Oil & Gas Prices - July 14

[dan_s]

Opening Prices:
> WTI is down $0.07 to $76.82/bbl, and Brent is down $0.06 to $81.30/bbl.
> Natural gas is up 3.7c to $2.582/MMBtu. As of 08:00 AM CDT

Oil prices never have and never will go up or down in a straight line. The trading volume of NYMEX futures contracts is HUGE and the Paper Traders are going to harvest gains from time-to-time, especially on Fridays. The only fundamental reason for oil prices to pullback today is a slightly stronger US dollar and profit taking by some of the large paper traders. Some large block sales this morning triggered lots of automated "stop loss orders".
Supply / Demand Fundamentals point to much higher oil prices by the end of this quarter.

AEGIS Notes
Oil

Oil surges to an 11-week high on a weak dollar and supply disruptions
August ’23 WTI lost 7c this morning to trade around $76.81/Bbl
The U.S. dollar plunged to a 15-month low yesterday before rising 0.1% to 99.91 early Friday
Production disruptions in Libya and Nigeria cut over 0.5 MMBbl/d, 0.5% of the global supply
With no restart timeline, crude jumped nearly 70¢ following the Libyan news on Thursday
Additionally, Russia's total oil exports dropped 0.6 MMBbl/d to 7.3 MMBbl/d in June
Moderating inflation has prompted markets to expect less aggressive Fed rate hikes for 2023
IEA reiterated oil demand will increase in H2, led by China, which accounts for 70% of forecast record demand growth despite economic headwinds

Production disruptions in Libya rattle oil markets (BBG)
Libya's massive Sharara oil field shut down on Thursday due to protests, removing up to 0.26 MMBbl/d from the global supply
A smaller El Feel field (0.07 MMBbl/d) also halted output
A prolonged Libyan disruption could shift more West African crude to Europe, tightening supply further just as Saudi and Russian output cuts start tightening the market

Shell shuts key Nigeria export terminal after leak detected (BBG)
Shell halted Nigeria's Forcados oil terminal, which exports ~0.23 MMBbl/d, to check for a possible leak
Investigation ongoing after sheen spotted near terminal's mooring area, tightening Nigerian and global crude supply

Chevron shuts part of Richmond refinery after an emissions leak (BBG)
Chevron shut part of its 0.25 MMBbl/d Richmond, CA refinery due to a process disruption which led to the emissions leak
The incident resulted in sulfur dioxide release, temporarily halting operations

Natural Gas

Natural gas prices are higher today, around $2.58, after falling 9c yesterday
Weather forecasts continue to indicate slightly above-average temperatures over the next two weeks
LNG feedgas levels are lower again today, with total demand from LNG facilities at 11.4-Bcf/d
Power demand in the ERCOT system hit record highs for the second consecutive day (Reuters)

Demand for electricity on Thursday reached a high of 81.4 GW after setting a record the previous day at 81.3 GW
Power sector natural gas demand in Texas climbed to 7.58-Bcf/d on Thursday, up from 6.3-Bcf/d one week prior
ERCOT continues to forecast strong demand, with an expected load of 83 GW on July 16 and 84 GW on July 17

El Nino conditions likely to persist through winter (Reuters)
Weather forecasters at the National Weather Service’s Climate Prediction Center said on Thursday that there is more than a 90% chance that El Nino conditions will continue throughout the 2023-2024 winter season
While globally, El Nino is often associated with hotter temperatures; the effects can be mixed on a regional basis
Oftentimes in the US, a winter El Nino leads to wetter conditions in the southern US and warmer/drier conditions in the northern US, but effects depend on the strength of the El Nino