Oil & Gas Prices - Jan 27
Posted: Fri Jan 27, 2023 10:10 am
Opening Prices:
> WTI is up $0.98 to $81.99/bbl, and Brent is up $0.97 to $88.44/bbl.
> Natural gas is down -8.4c to $2.86/MMBtu.
AEGIS notes
Oil
Oil heads for a weekly gain amid hopes of a rebound in Chinese demand
> March ’23 WTI gains nearly $1 this morning to trade around $82/Bbl
> Optimism for a recovery in Chinese demand supported crude this week, reversing some losses from early January
> High refined product cracks due to refinery outages and a weaker US Dollar also supported prices this week
> A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
OPEC+ delegates meet next week (Feb. 1) to review crude production levels, and sources from the bloc expect the existing output policy to remain unchanged (Reuters)
Additionally, the EU is in the planning phases for a price cap on Russian fuel products that will go into effect on February 5, along with sanctions
> The EU is mulling a plan to impose a price cap of $100/Bbl on premium Russian oil products like diesel (BBG) < Europe's economy will be crushed if Russia stops sending them diesel. U.S. diesel inventories are 20% below the normal level.
> According to reports, a $45/Bbl cap level is being considered for products that sell at a discount to crude
> The price cap is expected to go into effect on February 5, the same day the EU ban on Russian products would start
> A price cap level will be more formally discussed today, and if EU members are unable to come to an agreement by February 5, the full ban on Russian petroleum products would go into effect, which will likely tighten the diesel and other fuels markets
> Additionally, a coalition led by Estonia, Lithuania, and Poland is pushing to lower the crude oil price cap somewhere between $40 - $50 to curb Russian revenues further
Natural Gas
Natural gas prices are trading around $2.86, heading for a sixth consecutive weekly loss
> Weather forecasts shifted materially warmer again
> The Midwest regions forecast gained 26 °F in the 6-10 day period and 16 °F in the 11-15 day period
> Yesterday the EIA reported a storage withdrawal of 91 Bcf, which is 73 Bcf less than the five-year average withdrawal for this week
Freeport LNG receives approval to begin steps to restart the facility (Reuters)
> Federal regulators approved Freeport’s request to begin cooling down some of their piping systems, a process which could take about 11 days to complete
> However, the export plant has yet to request approval to restart liquefaction operations
> Freeport expects to steadily increase gas flows once they begin the restart process, ramping up to a full capacity of 2.1 Bcf/d by March
Mountain Valley Pipeline may face another delay (BBG)
> The completion date of the long-awaited pipeline could be extended into 2024 due to ongoing litigation
> On January 24, Virginia courts heard oral arguments pertaining to two lawsuits challenging MVPs water permits
> Bloomberg estimates that there is a 60% chance that MVPs developer, Equitrans, loses one or both of the lawsuits
> Equitrans is still guiding towards completion of the 2 Bcf/d pipelines in the second half of 2023
ICE to create a new gas trading hub in London due to EU price cap (Reuters)
> The hub will act as a “parallel market” to the Dutch TTF hub, which ICE also operates
> The market is being created due to concerns that the EU’s gas price cap could create situations that prevent customers from trading or managing risk at the TTF hub
> WTI is up $0.98 to $81.99/bbl, and Brent is up $0.97 to $88.44/bbl.
> Natural gas is down -8.4c to $2.86/MMBtu.
AEGIS notes
Oil
Oil heads for a weekly gain amid hopes of a rebound in Chinese demand
> March ’23 WTI gains nearly $1 this morning to trade around $82/Bbl
> Optimism for a recovery in Chinese demand supported crude this week, reversing some losses from early January
> High refined product cracks due to refinery outages and a weaker US Dollar also supported prices this week
> A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
OPEC+ delegates meet next week (Feb. 1) to review crude production levels, and sources from the bloc expect the existing output policy to remain unchanged (Reuters)
Additionally, the EU is in the planning phases for a price cap on Russian fuel products that will go into effect on February 5, along with sanctions
> The EU is mulling a plan to impose a price cap of $100/Bbl on premium Russian oil products like diesel (BBG) < Europe's economy will be crushed if Russia stops sending them diesel. U.S. diesel inventories are 20% below the normal level.
> According to reports, a $45/Bbl cap level is being considered for products that sell at a discount to crude
> The price cap is expected to go into effect on February 5, the same day the EU ban on Russian products would start
> A price cap level will be more formally discussed today, and if EU members are unable to come to an agreement by February 5, the full ban on Russian petroleum products would go into effect, which will likely tighten the diesel and other fuels markets
> Additionally, a coalition led by Estonia, Lithuania, and Poland is pushing to lower the crude oil price cap somewhere between $40 - $50 to curb Russian revenues further
Natural Gas
Natural gas prices are trading around $2.86, heading for a sixth consecutive weekly loss
> Weather forecasts shifted materially warmer again
> The Midwest regions forecast gained 26 °F in the 6-10 day period and 16 °F in the 11-15 day period
> Yesterday the EIA reported a storage withdrawal of 91 Bcf, which is 73 Bcf less than the five-year average withdrawal for this week
Freeport LNG receives approval to begin steps to restart the facility (Reuters)
> Federal regulators approved Freeport’s request to begin cooling down some of their piping systems, a process which could take about 11 days to complete
> However, the export plant has yet to request approval to restart liquefaction operations
> Freeport expects to steadily increase gas flows once they begin the restart process, ramping up to a full capacity of 2.1 Bcf/d by March
Mountain Valley Pipeline may face another delay (BBG)
> The completion date of the long-awaited pipeline could be extended into 2024 due to ongoing litigation
> On January 24, Virginia courts heard oral arguments pertaining to two lawsuits challenging MVPs water permits
> Bloomberg estimates that there is a 60% chance that MVPs developer, Equitrans, loses one or both of the lawsuits
> Equitrans is still guiding towards completion of the 2 Bcf/d pipelines in the second half of 2023
ICE to create a new gas trading hub in London due to EU price cap (Reuters)
> The hub will act as a “parallel market” to the Dutch TTF hub, which ICE also operates
> The market is being created due to concerns that the EU’s gas price cap could create situations that prevent customers from trading or managing risk at the TTF hub