Opening Prices:
> WTI is up $1.57 to $93.05/bbl, and Brent is up $1.00 to $95.43/bbl. < The Day Traders are loving this. Buy the dips and harvest gains on the rebounds until it no longer works. There was resistance at $92. If it is broken, then next resistance level is $100.
> Natural gas is up 6.1c to $2.789/MMBtu.
AEGIS Notes
Oil
Oil soars to highest since August 2022 amid growing concerns of tight supply
October ’23 WTI gained $1.57 this morning to trade around $93.05/Bbl
U.S. oil output from top shale-producing regions is set to drop from 9.43 MMBbl/d in September to 9.39 MMBbl/d in October, its lowest since May 2023, marking a three-month decline, said EIA in its recent DPR
After Saudi Arabia and Russia extended their combined supply cuts of 1.3 MMBbl/d to year-end, prices are supported by worries about significant supply deficits in 4Q 2023 < It should be noted that the current supply deficit may be over 3 million barrels per day.
Central banks from the U.S., Britain, Japan, Sweden, Switzerland, and Norway are set to announce interest rate decisions this week
Saudi defends production cuts as oil industry questions IEA's forecast accuracy (CNBC, Bloomberg)
Saudi Arabia’s energy minister defended its decision to extend oil production cuts and said they’re not about “jacking up prices”
He emphasized OPEC's commitment to oil market stability and global energy security, adopting a proactive, preemptive, and cautious approach amid various uncertainties < IMO they are just doing what is best for Saudi Arabia. The Kingdom used to care about what the U.S. wanted, but Team Biden destroyed that relationship. Plus, the recent $6Billion that Biden handed to Iran on 9/11 really pissed them off.
At the World Petroleum Congress, leaders, including Saudi Arabia's energy minister, the head of a group of African oil producers, and the premier of Alberta challenged the IEA's forecast of oil demand peaking before 2030 and its call for a demand reduction to 25 MMBbl by 2050 for net zero
Abdulaziz criticized the IEA, noting their predictions often missed the mark and that they've shifted from market assessment to political advocacy
Market eyes $100 oil, but non-OPEC supply might hold it back (Bloomberg)
Energy Aspects’ Amrita Sen expects a "temporary upswing in crude" that could nudge Brent above $100 by the end of October
Citigroup analysts, led by Ed Morse, believe that prices might briefly surge above $100 due to technical traders and geopolitical risks
However, with an added 1.8 MMBbl/d supply from non-OPEC countries like Canada and Brazil, sustained $90 prices appear unlikely, added Citigroup analysts < Note that all of my forecast models are based on the assumption that WTI will average $90 after Q3 2023. I do expect a spike to over $100 because OECD Petroleum Inventories are declining rapidly and that trend cannot continue. Higher oil prices will be necessary to reduce demand.
Natural Gas
Natural gas prices are higher after Midwest and South Central weather forecasts turn warmer
The forecast for Lower 48 average temperatures over the next two weeks increased by 3.2 °F, with the Midwest and South Central regions responsible for most of the change
The EIA released its drilling productivity report yesterday, saying it anticipates gas production to fall by 339 MMcf/d from September to October
The agency forecasts the largest declines to come from Appalachia and Haynesville, with a slight uptick in production from the Permian, Bakken, and Niobrara
Record gas production from North Dakota (NGI)
Output from the state reached a record of 3.29 Bcf/d this summer, despite weak prices in the Bakken area, with gas delivered to Northern Border Ventura averaging $2.335/MMbtu recently
The weak prices have been an obstacle to adding additional takeaway capacity for the associated gas found in the Bakken
Gas-oil ratios have increased due to the depletion of top-tier Bakken inventory, forcing producers to seek additional outlets for their gas
Drilling activity, however, has been slow lately, which has been attributed to workforce shortages in North Dakota
Oil & Gas Prices - Sept 19
Oil & Gas Prices - Sept 19
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Sept 19
Oil is indeed going up, but the market is causing shares to lag big time.
Re: Oil & Gas Prices - Sept 19
From OilPrice.com
News of shrinking US supply has only added bullish sentiment in oil markets, keeping ICE Brent and WTI around $95 and $93 per barrel, respectively. This week will bring about a flurry of macroeconomic news with central banks meeting in the United States, the United Kingdom, Japan, and other countries, potentially reminding the oil markets of the continued risk of a significant recession in Western economies.
US Shale Output to Decline in October. According to the EIA’s Drilling Productivity Report, US shale output is on track to decline for the third month in a row in October, expected to come in at 9.393 million b/d, the lowest monthly level since May and some 85,000 b/d below the July peak.
