Energy Prospectus

Opening Prices:
> WTI is up $0.09 to $85.58/bbl, and Brent is up $0.14 to $89.97/bbl.
> Natural gas is up 4.0c to $2.966/MMBtu.

AEGIS Notes
Oil

Oil trades higher, around $85.60, despite weak economic data from the Eurozone < WTI went down soon after the markets opened.
Eurozone and UK business activity turned lower, suggesting a potential recession, while German data showed a recession may already be underway in the country

Oil prices fell 2% on Monday amid efforts to contain the Israel-Hamas conflict

Russia’s seaborne crude exports hit four-month high (BBG)
3.53 MMBbl/d was shipped from Russian ports, an increase of 20 MBbl/d from the prior week, according to ship tracking data from Bloomberg
The increase in flows came from Baltic and Pacific ports, offsetting declining shipments from the Black Sea
The majority of cargoes were delivered to Asia, although flows to India remain below peak levels seen earlier this year

IEA says global oil demand to peak this decade (Reuters) < IEA ALWAYS under-estimates demand because they are based in Paris.
The IEA report contrasts with OPEC’s view, which sees oil demand rising after 2030 and calls for continuous investment into the sector
The report outlines the agency's view that electric vehicle growth in China will be a large source of the shift, saying that in 2022, more than 50% of global electric vehicle sales were in China
The IEA report forecasts consumption of 102 MMBbl/d in the late 2020s before falling to 97 MMBbl/d by the middle of the century < This is nothing but a forecast based on what the boss wants to hear. IMO oil demand will only go down if human population goes down. Seven of the eight billion people on Earth can't afford EVs and they want a better standard of living, which is only possible with more oil-based fuels and products.

Natural Gas

Natural gas prices are 4c higher at $2.966 after weather forecasts shifted slightly cooler

West Texas gas, or Waha, is trading negative amid signs of the Whistler pipeline starting and El Paso's North Mainline maintenance to constrain supply until late November
AEGIS notes that in regions like the Permian, operating at full egress capacity, events such as maintenance can weigh on spot cash prices

The Winter ‘23/’24 strip is up 2.6c to $3.303, and the Summer ’24 strip is unchanged at $3.240
The Lower 48 6-10 day forecast has cooled by 5.2 °F over the last 24 hours, with the bulk of East of Rockies cooling, while the Rockies and West region’s forecast warmed by 8.9 °F and 10.3 °F

Furthermore, the IEA, in its World Energy Outlook, forecasted decreased global natural gas demand till 2040, attributed to rising renewable capacity and Europe's distancing from Russian gas post-Ukraine conflict

US LNG exports rise in October, Europe leads, but market remains cautious (S&P)
US LNG exports reached 4.96 million mt in October, which is about 68% of September's total
Regionally, Europe was the prime recipient, importing 2.33 million mt of the total exports. In contrast, Asia and North America received 220,000 mt and 130,000 mt, respectively, with remaining allocations still to be determined
Over 35% of October's LNG exports came from Sabine Pass, the largest export facility; Freeport LNG contributed around 18%
Despite the rise in exports, a bearish outlook persists due to high European gas storage and ongoing mild temperatures weighing on demand

IEA is very irresponsible. They have jumped the Green Unicorn strategy and talked Europe into wind and solar. Germany dismantled their last nuclear facility and then had to fire up some coal plants when the threat of discomfort manifested its ugly head. Most will not sacrifice today for a 2 degrees drop in temperature 50 years from now.

Bloomberg: Oil trader Pierre Andurand said he expects
Saudi Arabia to keep its current supply curbs in place until
prices reach at least $110 a barrel.

As inventories decline in the coming months, “the market
will have to beg for more supply at some point,” the founder of
Andurand Capital Management LLP said during a question-and-
answer session at Saudi Arabia’s Future Investment Initiative in
Riyadh.

“The Saudis will have to decide when and at what price to
bring supply back,” he added. “For me, an adjustment likely will
come around $110 a barrel. So there’s room to the upside for
prices.”

Since July, Saudi Arabia has pledged to implement a
unilateral production cut of 1 million barrels a day on top of
existing curbs. The kingdom earlier this month said it would
keep the curbs in place until the end of the year.

Andurand said Saudi policy remains the deciding factor for
crude prices. Global benchmark Brent oil is back below $90, even
as the Israel-Hamas war threatens greater conflict in the Middle
East. It’s “not impossible” that there will be direct
confrontation with Iran that may change the landscape, he said.
Andurand sees oil demand reaching a high later this decade,
then trailing off. On the topic of metals, he warned of trouble
for copper markets, as mining supply is expected to peak while
demand accelerates due to the energy transition.

Looks like its possible that Biden and the DOE may get their wish of buying 6 million barrels @ 79. Paper traders are on his payroll.

The drop in oil prices makes no sense. We are back to threats of recession in Europe. Demand destruction nonsense coming from IEA, etc.

Crude is down over 6 bucks from Friday's high. People were worried about IDF going after Iran.
That risk had lessened, (for now)

We still have recession fears.

I agree , it's overdone and ridiculous.