Oil & Gas Prices - June 21
Posted: Wed Jun 21, 2023 8:54 am
Opening Prices:
> WTI is up $0.13 to $71.32/bbl, and Brent is up $0.06 to $75.96/bbl.
> Natural gas is up 0.8c to $2.5/MMBtu.
AEGIS Notes
Oil
Oil trades higher ahead of Fed Chair’s congressional testimony
August ’23 WTI gained 5c this morning to trade around $71.24/Bbl
Yesterday, the July ‘23 WTI contract expired at $70.50/Bbl, down by $1.28/Bbl, but finished $3 above midmonth's near $67/Bbl lows
Equities and the dollar remain relatively unchanged as Fed Chair Powell is set to testify before Congress today, following last week's pause in interest rate hikes
Despite China's incremental steps to boost its economy, concerns arise about the adequacy of these measures to drive substantial growth
Additionally, the EPA, after a one-week delay, is expected to announce its decision on a potential increase in the U.S. biofuel mandate
Subdued Jet Fuel Demand Hampers 2023 Crude Growth Forecast Amid Slow Asian Flight Recovery (Bloomberg)
> Forecasts for 2023 had projected jet fuel to significantly drive crude demand growth post-Covid, but sluggish recovery of international flights, especially in China, is damping expectations
> Contrary to IEA's projection of jet fuel driving 45% of 2023's demand growth, airlines are likely to use 0.7 MMBbl/d less than in 2019, mainly due to fewer long-haul flights in Asia, according to FGE's Eugene Lindell
> Additionally, U.S. jet fuel demand remains 15% lower than in 2019, despite a five-year seasonal peak in domestic travel in June
Natural Gas
Natural gas prices are trading around $2.47 after falling 14c yesterday
Despite a heatwave in the Southern US, Lower 48 forecasts continue to indicate temperatures will remain below normal through the end of June, only rising to the 10-year average in the first week of July
Low wind generation in Texas leading to more gas usage (Reuters)
Despite adding an additional 2-GW of wind capacity added to the ERCOT grid this year, electricity generation from wind has fallen well below prior-year levels due to low wind speeds
So far in 2023, ERCOT wind generation has fallen 8% from year-ago levels, while natural gas generation has increased 12.9%, and solar has risen 26.1%
Lower wind output will generally lead to higher utilization of gas by the power sector to meet demand
Reduced wind combined with a considerable heat wave has led power prices in Texas to reach $2,500/MWh in the day-ahead market
LNG utilization rises from a six-month low (S&P)
Major maintenance at Cheniere’s Sabine Pass facility and an operational issue at Freeport LNG have brought US LNG feedgas levels to 11.2-Bcf/d, compared to an average of 13-Bcf/d in May and a peak of 14.8-Bcf/d
Sabine Pass has brought two trains offline for maintenance, which occurs once every six years
Freeport LNG has not publicly commented on their operational issue, but according to pipeline notices, they failed to take some quantities of gas, and Freeports utilization fell to 700-MMcf/d from 2.1-Bcf/d
Volumes into the facility have recovered this week however
> WTI is up $0.13 to $71.32/bbl, and Brent is up $0.06 to $75.96/bbl.
> Natural gas is up 0.8c to $2.5/MMBtu.
AEGIS Notes
Oil
Oil trades higher ahead of Fed Chair’s congressional testimony
August ’23 WTI gained 5c this morning to trade around $71.24/Bbl
Yesterday, the July ‘23 WTI contract expired at $70.50/Bbl, down by $1.28/Bbl, but finished $3 above midmonth's near $67/Bbl lows
Equities and the dollar remain relatively unchanged as Fed Chair Powell is set to testify before Congress today, following last week's pause in interest rate hikes
Despite China's incremental steps to boost its economy, concerns arise about the adequacy of these measures to drive substantial growth
Additionally, the EPA, after a one-week delay, is expected to announce its decision on a potential increase in the U.S. biofuel mandate
Subdued Jet Fuel Demand Hampers 2023 Crude Growth Forecast Amid Slow Asian Flight Recovery (Bloomberg)
> Forecasts for 2023 had projected jet fuel to significantly drive crude demand growth post-Covid, but sluggish recovery of international flights, especially in China, is damping expectations
> Contrary to IEA's projection of jet fuel driving 45% of 2023's demand growth, airlines are likely to use 0.7 MMBbl/d less than in 2019, mainly due to fewer long-haul flights in Asia, according to FGE's Eugene Lindell
> Additionally, U.S. jet fuel demand remains 15% lower than in 2019, despite a five-year seasonal peak in domestic travel in June
Natural Gas
Natural gas prices are trading around $2.47 after falling 14c yesterday
Despite a heatwave in the Southern US, Lower 48 forecasts continue to indicate temperatures will remain below normal through the end of June, only rising to the 10-year average in the first week of July
Low wind generation in Texas leading to more gas usage (Reuters)
Despite adding an additional 2-GW of wind capacity added to the ERCOT grid this year, electricity generation from wind has fallen well below prior-year levels due to low wind speeds
So far in 2023, ERCOT wind generation has fallen 8% from year-ago levels, while natural gas generation has increased 12.9%, and solar has risen 26.1%
Lower wind output will generally lead to higher utilization of gas by the power sector to meet demand
Reduced wind combined with a considerable heat wave has led power prices in Texas to reach $2,500/MWh in the day-ahead market
LNG utilization rises from a six-month low (S&P)
Major maintenance at Cheniere’s Sabine Pass facility and an operational issue at Freeport LNG have brought US LNG feedgas levels to 11.2-Bcf/d, compared to an average of 13-Bcf/d in May and a peak of 14.8-Bcf/d
Sabine Pass has brought two trains offline for maintenance, which occurs once every six years
Freeport LNG has not publicly commented on their operational issue, but according to pipeline notices, they failed to take some quantities of gas, and Freeports utilization fell to 700-MMcf/d from 2.1-Bcf/d
Volumes into the facility have recovered this week however