Energy Prospectus

> WTI is up $0.67 to $78.73/bbl, and Brent is up $0.87 to $85.37/bbl.
> Natural gas is up 1.8c to $2.448/MMBtu.

AEGIS Notes
OIL

Oil heads for a significant weekly gain amid risks of supply loss
March ’23 WTI gained nearly 80c this morning to trade around $79/Bbl
Crude is set to gain more than $5/Bbl, or 8% this week

OPEC+ group indicated to maintain output despite Russia’s plans to cut production by 0.5 MMBbl/d in March (BBG)
The bloc added that they remain apprehensive that a resurgence in covid cases may hamper China's economic recovery

Crude prices rose earlier in the week following production disruptions caused by the Turkey earthquake and a technical issue at a North Sea field
Prices came under pressure in the second half of the week amid Fed's signal that rate hikes would continue and weak Chinese economic data
GH
Russia said it would cut oil output by 0.5 MMBbl/d in March (Bloomberg)
The production cut is in retaliation to Western sanctions and price caps, according to a statement from Deputy Prime Minister Alexander Novak
Russia discussed its voluntary oil output cut with some OPEC+ members, Interfax reported, citing Kremlin spokesperson Dmitry Peskov
The cut would deepen the 2 MMBbl/d OPEC+ supply cuts that last until the end of 2023, and delegates of the bloc signaled they wouldn't increase production to make up for Moscow's supply cuts

NATURAL GAS < KEEP IN MIND THAT THE NGAS PRICE SHOWN ABOVE IS THE FRONT MONTH FUTURES CONTRACT PRICE. SPOT MARKET PRICES ARE MUCH HIGHER ON BOTH COASTS.

Natural gas prices are up slightly, heading for the first higher weekly close in seven weeks
Weather forecasts have shifted warmer, with the largest changes in the Northeast region
The Northeast’s forecast has warmed by 10.1 °F in the 6-10 day period and 14.6 °F in the 11-15 day period

California regulators looking at the role storage played in the December gas price spike (S&P)
The California Public Utilities Commission is investigating what caused western gas prices to spike in December and is focusing on California’s underground storage
The commission identified the causes of the price spike to be low storage levels, sustained below-normal temperatures, reduced Canadian imports, and Permian Basin pipeline constraints

Pacific gas storage levels are 34% lower than the five-year average, and an accounting change in 2021 may have exacerbated the low storage levels by reclassifying 58 Bcf of working gas as base storage
The issues from December may continue in the future as PG&E is being urged by some to decommission about 86 Bcf of storage facilities due to previous leaks

Regulators approve Freeport LNG’s request to begin loading ships (Reuters) > THIS IS ONE OF THE KEYS TO HIGHER NATURAL GAS PRICES.
Freeport had been given the authorization to restart one of their three liquefaction trains last week
As of Thursday, Freeport now has the approval to transfer LNG from their storage tanks to ships at their loading dock
Freeport has continued to receive small amounts of gas flows, with Thursday's nominations totaling 69 MMcfd, and an average of 34 MMcfd since January 26

From one of our members in New York: "JPM estimates Putin could cut 5,000,000 bopd w/out severely damaging Russia econ. Do you think the euro bureau elite in Germany and Belgium want to play that rough?"

MY TAKE: Putin controls the oil price and Europe controls nothing. The EU sanctions will hurt the citizens of Europe more than they impact Putin.

Jet Fuel Prices Hit 12-Year Highs
Friday Feb 10, 2023
URL: https://www.rigzone.com/news/jet_fuel_p ... 6-article/
In a statement sent to Rigzone on Thursday, energy and environmental geo-analytics company Kayrros noted that jet fuel prices have reached 12-year highs relative to diesel, “helped by the reopening of China”.

“Since China’s reopening on 8 January, which followed more than 1,000 days of Covid restrictions, jet fuel demand has been climbing,” Kayrros said in the statement, adding that, “as the Chinese took to the skies to celebrate their freedom and the Lunar New Year, national jet fuel demand doubled within a week”.

Kayrros noted that the reopening has boosted the global aviation sector, which it said is still recovering after Covid. Year on year growth in jet fuel demand reached 20 percent last month, according to figures from Kayrros, which cited analysis of ADS-B data - signals from aircraft transponders.

In the statement, Kayrros outlined that data on air cargo suggests the global economy may not be rising with increasing jet fuel prices. Passenger travel demand growth now outperforms that from air freight, according to Kayrros, which said this may be a worrying sign for the economy.

“Air freight is considered a leading economic indicator,” Kayrros’ President Antoine Rostand said in a company statement.

“That’s why the drop in air cargo demand which our data show could be a red flag for the economy … For now, this has been more than offset by the surge in passenger flights, particularly on low-cost airlines. But this will continue to cause rising prices, which will drive down air cargo demand,” he added.

“It therefore remains to be seen how the global economy will react. We can be certain that real-time monitoring of jet fuel data will be key to understanding whether China’s reopening will give the world economy the shot in the arm it needs,” Rostand continued.

Jet Fuel Price Forecast

In a report sent to Rigzone on January 31, Fitch Solutions Country Risk & Industry Research said the company had raised its global annual average price forecast for jet fuel to $140 per barrel for 2023.

The figure marked an increase of 10.5 percent over Fitch Solutions’ previous view for prices of $127 per barrel, the company highlighted. Fitch Solutions outlined in the report that the increase reflected “tighter supplies globally and resurgent demand for air travel from all regions aided by rapid return of the Chinese market”.

“The outlook for jet fuel prices in the short-term is tilted to the upside but we hold a mixed view for prices from current spot levels,” the Fitch Solutions report, which pegged the global spot average at $166 per barrel, stated.

“The high volatility seen in the U.S. market is likely to moderate in the coming months, giving the global market average a bearish tilt in the near-term. While in Europe prices are forecast to rise in the short-term on the fuel import ban from Russia which will come into effect in February 2023,” the report added.

“In Singapore, we forecast the annual average prices to come just below current spot prices, as increased refinery runs and exports from China are likely to keep markets well supplied despite expectations for increased regional consumption as China’s borders re-open with few restrictions,” the report continued.

Demand Growth

In its latest oil market report, which was released in January, the International Energy Agency (IEA) projected that global oil demand is set to rise by 1.9 million barrels per day in 2023 to a record 101.7 million barrels per day.

Nearly half the gain will come from China following the lifting of its Covid restrictions and jet fuel will be the largest source of growth, up 840,000 barrels per day, the report outlined.

“This year could see oil demand rise by 1.9 million barrels per day to reach 101.7 million barrels per day, the highest ever, tightening the balances as Russian supply slows under the full impact of sanctions,” the IEA oil market report stated.

“China will drive nearly half this global demand growth even as the shape and speed of its reopening remains uncertain,” the report added.

The IEA’s next oil market report is currently scheduled to be released on February 15.

Closing Prices:
> Prompt-Month WTI (Mar 23) was up $1.66 on the day, to settle at $79.72.
> Prompt-Month Henry Hub (Mar 23) was up $0.084 on the day, to settle at $2.514.