Oil & Gas Prices - Oct 10
Posted: Tue Oct 10, 2023 9:42 am
Opening Prices:
> WTI is down $0.47 to $85.91/bbl, and Brent is down $0.45 to $87.70/bbl.
> Natural gas is up 2.7c to $3.403/MMBtu.
AEGIS Notes
Oil
Oil edges lower as demand concerns persist amid the resurgence of the Middle East war premium
China's economic recovery remains in focus amid declining home sales and slower-than-expected domestic consumption recovery
However, China is considering a fiscal stimulus by issuing $137 billion in additional debt for infrastructure projects, potentially exceeding its 3% budget deficit cap for 2023
Furthermore, the IMF revised China's growth forecast to 5% for 2023 (down by 0.2%) and to 4.2% for 2024 (down by 0.3%) (BBG)
The bank also called for central banks to maintain tight policy until price pressures ease and raised its 2024 global inflation forecast
Prompt month WTI rose by $3.6/Bbl yesterday following the Hamas-Israel conflict, raising geopolitical tensions despite no immediate impact on supply
On Monday, options markets saw their biggest swing in favor of bullish calls since March of 2022, when Russia invaded Ukraine (BBG)
Equities are up this morning, while the dollar is down ahead of this week’s CPI and PPI reports
U.S. gears up to tighten grip on Russian oil sanction breaches (WSJ)
With Russian crude prices reaching as high as $85/Bbl in September, Treasury Secretary Janet Yellen emphasized the US's commitment to bolstering the established $60/Bbl price cap on Russian oil sales < Is anyone in Russia afraid of Janet Yellen?
The price cap mandates Western companies involved with Russian oil to trade or insure it at or below the set cap or risk penalties from the U.S. and its allies
However, Russia's multifaceted oil export system, involving unmonitored resales at sea, complicates the enforcement of price caps
Natural Gas
Prompt month natural gas prices are lower to $3.38 but still trading near one-month highs
Weather forecasts shifted slightly cooler, with the Lower 48 forecast falling by 3.3 °F over the two-week period
Temperatures are currently expected to be below the ten-year average for the next two weeks, leading gas demand to be slightly elevated compared to seasonal averages
Gas production is lower again, around 100.5 Bcf/d, after recovering to 102.5 Bcf/d yesterday
IEA says global gas demand is set for slower growth until 2026 (Reuters)
The IEA’s medium-term gas market outlook says gas demand is on track to increase by 1.6% per year until 2026, slower than the average increase of 2.5% per year seen from 2017-2021
The agency believes gas consumption growth will be driven by emerging markets in Asia, the Middle East, and Africa
China is expected to account for nearly half of the total growth in gas demand
Global LNG prices remain cheap ahead of seasonal demand increase (Reuters)
Spot LNG delivered to North Asia finished last week at $13.50/MMbtu but is expected to move higher into the winter heating season
LNG imports into Asia have begun to rise ahead of higher seasonal demand, with Japan being the top importer in September
> WTI is down $0.47 to $85.91/bbl, and Brent is down $0.45 to $87.70/bbl.
> Natural gas is up 2.7c to $3.403/MMBtu.
AEGIS Notes
Oil
Oil edges lower as demand concerns persist amid the resurgence of the Middle East war premium
China's economic recovery remains in focus amid declining home sales and slower-than-expected domestic consumption recovery
However, China is considering a fiscal stimulus by issuing $137 billion in additional debt for infrastructure projects, potentially exceeding its 3% budget deficit cap for 2023
Furthermore, the IMF revised China's growth forecast to 5% for 2023 (down by 0.2%) and to 4.2% for 2024 (down by 0.3%) (BBG)
The bank also called for central banks to maintain tight policy until price pressures ease and raised its 2024 global inflation forecast
Prompt month WTI rose by $3.6/Bbl yesterday following the Hamas-Israel conflict, raising geopolitical tensions despite no immediate impact on supply
On Monday, options markets saw their biggest swing in favor of bullish calls since March of 2022, when Russia invaded Ukraine (BBG)
Equities are up this morning, while the dollar is down ahead of this week’s CPI and PPI reports
U.S. gears up to tighten grip on Russian oil sanction breaches (WSJ)
With Russian crude prices reaching as high as $85/Bbl in September, Treasury Secretary Janet Yellen emphasized the US's commitment to bolstering the established $60/Bbl price cap on Russian oil sales < Is anyone in Russia afraid of Janet Yellen?
The price cap mandates Western companies involved with Russian oil to trade or insure it at or below the set cap or risk penalties from the U.S. and its allies
However, Russia's multifaceted oil export system, involving unmonitored resales at sea, complicates the enforcement of price caps
Natural Gas
Prompt month natural gas prices are lower to $3.38 but still trading near one-month highs
Weather forecasts shifted slightly cooler, with the Lower 48 forecast falling by 3.3 °F over the two-week period
Temperatures are currently expected to be below the ten-year average for the next two weeks, leading gas demand to be slightly elevated compared to seasonal averages
Gas production is lower again, around 100.5 Bcf/d, after recovering to 102.5 Bcf/d yesterday
IEA says global gas demand is set for slower growth until 2026 (Reuters)
The IEA’s medium-term gas market outlook says gas demand is on track to increase by 1.6% per year until 2026, slower than the average increase of 2.5% per year seen from 2017-2021
The agency believes gas consumption growth will be driven by emerging markets in Asia, the Middle East, and Africa
China is expected to account for nearly half of the total growth in gas demand
Global LNG prices remain cheap ahead of seasonal demand increase (Reuters)
Spot LNG delivered to North Asia finished last week at $13.50/MMbtu but is expected to move higher into the winter heating season
LNG imports into Asia have begun to rise ahead of higher seasonal demand, with Japan being the top importer in September