Energy Prospectus

Opening Prices;
> WTI is up $0.09 to $90.12/bbl, and Brent is up $0.26 to $93.53/bbl.
> Natural gas is down -2.1c to $2.616/MMBtu. < NOV23 contract at $2.915 at the time of this post. OCT23 will soon expire, focus on NOV23 and DEC23 futures contracts.


AEGIS Notes
Oil

Oil edges slightly higher after Russia relaxes its fuel export ban
November ’23 WTI gained 13c this morning to trade around $90.16/Bbl

Crude prices held on to weekly gains on Friday, as the Fed hinted at another potential rate hike and the expected supply constraints from Saudi and Russian output cuts

Adding to the supply constraints, U.S. oil refiners are set to have 1.7 MMBbl/d of capacity offline for the week ending Sept 29, reducing refining capacity by 0.32 MMBbl/d (Reuters, IIR Energy)
The offline capacity is anticipated to increase to 1.9 MMBbl/d by October 6, IIR noted

Additionally, within the CFTC's managed money category, both net-long and long-only positions for NYMEX WTI oil have hit their highest in 19 months, further indicating bullish sentiment
However, the US dollar hit its highest level since November, making dollar-denominated commodities more expensive

Russia lifts the export ban on low-quality diesel (Bloomberg) < So, Russia will sell their crappy diesel and keep the good stuff.
Russia amended its fuel export ban issued last week, lifting the temporary ban on bunker fuel, gas oils, and some middle distillates. However, the ban on most diesel and gasoline exports remains in place
Russia, the largest seaborne diesel-type fuel exporter, has halted diesel and gasoline exports from Sept 21 with no clear end date to control surging domestic fuel prices
Preceding the export ban, diesel exports in the first 20 days of September fell by 28% to about 65,700 tons, compared to an average of 91,800 tons in August, likely due to seasonal maintenance
However, Moscow faces capacity constraints as diesel storage reached 22 MMBbl by September 18, with a maximum estimated capacity of 27.7 MMBbl

MY TAKE: The U.S. is short diesel, heating oil and other distillates. We are also short the black oil that is the feedstock need to make more distillates. No Quick Fix, but is is time to consider long-term solutions like these: Finish the Keystone XL pipeline, crawl on you knees to Venezuela to ask for more of their black oil and convert half of our truck fleet to run on CNG.

Natural Gas

Natural gas prices are lower, extending losses from last week

Lower 48 temperatures are expected to average about 68 °F over the next two weeks, which should keep gas demand relatively limited

LNG feedgas levels remain lower, around 12 Bcf/d as of this morning’s pipeline nominations

Gas production is down about 0.6 Bcf/d due to pipeline maintenance in the Northeast

FERC advances Port Arthur LNG expansion among other projects (S&P)
The energy regulator approved Sempra’s proposal to double Port Arthur LNG’s capacity from 1.8 Bcf/d to 3.6 Bcf/d
FERC approved Venture Global’s request to increase capacity at their Calcasieu Pass facility from 1.60 Bcf/d to 1.65 Bcf/d
Regulators approved Texas Eastern Transmission’s Venice Extension project, which will supply 1.3 Bcf/d to Venture Global’s Plaquemines LNG facility

Here is a tiny fact that most people don't know: Total crude inventory (including SPR) can cover ~36.0 days of total crude demand including exports, ~17.1 days below the 5y average.

Draining the SPR any further should not be an option.

Closing Prices:
> Prompt-Month WTI (Nov 23) was down $-0.35 on the day, to settle at $89.68
> Prompt-Month Henry Hub (Oct 23) was up $0.002 on the day, to settle at $2.639