Oil & Gas Prices - July 26

[dan_s]

Opening Prices:
> WTI is down $0.90 to $78.73/bbl, and Brent is down $0.91 to $82.73/bbl.
> Natural gas is down -3.4c to $2.696/MMBtu.

AEGIS Notes
Oil

Oil falls from three-month highs ahead of U.S. Fed meeting
> September ’23 WTI lost 90c this morning to trade around $78.73/Bbl
> Equities trade higher while the dollar weakened, making dollar-denominated commodities cheaper for holders of other currencies

The U.S. Fed is widely expected to deliver a 25-bp rate hike today
> While an expected end to the Fed's rate-hike cycle supports prices, further Fed actions could potentially weigh on oil prices and other risk assets
> Oil saw a four-week rally driven by signs of tighter supplies by Saudi and Russian output cuts, and pledges by China to bolster its economy

Russian crude exports from western ports dive to lowest in seven months (Bloomberg)
> Russia's seaborne crude exports from western ports have dropped to their lowest level in seven months, falling by 0.63 MMBbl/d to 1.17 MMBbl/d
> Despite an increase in flows from Kozmino, a Pacific port, Russia's total crude exports fell by 0.31 MMBbl/d to a total of 2.73 MMBbl/d
> The reduction in crude exports aligns with Russia's pledge to the OPEC+ pact, coupled with a resurgence in domestic oil refining and the end of local fuel supply subsidies

Standard Charted forecasts large supply deficits over the next two months (Bloomberg)
> A surge in seasonal demand and production curbs are expected to cause significant oil supply deficits in the next two months, said Standard Charted in a July 25 note to clients
> The bank projects supply deficits of 2.81 MMBbl/d in August, 2.43 MMBbl/d in September, and above 2 MMBbl/d in November, December, and February 2024 < This lines up with forecast by Eric Nuttall, Raymond James and Goldman Sachs
> The bank maintains its average Brent price forecasts at $88/Bbl for Q3 and $93/Bbl for Q4< My WTI forecasts are $80/Bbl for Q3 and $90/Bbl for Q4 and all of 2024. Just remember that Fear of the Fed and Fear of a Recession will keep oil prices from moving straight up, but supply deficits over 2 million bpd will push the oil price a lot higher.

Natural Gas

Natural gas prices are trading lower following pipeline explosion
The Winter ‘23/’24 strip is at a monthly high of $3.60, and the Summer ’24 strip is trading at $3.33
Weather forecast changes were mixed with The Northeast region’s forecast cooling by 9.1 °F and the South Central region’s forecast warming by 10.9 °F over the two-week period
Lower 48 gas production has fallen again today, bringing it to the lowest level of this summer so far

Pipeline explosion in Virginia reduces flows to Cove Point LNG
An incident on a section of the Columbia Gas Transmission pipeline near Strasburg, Virginia, has resulted in reduced gas flowing to the Cove Point LNG export plant
Cove Point receives gas from the Cove Point Pipeline, which connects to Columbia Gas and the Transcontinental Pipeline
Flows from Columbia have dropped from 604 MMcf/d on Monday to 0 today, while flows from Transco have jumped 469 MMcf/d to 850 MMcf/d
Cove Point’s deliveries have fallen from 787 MMcf/d to 435 MMcf/d

[dan_s]

This was just a "Fear of the Fed Day"

Closing Prices:
> Prompt-Month WTI (Sep 23) was down $-0.85 on the day, to settle at $78.78
> Prompt-Month Henry Hub (Aug 23) was down $-0.065 on the day, to settle at $2.665