Oil & Gas Prices - Jan 4
Posted: Wed Jan 04, 2023 10:24 am
Opening Prices:
> WTI is down $1.90 to $75.03/bbl, and Brent is down $2.08 to $80.02/bbl.
> Natural gas is up 10.3c to $4.091/MMBtu.
AEGIS Notes
Oil
Oil prices remain under pressure after losing more than $3/Bbl yesterday
> Feb ’23 WTI lost nearly $2 this morning to trade around $75/Bbl
> The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) weakened on Wednesday after posting big gains in the previous session. A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
Concerns about surging Covid cases in China and whether the country can sustain the eased restrictions persist (Reuters)
> EU members are considering potential travel restrictions against travelers entering from China
> Many Chinese funeral houses and hospitals say they are overwhelmed, and international health experts anticipate at least 1 million deaths in China this year
> China has reported five more Covid related deaths today, bringing the total to over 5000. However, unreliable data and transparency raise questions. < Just FYI in this world of over 8 billion people, ~175,000 people die each day.
China hikes refined product export quotas for the first batch of 2023 (BBG)
> The government has issued 18.99 million tonnes (151 MMBbl) of quotas, up 46% from the 13 million tonnes allotted a year earlier, to cover mostly gasoline, diesel, and jet fuel exports, according to consultancies JLC and Longzhong
> However, this move could indicate that domestic demand is expected to be weakened
> This move might help reduce the impact of potential reductions in Russian diesel exports when EU sanctions go into effect in February
IMF's Managing Director warns that 2023 will be a more difficult year for the global economy (Reuters)
> 2023 is going to be a tough year for a large portion of the global economy as the key drivers of growth - the U.S., EU, and China - all see weaker activity, Kristalina Georgieva, managing director of the IMF, said on Sunday
> The IMF cut its forecast for global economic growth in 2023 in October, taking into account the ongoing drag from the Ukraine conflict as well as inflationary pressures and central banks' interest rates hikes
IMO FEAR of Recession remains the #1 reason for weaker oil prices.
Chevron to receive the first cargo of crude from Venezuela to the U.S. in four years
> Two oil tankers are being sent to Venezuela by Chevron, one of which is expected to load a cargo of Venezuelan crude for delivery into the U.S.
> The second tanker is loaded with diluents that will be sent to a Chevron oil joint venture located in Venezuela
Natural Gas
Natural gas prices are up nearly 2% to $4.09 after five consecutive days of losses
> The Summer ’23 strip is higher by 4c to $3.80, and the Winter ‘23/’24 strip is up 3c to $4.64
> Weather forecasts shifted cooler again, with the Lower 48 forecast losing 5.9 °F in the 6-10 day period
US dry gas production has returned to about 100 Bcf/d after plunging to 87 Bcf/d last week due to freeze-offs < Not sure about this as it usually takes several weeks to get all freeze related problems fixed. Weather still impacting North Dakota and other Rockies fields.
Tellurian amends the offtake agreement with Gunvor (S&P)
> The offtake agreement formerly had a December 30 deadline for Tellurian to satisfy certain conditions, such as commercially sanctioning the first phase of its Driftwood LNG project
> The deadline has been extended to January 31, but either company can now terminate the agreement without giving a previously required 45-day notice
> Tellurian has said that the 10-year Gunvor deal for 0.40 Bcf/d is key to the company securing further equity and debt financing for its LNG export plant
> The company faced several setbacks in 2022, with a $1 billion bond sale being canceled and supply agreements with Shell and Vitol being pulled
China could replace spot LNG with other gas sources in 2023 (BBG)
> China’s spot LNG deliveries may fall to zero from 124 Bcf last year as the country secures more gas supply from contractual LNG purchases and pipeline gas from Russia
> Even if spot LNG purchases are reduced, China’s total LNG imports this year are expected to rise by about 17%
> This may reduce competition in the LNG spot market, freeing up more cargo for buyers in Europe and other Asian countries
> WTI is down $1.90 to $75.03/bbl, and Brent is down $2.08 to $80.02/bbl.
