Energy Prospectus

Opening Prices:
> WTI is up $0.70 to $83.62/bbl, and Brent is up $0.65 to $86.82/bbl.
> Natural gas is up 16.3c to $2.94/MMBtu.

AEGIS NOTES
OIL

Oil surges to a nine-month high as risks to supply offset demand concerns
September ’23 WTI gains 70c this morning to trade around $83.62/Bbl

Equities trade lower, and the dollar weakened early on Wednesday < More money will be rotating into high quality upstream oil and gas companies and we should see the Sweet 16's YTD gain move higher than the S&P 500 Index gain YTD gain soon.

Saudi Arabia last week extended its 1 MMBbl/d cut into September; Russia to reduce exports by 0.3 MMBbl/d

Concerns rise over potential disruptions to Russian flows from the Black Sea after President Zelensky's warning of retaliation
The remarks followed a Ukrainian drone attack on a Russian oil tanker over the weekend
Russian fuel oil exports soar, but diesel dip dampens overall exports (Bloomberg)
Russia’s weekly fuel oil shipments surged to the highest in 2023, reaching about 1.1 MMBbl/d through Aug. 4
Diesel and gasoil exports declined by 18% from the previous week to 1.1 MMBbl/d, and naphtha shipments nearly halved to 0.31 MMBbl/d
July's total Russian oil exports rose to 2.67 MMBbl/d, the highest since April, with diesel and gasoil at 1.27 MMBbl/d, nearing March's all-time high, according to Vortexa
Russian oil shipments are closely watched to gauge the classified official production data by Moscow. While crude exports remained stable until Aug. 6, refinery rates increased in early August ahead of state subsidy cuts

EIA forecasts record U.S. oil production in 2023
US oil output is expected to hit a record 12.8 MMBbl/d in 2023, up from the earlier 12.6 MMBbl/d forecast, driven by high well productivity and crude prices, per EIA’s August STEO < I doubt that this will happen.

Despite the increase in US oil output, consumption of refined products is expected to decline, particularly in jet fuel, gasoline, and diesel
However, total oil demand in the US is expected to rise due to increased natural gas liquids usage
Global oil production is predicted to expand by 1.7 MMBbl/d to 103 MMBbl/d in 2024

NATURAL GAS

Natural gas prices surge 8% to $3.00 amid warmer Midwest weather and lower production
The Winter ‘23/’24 strip is up 15c to $3.77, and the Summer ’24 strip is higher by 7c to $3.40 < Outlook for our gassers looking better, but IMO it will take a very cold December to make gas prices stay elevated all year.

Materially warmer than normal weather is forecast for the Midwest, leading to an increase in expected gas demand
Production has fallen another 0.3 Bcf/d to 100.5 Bcf/d < Market forces are finally starting to bring down gas production.

Transcontinental expansion to increase capacity proposed (S&P)
Transco is proposing to increase capacity at compressor station 165, where Mountain Valley Pipeline will connect to the Transcontinental pipeline
The project, called the Carolina Market Link Project, will increase capacity by 78 MMcf/d and serve local distribution companies in the Carolinas
The company told FERC that construction is expected to begin in August 2024

Nearly 17 GW of generating capacity added in the first half of 2023 (EIA)
Developers have added 16.8 GW of new capacity this year, with another 35.2 GW planned for the second half of the year
Solar accounted for 35%, natural gas was 34%, and wind made up 19% of new capacity
8.2 GW of capacity was retired in the first half, mostly coal and natural gas
The amount of renewable generation brought online this year should equal gas displacement of about 2.1 Bcf/d before adjusting for capacity factor; after adjustment, the displacement is closer to 750 MMcf/d

Platts is reporting that OPEC+ cut its crude oil production to a near two-year low in July as
a major voluntary cut by Saudi Arabia took effect, according to a Platts survey by S&P Global
Commodity Insights. The latest Saudi cut as well as disruptions in Kazakhstan and Nigeria
more than offset gains in Iran and Iraq, contributing to an almost 1 MMBopd fall in OPEC
+ output month on month. OPEC's 13 members pumped 27.34 MMBopd, while Russia and
eight other allies added 13.06 MMBopd, for a total of 40.4 MMBopd, which was the group's
lowest since August 2021 when major cuts implemented during the pandemic were still being
unwound.

Closing Prices:
> Prompt-Month WTI (Sep 23) was up $1.48 on the day, to settle at $84.40
> Prompt-Month Henry Hub (Sep 23) was up $0.182 on the day, to settle at $2.959