Oil & Gas Prices - July 19
Posted: Wed Jul 19, 2023 8:56 am
Opening Prices:
> WTI is up $0.52 to $76.27/bbl, and Brent is up $0.65 to $80.28/bbl. < At the time of this post WTI is up $1.03 to $76.78.
> Natural gas is down -2.4c to $2.605/MMBtu. < Ngas now back to $2.63.
AEGIS Notes
Oil
Oil trades higher as supply shortage risks counter economic worries
> August ’23 WTI gained 58c this morning to trade around $76.33/Bbl
> Russia’s crude exports fell to a six-month low in the four weeks ending July 16
> Crude has been trading range-bound since May as the market weighs China’s slow recovery against OPEC+ supply cuts and potential end to Fed rate hikes
> China's NDRC plans to implement policies to grow consumption, potentially driving up oil demand
> Additionally, cooling inflation in Canada and UK boosts market sentiment
Russia’s flagship crude dips below the $60/Bbl G7-price cap (BBG)
> Russia's Urals crude oil fell back below the $60/Bbl price cap imposed by the G7 countries to constrain Russia's funding for its Ukraine conflict
> After exceeding the cap for the first time last week, it fell to $58.59 and $59.09 in Baltic and Black Sea ports, respectively, according to Argus
> The G7 cap, effective since December 5, had not been surpassed by the Urals until last week, amidst an oil market tightened by disruptions in Libya, Nigeria, and supply curbs by OPEC+
Market participant optimism rises following Saudi's supply cuts (Reuters)
> Over seven days ending July 11, hedge funds and other managers bought 115 MMBbl across six major petroleum futures and options contracts, indicating a significant shift in traders' risk assessments
> Following Saudi's extended 1 MMBbl/d cut, fund purchases rose from 282 MMBbl on June 27 to 445 MMBbl by July 11, driving bullish over bearish positions to 2.98:1
> Although fund managers remain cautious about future oil prices, the recent supply cuts may have eased the extreme market pessimism
Natural Gas
Natural gas prices are down slightly, around $2.61, after gaining 12c yesterday
> Weather forecasts for the Lower 48 are mostly unchanged today; however, the South Central regional forecast warmed by 8.4 °F over the two-week period
> Gas demand is expected to rise to 77.6-Bcf/d from 73.4-Bcf/d over the next two weeks
> Northeast gas production is down 1-Bcf/d due to a maintenance event on the Transcontinental pipeline’s Leidy line
Texas storage facility seeking approval to increase injections and withdrawals (S&P)
> The Golden Triangle storage facility located in Southeast Texas is seeking approval from FERC to increase maximum withdrawals to 680-MMcf/d from 600-MMcf/d and to increase injections to 765-MMcf/d from 300-MMcf/d
> Another storage facility in the Gulf Coast region, the Tres Palacios Gas Storage, is seeking FERC’s approval to expand total storage capacity by 6.5-Bcf, while Sempra was approved last September to construct a 20-Bcf storage site in Louisiana
> Storage has become increasingly valuable to the Gulf Coast due to the growth of LNG exports, as a weather or maintenance-related event can leave significant volumes of gas stranded in the region
MY TAKE: This is reminder that comparing natural gas storage levels to the 5-year average each week can be a bit misleading because demand for U.S. natural gas is MUCH HIGHER than it was five years ago. Here in the U.S., we need more gas in storage to insure steady flows of gas for power generation and space heating. Europe and Asia are now more dependent on imports of LNG from the U.S. each year.
New York City could face a power shortfall due to gas plant closure (S&P)
> Grid operator NYISO said in a recent reliability report that projected power demand on a 95 °F day could exceed transmission capacity by 306-446 MW, and at 98 °F the shortage could increase to 555 MW
> NYISO attributed much of the projected shortage to the shutdown of gas-fired peaking plants, of which 1,027 MW have been shut down since May 1, and an additional 590 MW will be shut down by 2025
> One proposed solution is to import additional power from Canada through new transmission lines
> WTI is up $0.52 to $76.27/bbl, and Brent is up $0.65 to $80.28/bbl. < At the time of this post WTI is up $1.03 to $76.78.
