Energy Prospectus

Opening Prices:
> WTI is down $0.24 to $78.50/bbl, and Brent is down $0.22 to $82.52/bbl.
> Natural gas is up 0.1c to $2.686/MMBtu.

AEGIS Notes
Oil

Oil eases from three-month highs ahead of Fed meeting
September ’23 WTI lost 24c this morning to trade around $78.50/Bbl
The U.S. dollar continues to strengthen relative to its recent lows weighing on dollar-denominated commodities
Crude prices surged nearly $8/Bbl since early July, driven by Saudi's 1 MMBbl/d output cut and Russia's plan to curb 0.5 MMBbl/d exports in August

China's leaders pledged policy support for the economy on Monday, hinting at more stimulus to boost domestic demand
Amid weak domestic and international demand, China's slow Q2 growth heightens pressure for more stimulus

The market expects a 25-bp rate hike from Fed’s July 25-26 meeting
Despite initial signals for two rate hikes this year, weaker economic reports have led many to expect the Fed’s Wednesday hike to be the final one in the current cycle

ussia’s weekly refinery processing falls for the first time since June (Bloomberg)
Russia's oil processing rates averaged 5.6 MMBbl/d for the week ending July 19, marking a decline of 0.08 MMBbl/d due to maintenance work at several refineries
Despite this weekly drop, the overall average crude processing for the month through July 19 remained higher at 5.64 MMBbl/d, compared to June's 5.46 MMBbl/d
Despite a decrease in refinery runs last week, Russia's seaborne oil exports for the week ending July 17 fell slightly from 3.27 MMBbl/d to 3.16 MMBbl/d, according to Kpler

Natural Gas

Natural gas prices are trading slightly higher, around $2.68
Weather forecasts shifted net cooler, with the biggest change in the Midwest region’s forecast, which cooled by 9.8 °F over the two-week period
Gas production is down 1.89 Bcf/d today amid maintenance on Transco’s Leidy Line in the Northeast
This should be the final day of maintenance on the Leidy Line

US Solicitor General asks Supreme Court to act on Mountain Valley Pipeline (S&P)
The Solicitor General has requested that the Supreme Court vacate the stay issued by the US Fourth Circuit Court of Appeals, which blocks construction on MVP
The Fourth Circuit Court issued the stay despite the debt ceiling bill removing the court's authority to act on MVP
Pipeline developers have said that the stay will need to be reversed by July 26 for the 2 Bcf/d Appalachian pipeline to enter service in 2023

24% of gas-fired power plants may require changes after EPA rule (S&P)
Proposed rules by the EPA intended to reduce power sector greenhouse gas emissions could put some gas power plants out of compliance
The rules would require larger plants that operate more than half of the time to implement green hydrogen blending or 90% carbon capture by 2032 and 2035, respectively
Power plants could also comply by reducing their annual capacity factor below 50%

Trading Economics:
"WTI crude futures rose over $79 per barrel on Tuesday, hovering near a three-month high hit in the previous session, underpinned by the prospect of tighter global supplies and stronger Chinese demand. The oil market remains supported by output cuts from OPEC+, with the group signaling readiness to take additional measures if needed. On the demand side, China pledged to ramp up policy support for its flagging economy, with a focus on boosting domestic demand and helping the ailing property market. Nevertheless, caution reined ahead of crucial interest rate decisions from both the US Federal Reserve and the European Central Bank. Market expectations suggest that both central banks are likely to implement rate hikes this month, though traders have dialed back their expectations of further monetary tightening this year due to easing inflationary pressures."

WTI almost made it to $80 today.

Closing Prices:
> Prompt-Month WTI (Sep 23) was up $0.89 on the day, to settle at $79.63
> Prompt-Month Henry Hub (Aug 23) was up $0.045 on the day, to settle at $2.730