows from Pennsylvania storage facility following leak (Reuters)
> The Rager Mountain storage facility operated by Equitrans suffered a leak in November that persisted for several days and released about 0.10 Bcf/d of gas
> Gas began flowing from the site on Thursday following repairs to the facility.
> Equitrans said they are “conducting a comprehensive review of all storage wells at Rager Mountain” and that the well that leaked is not currently in service
UK supplying Europe with natural gas (BBG)
> Normally at this time of year, the UK will be importing gas from Europe, however, flows through the Interconnector pipeline to Belgium are at their highest for this time of year since 2016
> The price of natural gas in the UK has been consistently lower than the price of gas in Europe, encouraging traders to export the gas
> Wood Mackenzie estimates that the UK will remain a net exporter of gas throughout the winter
> WTI is up $2.47 to $82.45/bbl, and Brent is up $2.60 to $88.17/bbl.
> Natural gas is down -40.9c to $5.872/MMBtu.
AEGIS Notes
Oil
Oil reversed Friday’s losses on Monday morning
> WTI rose by $2.47/Bbl to trade above $82/Bbl amid supply concerns
> OPEC+ nations agreed to hold their output targets steady at their Sunday meeting
> The G7 nation’s price cap and the EU’s price cap on Russian crude kicked in today
China continues to ease Covid curbs (BBG)
> Cities, including Shanghai, Shenzhen, and Chengdu, have scrapped PCR testing for entry into parks or public transport from today
> Despite increased cases in some areas of China, health officials have removed many testing booths in Beijing
> China’s easing of covid curbs supports oil prices as it indicates an impending recovery in oil demand in the largest crude-importing nation
OPEC and its allies decided yesterday to maintain their current crude output cuts at 2 MMBbl/d through the end of 2023
> The move comes as OPEC+ anticipates a weaker global economy against a backdrop of interest rate hikes and increased inflation
> Al Mulla, Kuwait's Minister of Oil, also advised "continuous caution" amid this weaker backdrop
A price cap of $60/Bbl on Russian crude was enforced on Monday, December 5, by the G7 coalition and the EU, following their Friday agreement (Reuters, BBG)
> According to the price cap, Russia can only export crude oil, ship it, and insure it using the services of Western companies if it sells it for $60/Bbl or less
> Starting in mid-January, the cap policy will be reviewed every two months and includes a resetting cap of at least 5% below average market rates
> Every change must get the unanimous approval of all EU members
Moscow responded to the cap by saying it would not sell oil under the cap and that it was mulling an appropriate response
> "We are working on mechanisms to prohibit the use of a price cap instrument, regardless of what level is set, because such interference could further destabilize the market," said Russian Deputy Prime Minister Novak yesterday
> He also added, "We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little"
In addition to the price cap, the EU has imposed an embargo on maritime imports of Russian crude, effective today
> The EU ban on seaborne Russian oil imports is part of a package of sanctions passed in June
> It includes barring maritime services — such as shipping insurance and financial services — on any tanker carrying Russian crude
> Hungary and a couple of other countries can continue to import Russian oil through pipelines
MY TAKE: If you live in Europe, stock up on firewood.
Natural Gas
Natural gas prices are down 7% in the prompt month
> The Summer ’23 seasonal strip is down 20c to $4.80, and the Winter ‘23/’24 strip is lower by 15c to $5.37
> Weather forecasts shifted significantly warmer over the weekend
> The Lower 48 forecast gained 24 °F in the 1-15 day period
> The Northeast region gained 37 °F, and the Midwest gained 49 °F over the same period
Equitrans resumes gas flows from Pennsylvania storage facility following leak (Reuters)
> The Rager Mountain storage facility operated by Equitrans suffered a leak in November that persisted for several days and released about 0.10 Bcf/d of gas
> Gas began flowing from the site on Thursday following repairs to the facility.
> Equitrans said they are “conducting a comprehensive review of all storage wells at Rager Mountain” and that the well that leaked is not currently in service
UK supplying Europe with natural gas (BBG)
> Normally at this time of year, the UK will be importing gas from Europe, however, flows through the Interconnector pipeline to Belgium are at their highest for this time of year since 2016
> The price of natural gas in the UK has been consistently lower than the price of gas in Europe, encouraging traders to export the gas
> Wood Mackenzie estimates that the UK will remain a net exporter of gas throughout the winter