Oil & Gas Prices - Sept 20

[dan_s]

Opening Prices:
> WTI is down $1.00 to $90.20/bbl, and Brent is down $0.93 to $93.41/bbl. < WTI rebounded quickly after the market opened. Up $0.27 to $91.47 at the time of this post.
> Natural gas is down -10.5c to $2.743/MMBtu.

We are still dealing with Fear of the Fed.

AEGIS Notes
Oil

Oil edges lower ahead of the Fed decision
October ’23 WTI lost $1 this morning to trade around $90.20/Bbl

The market awaits the Fed's decision today, where the Fed is expected to pause rate hikes following slower inflation but leave the door open for more hikes as early as November
Britain's inflation rate unexpectedly dropped to an 18-month low, cutting the odds of a BOE rate hike tomorrow

The US dollar and equities traded lower this morning

Despite expectations of export cuts tapering by 0.2 MMBbl/s, Russian crude exports hit a three-month high last week, rising 0.465 MMBbl/d in the four weeks to Sept. 17

Goldman sees oil revisiting $100 on OPEC+ cuts, record demand (Bloomberg)
Goldman Sachs raised its 12-month forecast for Brent to $100/Bbl, up from $93 previously, on record demand and tight OPEC+ supply, but sees oil's 30% rally since June largely over
Goldman cited brighter US and China demand outlooks and rapidly declining inventories as supporting oil's rally, with major economies still seen on track for a soft-landing
The bank added, “OPEC will sustain Brent between $80-$105 in 2024 by leveraging Asia-centric demand, though unlikely to push prices to extreme levels that would destroy long-term residual demand" in a report dated Sept 20
Goldman estimates a 2 MMBbl/d market deficit this quarter and 1.1 MMBbl/d shortfall in Q4 2023, with global oil consumption at record levels

Russia mulls massive hike in oil export duties to ease domestic shortages (Bloomberg, Reuters) < Russians burn a lot of oil to heat their homes in the winter, so exports likely to decline.
Russia is considering hiking export duties on oil products to $250/ton from October 1 to June 2024 to address domestic fuel shortages
Current light and middle distillate duties are $6.4/ton, while crude and heavy product duties are $21.4/ton
If the hike in duty prices is approved, companies complying with quotas to supply the domestic market would get partial or full reimbursement of new duties
However, Gazprom Neft head Alexander Dyukov said OPEC+ can still increase supply if a global oil shortage emerges, despite export duties

Natural Gas

Natural gas prices are lower by 3.5% after NGPL postpones maintenance
The Winter ‘23/’24 strip is off by 5c to $3.32, and the Summer ’24 strip is lower by 3c to $3.20

NGPL postpones maintenance event
Kinder Morgan’s NGPL pipeline had previously announced they would be performing hydro-testing on a section of the pipeline between east Texas and Louisiana, which would reduce the amount of gas flowing to Henry Hub from October to December 2023
Yesterday evening, NGPL released a notice that the maintenance has been “postponed until further notice”, with the outage now expected to occur from March to August 2024, but the exact dates have not yet been determined

Bank of America warns of risk of mild winter for gas prices (Reuters)
The bank said that despite the storage surplus having been significantly reduced this summer, a mild winter could drive inventories to record levels
"If realized, this inventory path may cause Henry Hub gas to trade below our forecast of $3.50/MMbtu (4Q23/1Q24) and below the current forward curve,"
Bank of America’s base case for 2024 is for Henry Hub to average $4/MMbtu < My forecasts are based on HH ngas averaging $3.25/MMbtu in 2024. I hope that BofA is right.

[dan_s]

Closing Prices:
> Prompt-Month WTI (Oct 23) was down $-0.92 on the day, to settle at $90.28
> Prompt-Month Henry Hub (Oct 23) was down $-0.115 on the day, to settle at $2.733