Oil & Gas Prices - Oct 5
Posted: Thu Oct 05, 2023 9:17 am
Opening Prices:
> WTI is down $0.71 to $83.51/bbl, and Brent is down $0.62 to $85.19/bbl.
> Natural gas is up 5.5c to $3.017/MMBtu.
AEGIS Notes
Oil
Oil trades below $85/Bbl amid macro-economic concerns and possible demand weakness
Prompt month WTI fell over $5/Bbl yesterday, the largest one-day plunge since August 2022, on the backdrop of a strong dollar and concerns about interest rates staying higher for longer
Additionally, Turkey's energy minister announced today that the Iraq-Turkey pipeline was ready to operate "as of yesterday — Wednesday," but the restart of crude flows hinges on Iraq (Argus)
The pipeline, transporting 0.4 MMBbl/d from the Kurdistan and 0.07 MMBbl/d of federal Iraqi crude, has been shut since March 25
Keystone pipeline restarts at reduced output (Bloomberg)
After maintenance on Tuesday, the Keystone crude pipeline is operating at 50% capacity, carrying 0.3 MMBbl/d of crude
The disruption sees Canadian heavy crude's price discount in Alberta to WTI widening 90c to $20.65/Bbl, a level not observed since February
US gasoline demand plunges, posing new hurdle for oil (Bloomberg)
On Wednesday, the EIA data showed that the four-week average implied fuel consumption dropped to 8.3 MMBbl/d last week, the lowest seasonal rate since 1998
This morning, front gasoline cracks bounced back from yesterday's decline, trading over $1/Bbl above the overnight lows
Inventories rose by 6.5 MMBbl/d last week, while exports saw a small uptick and imports were down slightly
AEGIS believes that the implied demand calculations, influenced by factors like production, imports, and especially recent storage figures, might be overstated < Keep in mind that EIAs weekly reports are just their Best Guess for many of the numbers and often include "corrections" to their previous mistakes.
Furthermore, Goldman, in a note to clients this morning, highlights alternate data points, such as ethanol blending and physical price findings, to suggest that demand is still robust
Natural Gas
Natural gas prices are trading higher, back above $3/MMbtu
Lower 48 weather forecasts shifted cooler, falling by 12.5 °F over the two-week period
The Northeast, Midwest, South Central, and Rockies regional forecasts all shifted significantly cooler
The EIA will release its weekly natural gas storage report today
The median estimate is for an injection of 94 Bcf, according to the Bloomberg survey, which ranges from a low estimate of 89 Bcf to a high of 99 Bcf
The five-year average injection for this report week is 103 Bcf
New Fortress’ Mexico LNG project prepares for startup (S&P)
The final unit of the floating LNG export facility being constructed by New Fortress has arrived at the project site offshore of Altamira in the Gulf of Mexico
The facility will be supplied by gas shipped from South Texas on the Sur de Texas-Tuxpan pipeline
The company is also planning to develop Altamira’s LNG import facility into an export facility in the second half of 2024
AccuWeather sees El Nino leading to colder weather in some parts of the US (Reuters)
Weather forecaster AccuWeather said on Wednesday that a strengthening El Nino pattern could lead to substantially colder weather in some regions of the US
AccuWeather’s founder and chairman said, "We expect to see an increase in U.S. demand for heating overall compared to last year, even though many places in the North will still average below historical demand,”
However, long-range weather forecasts often have low validity
> WTI is down $0.71 to $83.51/bbl, and Brent is down $0.62 to $85.19/bbl.
> Natural gas is up 5.5c to $3.017/MMBtu.
AEGIS Notes
Oil
Oil trades below $85/Bbl amid macro-economic concerns and possible demand weakness
Prompt month WTI fell over $5/Bbl yesterday, the largest one-day plunge since August 2022, on the backdrop of a strong dollar and concerns about interest rates staying higher for longer
Additionally, Turkey's energy minister announced today that the Iraq-Turkey pipeline was ready to operate "as of yesterday — Wednesday," but the restart of crude flows hinges on Iraq (Argus)
The pipeline, transporting 0.4 MMBbl/d from the Kurdistan and 0.07 MMBbl/d of federal Iraqi crude, has been shut since March 25
Keystone pipeline restarts at reduced output (Bloomberg)
After maintenance on Tuesday, the Keystone crude pipeline is operating at 50% capacity, carrying 0.3 MMBbl/d of crude
The disruption sees Canadian heavy crude's price discount in Alberta to WTI widening 90c to $20.65/Bbl, a level not observed since February
US gasoline demand plunges, posing new hurdle for oil (Bloomberg)
On Wednesday, the EIA data showed that the four-week average implied fuel consumption dropped to 8.3 MMBbl/d last week, the lowest seasonal rate since 1998
This morning, front gasoline cracks bounced back from yesterday's decline, trading over $1/Bbl above the overnight lows
Inventories rose by 6.5 MMBbl/d last week, while exports saw a small uptick and imports were down slightly
AEGIS believes that the implied demand calculations, influenced by factors like production, imports, and especially recent storage figures, might be overstated < Keep in mind that EIAs weekly reports are just their Best Guess for many of the numbers and often include "corrections" to their previous mistakes.
Furthermore, Goldman, in a note to clients this morning, highlights alternate data points, such as ethanol blending and physical price findings, to suggest that demand is still robust
Natural Gas
Natural gas prices are trading higher, back above $3/MMbtu
Lower 48 weather forecasts shifted cooler, falling by 12.5 °F over the two-week period
The Northeast, Midwest, South Central, and Rockies regional forecasts all shifted significantly cooler
The EIA will release its weekly natural gas storage report today
The median estimate is for an injection of 94 Bcf, according to the Bloomberg survey, which ranges from a low estimate of 89 Bcf to a high of 99 Bcf
The five-year average injection for this report week is 103 Bcf
New Fortress’ Mexico LNG project prepares for startup (S&P)
The final unit of the floating LNG export facility being constructed by New Fortress has arrived at the project site offshore of Altamira in the Gulf of Mexico
The facility will be supplied by gas shipped from South Texas on the Sur de Texas-Tuxpan pipeline
The company is also planning to develop Altamira’s LNG import facility into an export facility in the second half of 2024
AccuWeather sees El Nino leading to colder weather in some parts of the US (Reuters)
Weather forecaster AccuWeather said on Wednesday that a strengthening El Nino pattern could lead to substantially colder weather in some regions of the US
AccuWeather’s founder and chairman said, "We expect to see an increase in U.S. demand for heating overall compared to last year, even though many places in the North will still average below historical demand,”
However, long-range weather forecasts often have low validity