Energy Prospectus

Opening Prices:
> WTI is up $1.17 to $74.07/bbl, and Brent is up $1.32 to $78.74/bbl.
> Natural gas is down -5.2c to $3.01/MMBtu.

AEGIS Notes
Oil

Oil is trading higher, reversing some losses from yesterday’s decline of nearly $4/Bbl
Oil is heading for its fourth consecutive weekly decline, down $3.40/Bbl this week and lower by $14.11/Bbl over the past four weeks

Goldman Sachs says oil selloff driven by non-OPEC supply (BBG)
The bank said in a note that the “key surprise has been much stronger than expected non-core OPEC production, partly offset by core OPEC supply cuts,” as well as output increases by some sanctioned countries such as Iran
Demand is on track to surpass the bank's expectation of 2.5 MMBbl/d of growth by 500 MBbl/d this year
Goldman Sachs expects Saudi Arabia to unwind its 1 MMBbl/d unilateral cut gradually from 3Q 2024 by 250 MBbl/d per month

Russian oil sanctions failing to work (BBG)
Budget data shows the country's revenues from oil are climbing as Russia has increased the size of its shadow fleet
A study showed that nearly every cargo of Russian crude shipped last month was priced above the $60/Bbl price cap
The US Treasury Department has begun to look at sanctioning shipping companies that transported Russian oil above the price cap, and is looking at ways to increase costs for Russia’s shadow fleet

Natural Gas

Natural gas trades lower around $3.01 and heads for a second straight weekly loss amid high production
The Winter ‘23/’24 strip is down 5.3c to $3.073, and the Summer ’24 strip is down by 5.2c to $3.096

The Euro Ens indicates warming in the Midwest, Northeast, and Southeast in the next 6-10 days, but overall cooler U.S. temperatures into Thanksgiving, with 2023’s HDD’s similar to 2022
Yesterday, the EIA reported a +60 Bcf gas injection for the week ending 11/10, reflecting robust production amid a mild start to winter

Kinetik to sell Gulf Coast Express stake, eyes December start for PHP expansion (Criterion)
Kinetik Holdings is selling a 16% stake in the Gulf Coast Express Pipeline, with a potential value of up to $550 million and interest from private equity firms
The Gulf Coast Express Pipeline, a 2 Bcf/d gas pipeline, is jointly owned by Kinder Morgan with a 34% share, DCP Midstream and ArcLight Capital each holding 25%, and Kinetik with 16%
In their 3Q2023 earnings report, Kinetik revealed plans for the Permian Highway Pipeline Expansion, which is set to increase capacity by 550 Mmcf/d and is expected to be operational by December 1, 2023

"Oil prices declined to their lowest level since July this week, with WTI falling to $73 per barrel on its way toward a fourth consecutive weekly loss. With a combination of weak economic data from the US where the labor market seems to finally be cooling off and CTA trading patterns that aggravated the downward spiral, WTI has shed its previous levels of steep backwardation and is now in contango in the prompt months. Despite the negative sentiment, oil prices did begin to bounce back slightly on Friday morning, with Brent rising to $78.50 and WTI trading at $73.86." - OilPrice.com

"WTI crude oil futures rose toward $76 per barrel on Friday, cutting the 5% plunge from the prior session that took prices to their lowest since July, but still on course to book its fourth consecutive weekly loss amid concerns of low demand and respite to supply. The latest data from the EIA showed that crude oil stocks in the US rose by 17.5 million barrels in the last two weeks, taking inventories to their highest in 2-1/2 months. Additionally, higher output from non-core OPEC members added some relief to global supply levels, softening the impact of repeated output cuts from Saudi Arabia and Russia. In the meantime, the same EIA report pointed to a 7.6% decline in fuel product supplied from the earlier week halfway through November, consistent with the body’s earlier report that stated the oil market will not be as tight as initially thought."- Trading Economics

EIA Weekly Petroleum Report:
> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.6 million barrels from the previous week. At 439.4 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year.
> Total motor gasoline inventories decreased by 1.5 million barrels from last week and are about 1% below the five year average for this time of year.
> Distillate fuel inventories decreased by 1.4 million barrels last week and are about 13% below the five year average for this time of year.
>>> Total commercial petroleum inventories decreased by 0.1 million barrels last week.

MY TAKE:
> There was a bit of a crude oil supply surge last week BUT DEMAND FOR REFINED PRODUCTS STAYS STRONG.
> Wild crude oil price swings the last two days have more to do with the DEC23 WTI contract expiring on Monday. Lots of the Paper Traders held on to their contracts too long and some large sales on Thursday morning caused yesterday's selloff.
> Friday morning the shorts got crushed. Margin calls also played a part in this week's crazy trading.

"US natural gas futures fell more than 3.5% to below $3.0/MMBtu, the lowest in five weeks, after EIA reported a bigger-than-expected storage build and forecasts for mild weather that should keep heating demand low and allow utilities to keep injecting gas into storage. US utilities added 60 billion cubic feet (bcf) of gas into storage last week, more than expectations of a 40 bcf increase. Last week's increase boosted stockpiles to 3.833 trillion cubic feet (tcf), or 5.6% above the five-year average of 3.630 tcf for the time of year. Utilities could keep injecting gas into storage during the weeks ended Nov. 17 and Nov. 24 if output remains at record highs. So far in November, average gas output rose to 107.2 billion cubic feet per day (bcfd), up from a record 104.2 bcfd in October. Also, the expectation of warmer-than-normal weather until November 21st is reducing heating demand, further dampening the need for natural gas. For the week, natural gas prices are down 2.6%." - Trading Economics

Closing Prices
> Prompt-Month WTI (Dec 23) was up $2.99 on the day, to settle at $75.89
> Prompt-Month Henry Hub (Dec 23) was down $-0.102 on the day, to settle at $2.960