Oil & Gas Prices - Dec 22

[dan_s]

Opening Prices:
> WTI is up $0.92 to $79.21/bbl, and Brent is up $0.80 to $83.00/bbl.
> Natural gas is down -7.8c to $5.254/MMBtu.

AEGIS Notes
Oil

Oil rallies for a fourth-consecutive day, hitting its highest in two and a half weeks
> WTI gained nearly $1 this morning to trade around $79/Bbl
> The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) continued to weaken relative to its recent highs
> A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods

China to cut quarantine requirements for international travelers and stick to its complete reversal of the Covid-zero policy

A winter storm moving toward North America is likely to affect the whole of the U.S., according to CNN

China continues to struggle with COVID infections after curbs ease (BBG)
> According to Airfinity Ltd., a London-based research company that specializes in predictive health analytics, the nation likely has 1 million Covid cases and 5,000 viral deaths every day < In a country with 1.5 billion people is this really high?
> The group sees the daily case rate might increase to 3.7 million in January
> A complete change in how the virus is perceived is shown by the fact that Chinese workers with mild Covid infections are being told to return to work in some cities as officials try to reduce the economic impact of a spike in cases as the country reopens
> AEGIS notes that China's swift reversal of its Covid-zero policy has given rise to optimism for the long-term demand, although the near-term forecast is uncertain due to surging virus cases

Natural Gas

Natural gas prices are down slightly this morning, trading around $5.25 < At $5.41 when this was posted.
> The Summer ’23 strip is lower by 13c to $4.59, and the Winter ‘23/’24 strip is down 9c to $5.16
> The Winter ‘23/’24 strip is trading at its lowest level since August of this year
> Weather forecasts have warmed, with the Midwest region forecast gaining 20.8 °F in the 6-10 day period

ONEOK files permit applications for cross-border gas transport infrastructure
> According to a FERC filing by the company, ONEOK is planning to construct facilities to transport gas from their existing Permian Basin pipeline system to Mexico
> The facilities would connect at the international boundary, and a new pipeline under development in Mexico will transport gas to an export plant on Mexico’s West Coast
> The planned system will include a 2.8 Bcf/d pipeline originating at the Waha Hub, with an expected final investment decision by mid-2023

Shell suspends production at Prelude FLNG (BBG)
> A fire has caused Shell to temporarily stop production at their floating LNG export facility off the coast of Australia
> The facility was offline for maintenance for the last two months and resumed loadings this past week
> The outage could force Shell to purchase cargoes in the spot market to fulfill orders from customers at a time when the LNG spot market is already tight

[dan_s]

Closing Prices:
> Prompt-Month WTI (Feb 23) was down $-0.80 on the day, to settle at $77.49
> Prompt-Month Henry Hub (Jan 23) was down $-0.333 on the day, to settle at $4.999

Don't get too worried about the gas price: Trading can get "weird" during the holiday season and especially as the front month contracts expire. Plus, weather forecasts are all over the place.