> Natural gas is down -2.4c to $2.605/MMBtu. < Ngas now back to $2.63.
AEGIS Notes
Oil
Oil trades higher as supply shortage risks counter economic worries
> August ’23 WTI gained 58c this morning to trade around $76.33/Bbl
> Russia’s crude exports fell to a six-month low in the four weeks ending July 16
> Crude has been trading range-bound since May as the market weighs China’s slow recovery against OPEC+ supply cuts and potential end to Fed rate hikes
> China's NDRC plans to implement policies to grow consumption, potentially driving up oil demand
> Additionally, cooling inflation in Canada and UK boosts market sentiment
Russia’s flagship crude dips below the $60/Bbl G7-price cap (BBG)
> Russia's Urals crude oil fell back below the $60/Bbl price cap imposed by the G7 countries to constrain Russia's funding for its Ukraine conflict
> After exceeding the cap for the first time last week, it fell to $58.59 and $59.09 in Baltic and Black Sea ports, respectively, according to Argus
> The G7 cap, effective since December 5, had not been surpassed by the Urals until last week, amidst an oil market tightened by disruptions in Libya, Nigeria, and supply curbs by OPEC+
Market participant optimism rises following Saudi's supply cuts (Reuters)
> Over seven days ending July 11, hedge funds and other managers bought 115 MMBbl across six major petroleum futures and options contracts, indicating a significant shift in traders' risk assessments
> Following Saudi's extended 1 MMBbl/d cut, fund purchases rose from 282 MMBbl on June 27 to 445 MMBbl by July 11, driving bullish over bearish positions to 2.98:1
> Although fund managers remain cautious about future oil prices, the recent supply cuts may have eased the extreme market pessimism
Natural Gas
Natural gas prices are down slightly, around $2.61, after gaining 12c yesterday
> Weather forecasts for the Lower 48 are mostly unchanged today; however, the South Central regional forecast warmed by 8.4 °F over the two-week period
> Gas demand is expected to rise to 77.6-Bcf/d from 73.4-Bcf/d over the next two weeks
> Northeast gas production is down 1-Bcf/d due to a maintenance event on the Transcontinental pipeline’s Leidy line
Texas storage facility seeking approval to increase injections and withdrawals (S&P)
> The Golden Triangle storage facility located in Southeast Texas is seeking approval from FERC to increase maximum withdrawals to 680-MMcf/d from 600-MMcf/d and to increase injections to 765-MMcf/d from 300-MMcf/d
> Another storage facility in the Gulf Coast region, the Tres Palacios Gas Storage, is seeking FERC’s approval to expand total storage capacity by 6.5-Bcf, while Sempra was approved last September to construct a 20-Bcf storage site in Louisiana
> Storage has become increasingly valuable to the Gulf Coast due to the growth of LNG exports, as a weather or maintenance-related event can leave significant volumes of gas stranded in the region
MY TAKE: This is reminder that comparing natural gas storage levels to the 5-year average each week can be a bit misleading because demand for U.S. natural gas is MUCH HIGHER than it was five years ago. Here in the U.S., we need more gas in storage to insure steady flows of gas for power generation and space heating. Europe and Asia are now more dependent on imports of LNG from the U.S. each year.
New York City could face a power shortfall due to gas plant closure (S&P)
> Grid operator NYISO said in a recent reliability report that projected power demand on a 95 °F day could exceed transmission capacity by 306-446 MW, and at 98 °F the shortage could increase to 555 MW
> NYISO attributed much of the projected shortage to the shutdown of gas-fired peaking plants, of which 1,027 MW have been shut down since May 1, and an additional 590 MW will be shut down by 2025
> One proposed solution is to import additional power from Canada through new transmission lines