Opening Prices:
> WTI is down $0.47 to $86.22/bbl, and Brent is down $0.57 to $89.47/bbl. < Up $0.33 to $87.02 at the time of this post.
> Natural gas is down -3.9c to $2.543/MMBtu. < Down $0.06 to $2.52 at the time of this post.
AEGIS Notes
Oil
Oil edges lower as the market assesses Saudi and Russia’s extended supply cuts
Saudi Arabia and Russia extend their voluntary oil cuts until year-end, with Saudi Arabia cutting 1 MMBbl/d and Russia cutting exports by 0.3 MMBbl/d
These extended cuts are in addition to the April agreement by OPEC+ producers for production cuts lasting until the end of 2024
The US dollar traded near its six-month high of 104.90, making dollar-denominated commodities more expensive for holders of other currencies
Russia's fuel exports dip to 11-month low amid refinery slowdowns (Bloomberg)
August oil product exports dropped to 2.28 MMBbl/d, down 9% from July and the lowest since September 2022, as refineries entered planned autumn maintenance
Diesel and gasoil exports fell 5.7% to a three-month low of 1.04 MMBbl/d, and fuel oil shipments plunged by 25% to 0.59 MMBbl/d in August
However, seaborne crude exports from the nation hit an eight-week high in late August, with Russia and Saudi Arabia extending supply curbs through year-end
Natural Gas
Natural gas prices are lower again today as weather models continue to capitulate
Weather forecasts for the Midwest, South Central, and Southeast turned cooler, indicating below-average temperatures in the 11-15 day forecast period
Lower 48 gas demand is expected to fall over the next two weeks, from about 75 Bcf/d currently to as low as 62 Bcf/d
Tennessee Gas Pipeline expansion in jeopardy (S&P)
TGP’s East 300 project would add 115 MMcf/d of additional capacity by installing a new compressor station
The project was previously granted an exemption from having to acquire an environmental permit; however, a ruling by the Superior Court of New Jersey has vacated the exemption
Developers have been attempting to bring the project online by November 1, 2023, but the in-service date could now be at risk
The expansion would reduce winter capacity constraints in the Northeast
Tellurian in talks with partners for Driftwood LNG project (Reuters)
The company has struggled with securing financing and customers and is now in talks with potential equity partners
If the company is unable to secure enough financing or customers, it is possible that the planned LNG project could be delayed or canceled
Tellurian is planning on starting LNG production in 2027
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MY TAKE: Keep your portfolios heavily weighted to oil.
Oil & Gas Prices - Sept 6
Oil & Gas Prices - Sept 6
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Sept 6
Oil prices on Tuesday jumped nearly 3% to the highest since November after OPEC+ heavyweights Saudi Arabia and Russia announced an extension of their respective production cuts.
Brent crude futures for October delivery climbed 2.2% to $91.08 a barrel, while front-month Nymex crude oil futures for October rose 2.7% to $88.02 a barrel, before giving up some of those gains later on Wednesday.
Crude prices have now climbed about 30% since mid-June mainly on lower global supplies.
Back in July, Saudi Arabia announced it would cut one million barrels a day, equivalent to ~10% of its typical output while Russia’s voluntary cut is 300,000 barrels a day. Saudi Arabia's reduction makes up more than a third of the total OPEC+ cuts.
Last month, commodity analysts at Standard Chartered projected large inventory draws peaking at 2.9 mb/d in August. StanChart estimates that June demand was about 0.5 mb/d below August 2019’s all-time high, but said the record would be exceeded in the current month. According to the analysts, highly effective producer output restraint, led by Saudi Arabia, will create the conditions for a price rally that will take Brent prices onto their Q4-average forecast at $93/bbl, with a likely intra-quarter high above $100/bbl.
Meanwhile, U.S. shale output has continued to grow. The Energy Information Administration (EIA) has forecast total U.S. output will hit 12.61M bbl/day in the current year, eclipsing the previous record of 12.32M bbl/day set in 2019's and easily beating last year's 11.89M bbl/day. U.S. crude oil output is up 9% Y/Y, which under normal circumstances would blunt OPEC’s efforts to keep supplies low in a bid to goose prices. There is little doubt the U.S. Shale Patch is largely responsible for keeping oil markets well supplied and oil prices low: Rystad Energy has estimated that whereas OPEC and its allies have announced cuts amounting to ~6% of 2022's production, non-OPEC supply has made up for two-thirds of those cuts, with the U.S. accounting for half of that. Thankfully, U.S. output is unlikely to go high enough to put significant pressure on global oil prices.
By Alex Kimani for Oilprice.com
Brent crude futures for October delivery climbed 2.2% to $91.08 a barrel, while front-month Nymex crude oil futures for October rose 2.7% to $88.02 a barrel, before giving up some of those gains later on Wednesday.
Crude prices have now climbed about 30% since mid-June mainly on lower global supplies.
Back in July, Saudi Arabia announced it would cut one million barrels a day, equivalent to ~10% of its typical output while Russia’s voluntary cut is 300,000 barrels a day. Saudi Arabia's reduction makes up more than a third of the total OPEC+ cuts.
Last month, commodity analysts at Standard Chartered projected large inventory draws peaking at 2.9 mb/d in August. StanChart estimates that June demand was about 0.5 mb/d below August 2019’s all-time high, but said the record would be exceeded in the current month. According to the analysts, highly effective producer output restraint, led by Saudi Arabia, will create the conditions for a price rally that will take Brent prices onto their Q4-average forecast at $93/bbl, with a likely intra-quarter high above $100/bbl.
Meanwhile, U.S. shale output has continued to grow. The Energy Information Administration (EIA) has forecast total U.S. output will hit 12.61M bbl/day in the current year, eclipsing the previous record of 12.32M bbl/day set in 2019's and easily beating last year's 11.89M bbl/day. U.S. crude oil output is up 9% Y/Y, which under normal circumstances would blunt OPEC’s efforts to keep supplies low in a bid to goose prices. There is little doubt the U.S. Shale Patch is largely responsible for keeping oil markets well supplied and oil prices low: Rystad Energy has estimated that whereas OPEC and its allies have announced cuts amounting to ~6% of 2022's production, non-OPEC supply has made up for two-thirds of those cuts, with the U.S. accounting for half of that. Thankfully, U.S. output is unlikely to go high enough to put significant pressure on global oil prices.
By Alex Kimani for Oilprice.com
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Sept 6
Closing Prices:
> Prompt-Month WTI (Oct 23) was up $0.85 on the day, to settle at $87.54
> Prompt-Month Henry Hub (Oct 23) was down $-0.072 on the day, to settle at $2.510
My "WAG" is that if U.S. commercial crude oil inventories go below 400 million barrels, the price of WTI will go over $100/bbl within a few weeks.
> Prompt-Month WTI (Oct 23) was up $0.85 on the day, to settle at $87.54
> Prompt-Month Henry Hub (Oct 23) was down $-0.072 on the day, to settle at $2.510
My "WAG" is that if U.S. commercial crude oil inventories go below 400 million barrels, the price of WTI will go over $100/bbl within a few weeks.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group