Oil & Gas Prices - Aug 2
Posted: Wed Aug 02, 2023 9:01 am
Opening Prices:
> WTI is up $0.59 to $81.96/bbl, and Brent is up $0.54 to $85.45/bbl.
> Natural gas is down -4.0c to $2.52/MMBtu.
AEGIS Notes
Oil
First Look - Driven by Saudi's deep cuts, OPEC crude output tumbles by most since 2020
Oil trades near its highest since April on signs of additional supply tightness
September ’23 WTI gains 59c this morning to trade around $81.96/Bbl
The US dollar continues to strengthen, weighing on dollar-denominated commodities
Russia’s seaborne crude exports in the four weeks to July 30 fell to a six-month low of 2.98 MMBbl/d, down 0.9 MMBbl/d from mid-May’s peak
Furthermore, there's speculation that Saudi Arabia may extend its 1 MMBbl/d voluntary cut into September
However, concerns over China's oil buying slowing down due to higher prices and weaker-than-expected fuel demand, as indicated by weak PMI data this week, weighed on the demand outlook
SPR replenishment put on hold amid high crude prices (Bloomberg)
The Biden administration has postponed refilling the SPR due to prevailing market conditions and higher oil prices, rejecting purchase offers earlier this year, according to people familiar with the matter < MY TAKE: Team Biden is not going to refill the SPR. I think there is a better chance they start draining it a again next year, leading up to the election.
The U.S. has previously indicated a preferred purchase price of around $67 to $72/Bbl, while WTI exceeded $80/Bbl last week
Despite this being the fourth round of bids, the DOE emphasizes its commitment to refilling the SPR, maintaining its purchase stance when beneficial to taxpayers, in coordination with Congress
Driven by Saudi’s deep cuts, OPEC crude output tumbles by the most since 2020 (Bloomberg)
OPEC's crude production saw its most significant decline in three years, with Saudi Arabia implementing deep cuts, causing production to drop by 0.9 MMBbl/d in July to 27.79 MMBbl/d < The Saudi's export cuts should start showing up as lower imports by the U.S. in a few weeks. It takes more than two months for tankers full of oil from the Persian Gulf to reach the U.S.
Saudi Arabia enacted the majority of the pledged 1 MMBbl/d cut to buoy prices amidst a sluggish economy in China and US recession fears
Meanwhile, Nigeria and Libya also experienced production declines due to leaks and protests, respectively
Natural Gas
Natural gas prices are trading down, near a one-month low
The Winter ‘23/’24 strip is down 7c to $3.42, and the Summer ’24 strip is down 6c to $3.21
Lower 48 temperatures are expected to average 78.4 °F over the next two weeks, which is slightly higher than this week but roughly in line with temperatures over the prior two weeks
This should equal gas demand of about 75 Bcf/d
Power demand in Texas continues to hit record highs as heat wave lingers (Reuters)
Demand on the ERCOT system hit a record high for the second consecutive day, marking the seventh record high made this summer
Power sector gas demand in Texas reached 8.2 Bcf/d on Monday, up from a 30-day average of 7.4 Bcf/d
Temperatures in the South Central region are forecast to continue to remain above normal and be slightly hotter next week than this week
First US Nuclear reactor built in seven years is now operational (EIA)
Georgia’s Vogtle Nuclear plant has added an additional reactor, increasing the plant's output by 1.1 GW
Another reactor is expected to enter service between November 2023 and March 2024, further increasing power production
This new reactor is the first to be built in the US since 2016, when the Tennessee Valley Authority’s Watts Bar 2 plant entered service
The new reactor will displace about 220 MMcf/d of gas demand in the Southeast region, which has averaged about 12 Bcf/d this summer
> WTI is up $0.59 to $81.96/bbl, and Brent is up $0.54 to $85.45/bbl.
> Natural gas is down -4.0c to $2.52/MMBtu.
AEGIS Notes
Oil
First Look - Driven by Saudi's deep cuts, OPEC crude output tumbles by most since 2020
Oil trades near its highest since April on signs of additional supply tightness
September ’23 WTI gains 59c this morning to trade around $81.96/Bbl
The US dollar continues to strengthen, weighing on dollar-denominated commodities
Russia’s seaborne crude exports in the four weeks to July 30 fell to a six-month low of 2.98 MMBbl/d, down 0.9 MMBbl/d from mid-May’s peak
Furthermore, there's speculation that Saudi Arabia may extend its 1 MMBbl/d voluntary cut into September
However, concerns over China's oil buying slowing down due to higher prices and weaker-than-expected fuel demand, as indicated by weak PMI data this week, weighed on the demand outlook
SPR replenishment put on hold amid high crude prices (Bloomberg)
The Biden administration has postponed refilling the SPR due to prevailing market conditions and higher oil prices, rejecting purchase offers earlier this year, according to people familiar with the matter < MY TAKE: Team Biden is not going to refill the SPR. I think there is a better chance they start draining it a again next year, leading up to the election.
The U.S. has previously indicated a preferred purchase price of around $67 to $72/Bbl, while WTI exceeded $80/Bbl last week
Despite this being the fourth round of bids, the DOE emphasizes its commitment to refilling the SPR, maintaining its purchase stance when beneficial to taxpayers, in coordination with Congress
Driven by Saudi’s deep cuts, OPEC crude output tumbles by the most since 2020 (Bloomberg)
OPEC's crude production saw its most significant decline in three years, with Saudi Arabia implementing deep cuts, causing production to drop by 0.9 MMBbl/d in July to 27.79 MMBbl/d < The Saudi's export cuts should start showing up as lower imports by the U.S. in a few weeks. It takes more than two months for tankers full of oil from the Persian Gulf to reach the U.S.
Saudi Arabia enacted the majority of the pledged 1 MMBbl/d cut to buoy prices amidst a sluggish economy in China and US recession fears
Meanwhile, Nigeria and Libya also experienced production declines due to leaks and protests, respectively
Natural Gas
Natural gas prices are trading down, near a one-month low
The Winter ‘23/’24 strip is down 7c to $3.42, and the Summer ’24 strip is down 6c to $3.21
Lower 48 temperatures are expected to average 78.4 °F over the next two weeks, which is slightly higher than this week but roughly in line with temperatures over the prior two weeks
This should equal gas demand of about 75 Bcf/d
Power demand in Texas continues to hit record highs as heat wave lingers (Reuters)
Demand on the ERCOT system hit a record high for the second consecutive day, marking the seventh record high made this summer
Power sector gas demand in Texas reached 8.2 Bcf/d on Monday, up from a 30-day average of 7.4 Bcf/d
Temperatures in the South Central region are forecast to continue to remain above normal and be slightly hotter next week than this week
First US Nuclear reactor built in seven years is now operational (EIA)
Georgia’s Vogtle Nuclear plant has added an additional reactor, increasing the plant's output by 1.1 GW
Another reactor is expected to enter service between November 2023 and March 2024, further increasing power production
This new reactor is the first to be built in the US since 2016, when the Tennessee Valley Authority’s Watts Bar 2 plant entered service
The new reactor will displace about 220 MMcf/d of gas demand in the Southeast region, which has averaged about 12 Bcf/d this summer