Energy Prospectus

Opening Prices:
> WTI is up $0.97 to $76.71/bbl, and Brent is up $1.02 to $81.03/bbl. < MY TAKE: Saudi Arabia will aggressively defend the price of Brent.
> Natural gas is up 1.5c to $3.056/MMBtu.

AEGIS Notes
Oil

Oil is trading higher today, around $76.70, but is heading for a third consecutive weekly decline
The WTI prompt spread flipped into contango for the first time since July as the front of the curve softens

Banks see Saudi supply cut extending into 2024 (BBG)
Analysts at UBS, FGE, Commerzbank, Eurasia Group, and RBC view the extension of Saudi Arabia’s 1 MMBbl/d supply cut into 2024 as increasingly likely
Commerzbank said an extension “is now very probable, given that the oil market would otherwise risk seeing a high supply surplus in the first half of next year” < Not sure where they think an oil supply surplus is coming from.
OPEC is set to meet on November 26 to decide the future of their supply strategy going into 2024

Court upholds Alaska drilling project (BBG)
A federal judge has upheld the Biden Administration’s approval of ConocoPhillips Willow oil project
The 180 MBbl/d project has been challenged by environmental groups since it was approved by the Interior Department in March
Equipment for the project is currently being fabricated at facilities in the US Gulf Coast, and ConocoPhillips is expecting to resume on-site work in Alaska next month

Natural Gas

Natural gas prices trade higher, around $3.056, amid moderate weather outlook and strong production
The Winter ‘23/’24 strip is up 1.6c to $3.196, and the Summer ’24 strip is down by 1c to $3.209

Yesterday, gas prices extended losses amid warmer-than-normal November forecasts and higher U.S. production, marking a fourth straight loss
Today's forecast shows a moderate cooling east of the Rockies, especially in the Southeast, leading to a net positive impact on demand, with consistent, colder conditions expected in the coming weeks < It is called "Winter".
However, production remains high at around 105 Bcf/d (S&P) < Keep in mind that these daily estimates are no more than WAGs. EIA does not have a guage on all of the million+ wells that produce gas in this country.

Texas launches $10B energy fund for power project loans (Criterion)
Texas voters have greenlit a $10 billion Texas Energy Fund to provide low-interest loans for new power projects, including gas-fired plants, microgrids, and grid modernization
The fund will allocate $7.2 billion for projects adding over 100 MW to the grid by 2029, with a 10,000 MW cap and a 60% cost coverage limit per project, excluding storage, private generation, and gas pipelines

TC Energy announces mechanical completion of Coastal GasLink Pipeline (S&P)
TC Energy has mechanically completed the 2.1 Bcf/d Coastal GasLink pipeline, set to supply gas to LNG Canada's facility by the end of the year, achieving a key milestone ahead of schedule
With the potential to expand capacity to 5 Bcf/d, the project awaits a final investment decision for phase two

EOG highlights South Texas’ Dorado Shale infrastructure developments in 3Q earnings call < Bullish news for SilverBow Resources (SBOW). SilverBow also has a lot of upside in Webb County, so any infrastructure that helps get gas from that region to better markets is going to help gas prices for all of the companies in Webb County.
EOG is advancing infrastructure in South Texas' Dorado Shale, including a 36” natural gas pipeline capable of transporting up to 1 Bcf/d
Construction of the second phase of EOG's pipeline project is set to begin in early 2024, aiming to connect the Dorado Shale play to the Agua Dulce hub
This pipeline extension will primarily supply the Cheniere Corpus Christi Stage 3 development and Transco

DEC NG hit a 2 handle today.

No glut , everything is great , rah , rah . lets go gassers!

Trading Economics
"WTI crude futures climbed nearly 2% to $ 77 per barrel on Friday, mirroring gains in equities as the broader financial market rebounded from hawkish Federal Reserve comments, but were still on track for a third consecutive weekly decline. Concerns about potential supply disruptions in the Middle East, coupled with uncertainties in US and Chinese demand, contributed to the week's downward pressure. The EIA said that total petroleum consumption in the US is expected to decrease by 300,000 bpd this year, a reversal from its previous forecast for a 100,000 bpd increase. Latest data also showed that US crude inventories surged by nearly 12 million barrels last week, the largest increase since early 2023. In China, weaker-than-expected inflation and trade figures hurt the demand outlook in the world’s top crude importer."

IMO a lot of what is causing wild swings in the oil price is just "noise". EIA and IEA have no idea what U.S. oil demand will be next year and even less knowledge of what global oil demand will be next year. Their bosses want them to say oil demand is going down because of all the progress they've made on the Green New Deal.
Population growth and the employment rate are the primary drivers of oil demand. Population growth is definitely going up (ie wide open Southern Border) and the number of people working seems to be going up month-after-month, so where is the weaker demand for oil-based products coming from?

Closing Prices:
> Prompt-Month WTI (Dec 23) was up $1.43 on the day, to settle at $77.17
> Prompt-Month Henry Hub (Dec 23) was down $-0.008 on the day, to settle at $3.033

The Paper Traders love a good trading channel because they can make money when oil prices are rising or falling. WTI now seems to have a solid support level at $75 and resistance level somewhere around $90. Just run a one-year chart of WTI to see what I mean.

In my opinion, the "Right Price" for WTI is over $90/bbl based on supply and demand fundamentals, but Paper Traders are going to work this trading channel as long as is works. OECD petroleum inventories are low and they keep falling.

The traders shorting oil futures need to be worried about the U.S. slapping sanctions on Iran for their support of terrorist groups that having been attacking our bases in Syria and Iraq. If American soldiers are killed, the pressure on Team Biden to enforce sanctions on Iran will be extreme.

Israel has killed a lot of Hamas "demons".

Dan, Saudis may surprise the paper traders again like they did a few weeks ago. Recall they announced their cuts on a Sunday when markets were closed. Paper traders got spanked. Saudis have recently complained about the manipulation for which you speak. They should tread lightly.