Oil & Gas Prices - Feb 8

[dan_s]

Opening Prices:
> WTI is up $1.00 to $78.14/bbl, and Brent is up $0.84 to $84.53/bbl.
> Natural gas is down -5.1c to $2.533/MMBtu.

AEGIS NOTES
OIL

Oil rises for a third consecutive day amid optimism for a demand rebound
March ’23 WTI gained $1 this morning to trade above $78/Bbl

Yesterday, Fed Chair Powell said that last week’s stronger-than-expected jobs report showed that tightening monetary policy “will be a process that takes a significant period of time” (BBG)
He added that more rate hikes would be needed, but disinflation had begun

A weaker US Dollar also supported prices this week
A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods

Additionally, President Biden said that the world would require "oil and gas for a while," adding that the need will last for "at least another decade" during his state of the union address yesterday (BBG) < A rapid transition to renewables is a lie. $Trillions will be wasted on wind and solar, the two most unreliable sources of electricity on Earth.

Russia says the EU price cap exemptions show that there is still a demand for its oil (Reuters)
Russian Deputy Prime Minister Alexander Novak said that the price cap exemptions by the EU “emphasize that our oil products are in demand in Europe”
According to the EU's most recent guidance, the price cap would no longer apply after crude oil or petroleum products were allowed for free circulation in a jurisdiction outside Russia and given to the landed buyer
Additionally, the price cap also doesn't apply to Russian petroleum products if blending operations in a third nation "result in a tariff shift" or changes in the oil product type

Natural Gas

Natural gas prices are down 2.3% to $2.53
The Summer ’23 strip is lower by 6c to $2.99, and the Winter ‘23/’24 strip is down 4c to $3.97
Lower 48 weather forecasts are mixed with the 6-10 day period cooling by 6.7 °F, and the 11-15 day period warming by 5 °F
98% of US electricity capacity retirements will be from coal and natural gas in 2023 (EIA)

Operators plan to retire 15.6 GW of power generating capacity this year, with 6.2 GW of gas-fired retirements and 8.9 GW of coal retirements
Most US coal plants were constructed in the 1970s and 1980s and now must compete against higher-efficiency natural gas plants and low-cost renewables
California will be retiring the most gas-fired generation, with 2.2 GW of capacity expected to be retired
2% of retirements will be from petroleum-based power plants, which generally operate only at times of peak demand

LNG buyers seek more long-term deals (Reuters)
The global LNG market could take multiple years to balance, with high prices expected to continue, increasing demand for long-term supply agreements
Increased LNG demand from China’s reopening could further tighten the market, although estimates for 2023 imports are still below 2021 levels
The CEO of India’s Petronet LNG said that "What the industry has realized now is that they can't have a long-term business on spot purchases. So, the need is to have long-term contracts, a good mix of long-term, short-term, and medium-term contracts”