Oil Majors Warn Peak Oil Demand Not Happening Soon. Defying the IEA’s calls of fossil fuel demand peaking by 2030, the CEOs of Saudi Aramco and ExxonMobil (NYSE:XOM) both said the energy transition will take longer than assumed and that oil and gas investment remained critical to stop prices soaring. < IEA is a "Political Organization". Always keep that in mind when reading their forecasts.
Geopolitical Risk Jumps As Azerbaijan Launches “Anti-Terrorist” Operations. The risk of a renewed conflict between Azerbaijan and Armenia has increased after Azerbaijan announced "anti-terrorist operations" in the Nagorno-Karabakh region. The move comes just days after Armenia's Prime Minister expressed doubt over Russia's ability to guarantee its security while struggling with its invasion of Ukraine.
IAEA Condemns Iran Ban on Nuclear Inspection. Iran’s nuclear program made headlines again after Tehran banned multiple IAEA inspectors assigned to the country, triggering an immediate condemnation from the UN watchdog as it investigates uranium traces at undeclared Iranian sites. < Biden just gave them $6Billion.
Chevron’s Australia Strikes Turn Real. Australia’s Offshore Alliance union of oil terminal workers said that workers at Chevron’s (NYSE:CVX) Gorgon and Wheatstone terminals had begun full-day strikes, with the government tribunal activated by the US major set to start hearings this Friday.
News of shrinking US supply has only added bullish sentiment in oil markets, keeping ICE Brent and WTI around $95 and $93 per barrel, respectively. This week will bring about a flurry of macroeconomic news with central banks meeting in the United States, the United Kingdom, Japan, and other countries, potentially reminding the oil markets of the continued risk of a significant recession in Western economies.
US Shale Output to Decline in October. According to the EIA’s Drilling Productivity Report, US shale output is on track to decline for the third month in a row in October, expected to come in at 9.393 million b/d, the lowest monthly level since May and some 85,000 b/d below the July peak.
Oil Majors Warn Peak Oil Demand Not Happening Soon. Defying the IEA’s calls of fossil fuel demand peaking by 2030, the CEOs of Saudi Aramco and ExxonMobil (NYSE:XOM) both said the energy transition will take longer than assumed and that oil and gas investment remained critical to stop prices soaring. < IEA is a "Political Organization". Always keep that in mind when reading their forecasts.
Geopolitical Risk Jumps As Azerbaijan Launches “Anti-Terrorist” Operations. The risk of a renewed conflict between Azerbaijan and Armenia has increased after Azerbaijan announced "anti-terrorist operations" in the Nagorno-Karabakh region. The move comes just days after Armenia's Prime Minister expressed doubt over Russia's ability to guarantee its security while struggling with its invasion of Ukraine.
IAEA Condemns Iran Ban on Nuclear Inspection. Iran’s nuclear program made headlines again after Tehran banned multiple IAEA inspectors assigned to the country, triggering an immediate condemnation from the UN watchdog as it investigates uranium traces at undeclared Iranian sites. < Biden just gave them $6Billion.
Chevron’s Australia Strikes Turn Real. Australia’s Offshore Alliance union of oil terminal workers said that workers at Chevron’s (NYSE:CVX) Gorgon and Wheatstone terminals had begun full-day strikes, with the government tribunal activated by the US major set to start hearings this Friday.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Sept 19
Oil snaps a four day-rally despite tight supply outlook | Natural Gas finishes at a six-week high
Closing Prices:
> Prompt-Month WTI (Oct 23) was down $-0.28 on the day, to settle at $91.20
> Prompt-Month Henry Hub (Oct 23) was up $0.120 on the day, to settle at $2.848
MY TAKE: WTI spiked to $93.52 and then the profit taking started. This is the first test of resistance at $92. It might take a couple of tests before WTI moves higher. The fundamentals have not changed; the global oil market is significantly under-supplied. Fear of the Fed is still out there and now we have another debt ceiling federal government shutdown to worry about. Our government is broken. We really need to elect some adults.
Closing Prices:
> Prompt-Month WTI (Oct 23) was down $-0.28 on the day, to settle at $91.20
> Prompt-Month Henry Hub (Oct 23) was up $0.120 on the day, to settle at $2.848
MY TAKE: WTI spiked to $93.52 and then the profit taking started. This is the first test of resistance at $92. It might take a couple of tests before WTI moves higher. The fundamentals have not changed; the global oil market is significantly under-supplied. Fear of the Fed is still out there and now we have another debt ceiling federal government shutdown to worry about. Our government is broken. We really need to elect some adults.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group