Energy Prospectus

Opening Prices:
> WTI is down $0.30 to $87.78/bbl, and Brent is down $0.20 to $91.96/bbl.
> Natural gas is down -0.6c to $2.893/MMBtu.

AEGIS Notes
Oil

WTI is trading lower, around $87.75, extending losses from Friday
The Cal ’24 strip is down 47c to $80.60, and the Cal ’25 strip is lower by 20c to $74.82

Israel holds off on Gaza invasion as market participants assess geopolitical conflict (BBG)
Crude prices have advanced about 8% since the October 7 attack in Israel, with concerns mounting that Lebanon, Iran, or the US could be dragged into the conflict
The ground invasion has been delayed in an attempt to secure the release of more hostages

Speculators have increased their net long position in Brent crude by the most since 2016 last week and the number of call options traded hit a new record
RBC Capital wrote in a report that “There is significant asymmetric upside to near-term oil prices in the event that the Israel-Hamas war escalates into a wider-spread regional conflict”

Goldman Sachs says US supply growth to slow in 2024 (BBG)
The bank said in a note that while the US remains the world's marginal oil supplier, well productivity is not increasing in the Permian
Goldman forecasts that US liquids growth will slow to 600 MBbl/d in 2024, from 1.4 MMBbl/d in 2023
While OPEC countries have about 4 MBbl/d of spare capacity, physical or political barriers to deploying this capacity is an upside risk

Natural Gas

Gas prices edged slightly lower Monday morning as weather runs showed a net bearish change over the weekend
Prompt-month gas (Nov) was down 0.6c to $2.893/MMBtu this morning
The winter ’23-’24 strip has relaxed 4c to $3.229 since Friday
Last week, prompt gas prices fell about 33c following weather forecasts in the US showing warmer-than-usual temperatures before winter

US FERC greenlights 150 MMcf/d GTN XPress, five other gas projects (S&P)
On Oct. 19, FERC authorized multiple gas projects, including the GTN XPress Project, which will boost capacity by 150 MMcf/d between Idaho and Oregon
Washington, Oregon, and California officials, including attorneys general, opposed the compression project due to conflict with their climate laws and emission regulations < I guess they like higher energy prices for their citizens. We really need to elect people that CARE ABOUT US.

Texas Eastern Transmission secured approval for the Appalachia to Market II & Entriken Replacement, adding 55 MMcf/d service from Pennsylvania to New Jersey

Venture Global received FERC's nod to expedite the Plaquemine LNG terminal construction, aiming for a December 2025 completion and starting LNG production in 2024

WBI Energy Transmission's 60.5-mile, 20.6 MMcf/d Wahpeton Expansion in North Dakota received authorization, serving Montana-Dakota Utilities

Kinder Morgan eyes July 2026 start for Texas-Louisiana gas pipe expansion (S&P)
Kinder Morgan's NGPL plans a 2026 start for its 300,000 MMBtu/d Texas-Louisiana pipeline expansion
On Oct. 18, the company filed for FERC approval for a July 1, 2026 start and combined 300,000 MMBtu/d with existing capacity for a total of 467,000 MMBtu/d offered in March 2022

NGPL's expansion aims to meet growing demand in the Texas and Louisiana Gulf Coast, linking major supply basins like Haynesville, Permian, and Eagle Ford to LNG export hubs
Furthermore, Kinder Morgan projects a 20% increase in natural gas demand by 2028, largely fueled by LNG exports from the Gulf Coast < This is why the long-term outlook for U.S. natural gas prices is very bullish. Today annualized demand for U.S. natural gas is over 100 Bcfpd. 20 Bcfpd more demand is a BIG DEAL.

Closing Prices;
> Prompt-Month WTI (Dec 23) was down $-2.59 on the day, to settle at $85.49
> Prompt-Month Henry Hub (Nov 23) was up $0.027 on the day, to settle at $2.926

Trading Economic:
"WTI crude futures fell toward $86 per barrel on Monday, sliding for the second straight session as diplomatic efforts to keep the Israel-Hamas war from exploding to a wider conflict in the Middle East eased some concerns about supply disruptions in the oil-rich region. Aid convoys also started to arrive at the Gaza Strip from Egypt over the weekend, while Israel agreed to hold off its attack on Hamas amid pressure from the US. Elsewhere, the US broadly suspended sanctions on OPEC member Venezuela after Venezuelan leaders agreed to hold fair elections next year. Meanwhile, oil prices continued to be supported by expectations of a wider market deficit in the fourth quarter after top producers Saudi Arabia and Russia extended supply cuts to the end of the year."
> Team Biden's deal with Venezuela is political BS at the highest level. "Fair Elections" in Venezuela is a joke.
> The additional oil that Venezuela can add to the global supply is a "rounding error".

"US natural gas futures traded below $3.0/MMBtu, the lowest in three weeks pressured by record output and mild weather. Natural gas production rose to 103.6 bcfd so far in October, surpassing a record high of 103.1 bcfd in July. At the same time, exports to Mexico have been falling from September’s record, although there are expectations of an increase when New Fortress Energy's plant starts exporting liquefied natural gas. Meanwhile, US LNG facilities' gas flow reached 13.5 bcfd in October, with the return of Cove Point. Looking ahead, forecasts for mild weather through early November are expected to keep heating and cooling demands lower."
> EIA has no idea what actual U.S. natural gas production has been so far in October. They don't have gauges on each well.