Energy Prospectus

Opening Prices
> WTI is down $0.64 to $87.68/bbl, and Brent is down $0.74 to $90.76/bbl.
> Natural gas is down -3.6c to $3.02/MMBtu.

AEGIS Notes
Oil

Oil edges lower as US eases sanctions on Venezuela

Yesterday, crude prices reached a two-week high amid rising tensions in the Middle East, with both WTI and Brent closing over $1.60/Bbl higher
the US Treasury temporarily lifted some sanctions on Venezuelan oil and other commodities in return for the promise of freer elections in the country
Yesterday, the EIA reported a 0.8 MMBbl Cushing draw, with inventories reaching their lowest since October 2014 at 21 MMBbl, the perceived minimum operating level
Additionally, the US 10 Year Treasury yield rally continues this week, nearing a 17-year high of 5%

United States lifts sanctions on Venezuela's oil for six months (Bloomberg)
Yesterday, the US granted Venezuela a six-month general license temporarily authorizing transactions to restore its under-invested oil and gas sector
The six-month period is short, and the relief is contingent on President Maduro adhering to a democratic electoral pact
Oil production in 2023 averages 0.75 MMBbl/d, an uptick from 2022’s 0.67 MMBbl/d but still short of the 2.4 MMBbl/d seen before the 2017 sanctions
A Bloomberg survey of analysts estimates a 0.2 MMBbl/d increase in production; however, the country currently runs just one rig, a steep decline from 80 in 2017 < This amounts to a "rounding error" increase in global production, but we need more black oil. Completing the Keystone XL pipeline would make more sense.

Natural Gas

Natural gas prices fall to $3.02, extending losses from yesterday

The EIA will release its weekly natural gas storage report today
The median expectation is for an injection of 81 Bcf, according to the Bloomberg survey
The five-year average injection for this week of the year is 85 Bcf

Mountain Valley Pipeline pushed to 2024
A recent filing by Mountain Valley Pipeline, LLC says that it has delayed its construction timeline, with contractual obligations set to begin on April 1, 2024
The delay is attributed to multiple factors, including labor shortages, difficult terrain, and cost overruns, which put the expected total cost of the pipeline at $7.2 billion
MVP should enable some additional egress out of the Appalachian region, although it will not be able to flow at full capacity initially due to downstream constraints on the Transcontinental pipeline

New Fortress Energy to begin LNG production in November (S&P)
New Fortress’s offshore LNG export terminal in northern Mexico is expected to begin liquefaction in November, with gas supplied from the US on the Sur de Texas-Tuxpan pipeline
The first phase of the project will have a capacity of 187 MMcf/d, while the company is also planning two additional offshore units and an onshore terminal, which would bring the total capacity to about 930 MMcf/d
These units are expected to enter service in 2025

If I was Maduro, I'd say we will follow your lead and use Dominion on election day and do periodic timeouts to see what the counts is. If anyone questions the election from the other party, we will throw them in jail with no trial, just like you did comrade Biden.

The deal they announced said each side can choose its 2024 candidate according to its internal rules but did not reverse bans on some opposition figures - including Oct. 22 primary front runner Maria Corina Machado - that prevent them from holding office.

Free elections but certain people can't run >>What a f'n joke. Of course the press doesn't report that detail

Opposition sources said they have not given up on trying to get those bans lifted.

He is apparently running out of options, God forbid he allows drilling in a red state!

Can they even get crude out of there, their fields are in sad disrepair.

Crude pushing 90 again

But the chances Venezuela's exports could offset those cuts are slim absent a big increase in investment in the country's crippled oil sector, oil industry experts said.

Two decades of mismanagement and insufficient investment, coupled with U.S. oil sanctions since 2019, are expected to stymie state-run PDVSA's ability to make a quick comeback to cash-paying oil markets and offer its crude at fair prices.

Talks between the government and the opposition, meant to provide a way out of Venezuela's long-running political and economic crisis, were held on Tuesday for the first time in nearly a year. They agreed to further meetings at an unspecified date.

Syria and Iraq are now at war with Americans as they bomb its military bases. Israel has been given the go ahead to make Gaza into a cemetery. Putin and Z are still killing each other and because Maduro has been given the green light to export oil of which OPEC believes will have no significant impact, oil prices seem to be very tempered and controlled by the market. Doesn't make any sense here. Have we ever seen this show before, Dan?

MY TAKE: Sanctions against Iran will send WTI quickly over $100/bbl. Not only will it take a lot of oil off the market, but Iran will threaten to shut in the Persian Gulf, which could send oil over $150/bbl.

Closing Prices:
> Prompt-Month WTI (Nov 23) was up $1.05 on the day, to settle at $89.37
> Prompt-Month Henry Hub (Nov 23) was down $-0.099 on the day, to settle at $2.957

At the time of this post WTI is up another $0.97 in after-hours trading and is sitting at $90.34.

Trading Economics:
WTI crude oil erased early losses and rose to the $90 per barrel mark on Thursday, extending the gains from the prior session as markets continued to assess volatile supply expectations amid heightened geopolitical turmoil in the Middle East.
> The increase extended the rally in crude oil benchmarks from the prior two weeks, as escalating tumult between Israel and Gaza ramped up concerns of supply disruptions among key producers in the Middle East.
> Additionally, new data from the EIA showed that crude oil stocks fell by nearly 5 million barrels on the week ending October 13th, well above market expectations of a 300 thousand barrel draw.
> Limiting the increase, the United States government broadly eased sanctions on the Venezuelan oil sector following a deal between Washington and Caracas that promotes fairness in the upcoming Venezuelan elections. < This is just political "noise" since at most Venezuela can only increase oil exports by 200,000 bpd. Team Biden doing stuff like this to talk down oil prices. They know they are going to be forced to slap sanctions on Iran.

Report that the us will buy 6 m bbls for spr helped crude prices late in day

sell it for 65 and buy back in middle of winter at 90