Oil & Gas Prices - Dec 13

[dan_s]

Traveled back from Louisiana this morning, so just getting back at my desk.
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At 1:40 pm CT
> WTI oil price up $2.41 to $75.58
> HH natural price up $0.37 to $6.95

Trading Economics:
Crude Oil
WTI crude futures rose almost 4% to around $76 per barrel, extending gains for a second session amid growing optimism about China's reopening and persistent supply disruptions.
> China has signaled a softening stance in the fight against the coronavirus, raising hopes for a swifter rebound in economic activity and crude demand.
> At the same time, the Keystone Pipeline that connects fields in Canada to refiners in the US Gulf Coast remained shut.
> Adding to the bullish tone were softer-than-expected US inflation data, reinforcing the narrative that the Federal Reserve will be less aggressive while lifting the growth outlook.
> Keeping a lid on prices was a somewhat bearish report from OPEC, with the cartel group keeping its outlook for global oil supply and demand "cautious", suggesting that the West's move to set a price cap on Russian oil will likely not disrupt crude flows. OPEC now sees a balanced market in the first quarter of 2023 instead of the deficit implied by its projections a month ago.

Natural Gas
US natural gas futures traded around $7/MMBtu, moving away from five-month lows of $5.5/MMBtu hit on December 6th, amid forecasts for much colder weather and higher heating demand than previously expected.
> Frigid temperatures and heavy precipitation on the West Coast have fueled natural gas demand at a time when storage inventories are below average.
> Meanwhile, the Freeport LNG export plant in Texas, forced to go offline in June following a fire, expects to begin bringing operations back online by year's end, in another delay due to pending regulatory approval.
> Still, prices remain subdued for this time of the year, as milder weather in most of October and November delayed the winter heating season while record production levels added to the bearish sentiment.
> EIA reported that US production of dry natural gas, used primarily in homes and businesses for heating, cooking, and electricity, is set to break an annual record of 98.0 Bcf/d in 2022.
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MY TAKE:
> Not being reported yet, if the winter storm hits the Rockies and North Dakota hard it is likely to cause some well "freeze-offs". This is more likely if sub-freezing temperatures persist for several days in Appalachia (Marcellus/Utica gas wells).
> The EIA's weekly natural gas storage reports will show draws below the 5-year average for the weeks ending Dec 9 and Dec 16. Following that will be BIG DRAWS for the weeks ending Dec 23 and Dec 30. We could see a draw over 200 Bcf for the week ending Dec 23, which will be a nice Christmas present for all of our gassers. CRK, CTRA and SBOW appear to have the most upside if natural gas price move over $7.00 by year end.
> My current SWAG is that US natural gas storage will end 2022 at 100 to 150 Bcf below the 5-year average.
> There is a lot of winter remaining and La Nina winters can have big swings in the weather and the gas price.