> Natural gas is up 10.3c to $4.091/MMBtu.
AEGIS Notes
Oil
Oil prices remain under pressure after losing more than $3/Bbl yesterday
> Feb ’23 WTI lost nearly $2 this morning to trade around $75/Bbl
> The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) weakened on Wednesday after posting big gains in the previous session. A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
Concerns about surging Covid cases in China and whether the country can sustain the eased restrictions persist (Reuters)
> EU members are considering potential travel restrictions against travelers entering from China
> Many Chinese funeral houses and hospitals say they are overwhelmed, and international health experts anticipate at least 1 million deaths in China this year
> China has reported five more Covid related deaths today, bringing the total to over 5000. However, unreliable data and transparency raise questions. < Just FYI in this world of over 8 billion people, ~175,000 people die each day.
China hikes refined product export quotas for the first batch of 2023 (BBG)
> The government has issued 18.99 million tonnes (151 MMBbl) of quotas, up 46% from the 13 million tonnes allotted a year earlier, to cover mostly gasoline, diesel, and jet fuel exports, according to consultancies JLC and Longzhong
> However, this move could indicate that domestic demand is expected to be weakened
> This move might help reduce the impact of potential reductions in Russian diesel exports when EU sanctions go into effect in February
IMF's Managing Director warns that 2023 will be a more difficult year for the global economy (Reuters)
> 2023 is going to be a tough year for a large portion of the global economy as the key drivers of growth - the U.S., EU, and China - all see weaker activity, Kristalina Georgieva, managing director of the IMF, said on Sunday
> The IMF cut its forecast for global economic growth in 2023 in October, taking into account the ongoing drag from the Ukraine conflict as well as inflationary pressures and central banks' interest rates hikes
IMO FEAR of Recession remains the #1 reason for weaker oil prices.
Chevron to receive the first cargo of crude from Venezuela to the U.S. in four years
> Two oil tankers are being sent to Venezuela by Chevron, one of which is expected to load a cargo of Venezuelan crude for delivery into the U.S.
> The second tanker is loaded with diluents that will be sent to a Chevron oil joint venture located in Venezuela
Natural Gas
Natural gas prices are up nearly 2% to $4.09 after five consecutive days of losses
> The Summer ’23 strip is higher by 4c to $3.80, and the Winter ‘23/’24 strip is up 3c to $4.64
> Weather forecasts shifted cooler again, with the Lower 48 forecast losing 5.9 °F in the 6-10 day period
US dry gas production has returned to about 100 Bcf/d after plunging to 87 Bcf/d last week due to freeze-offs < Not sure about this as it usually takes several weeks to get all freeze related problems fixed. Weather still impacting North Dakota and other Rockies fields.
Tellurian amends the offtake agreement with Gunvor (S&P)
> The offtake agreement formerly had a December 30 deadline for Tellurian to satisfy certain conditions, such as commercially sanctioning the first phase of its Driftwood LNG project
> The deadline has been extended to January 31, but either company can now terminate the agreement without giving a previously required 45-day notice
> Tellurian has said that the 10-year Gunvor deal for 0.40 Bcf/d is key to the company securing further equity and debt financing for its LNG export plant
> The company faced several setbacks in 2022, with a $1 billion bond sale being canceled and supply agreements with Shell and Vitol being pulled
China could replace spot LNG with other gas sources in 2023 (BBG)
> China’s spot LNG deliveries may fall to zero from 124 Bcf last year as the country secures more gas supply from contractual LNG purchases and pipeline gas from Russia
> Even if spot LNG purchases are reduced, China’s total LNG imports this year are expected to rise by about 17%
> This may reduce competition in the LNG spot market, freeing up more cargo for buyers in Europe and other Asian countries