Energy Prospectus

$67/bbl will become a strong support level for oil if WTI can settle over that price today.
Look at the 1-year chart here https://tradingeconomics.com/commodity/crude-oil to see that it has bounce off $67 three previous times to quickly move back over $70.

Trading Economics:
WTI crude futures held around $67.3 per barrel on Tuesday morning after plunging over 6% in the previous session, its largest daily loss in two years and hovering at four-week lows.
> The decline followed reports that Israel’s retaliatory strike targeted military sites across Iran on Saturday, avoiding oil and nuclear facilities. Risk premiums eased further as Israeli Prime Minister Benjamin Netanyahu expressed openness to a brief truce in Gaza in exchange for the release of a limited number of hostages.
> With the easing of Middle East tensions, market focus has shifted back to weak fundamentals, particularly sluggish Chinese demand growth and the anticipated OPEC output increase.
> Traders will also watch key US data on growth and employment this week for insights into monetary policy, along with implications of the upcoming US election.

The front month NYMEX contract for HH natural gas is now the DEC24 contract:
> US natural gas futures (DEC24) dropped to below $2.80/MMBtu yesterday, mirroring other energy markets as supply concerns eased following Israel’s retaliatory strikes on Iran, which avoided crude and nuclear sites. < What happens in the Middle East has nothing to do with U.S. and Canadian natural gas supply/demand fundamentals.
> Additionally, meteorologists forecast warmer-than-normal temperatures across the Lower 48 states through at least November 9, allowing utilities to inject more gas into storage than usual for this time of year.
> Also, LNG feedgas supply is expected to stay below record levels for the next few weeks due to maintenance at facilities in Louisiana, including Cheniere Energy and Cameron LNG. < If the Freeport LNG export facility stays online, demand for U.S. natural gas should be 5 Bcf higher in Q1 2025 than it was in Q1 2024 since three new LNG export facilities will be online in Q1 2025 that will add 3.3 Bcfpd of LNG export capacity. Total U.S. LNG export capacity will be 17.8 Bcf per day when Cheniere's Corpus Christi, Texas Train 3 is fully operational in January.
> On the supply front, average natural gas output in 2024 is projected to decline for the first time since 2020.
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In my forecast/valuation models Q4 2024 is based on WTI averaging $70/bbl and Henry Hub natural gas averaging $2.75.

From Reuters: By Arunima Kumar

Oil prices rose on Tuesday after tumbling 6% in the previous session, as a U.S. plan to buy oil for the Strategic Petroleum Reserve (SPR) provided some support though wider concerns about weaker future demand growth exerted pressure.

Brent crude futures climbed 74 cents, or 1.04% to $72.16 a barrel by 1026 GMT, while U.S. West Texas Intermediate crude was 68 cents, or 1%, higher at $68.06 a barrel.

On Monday, both contracts fell to their lowest since Oct. 1 after Israel's retaliatory strike on Iran at the weekend bypassed Tehran's oil infrastructure.

With signs that neither country seemed likely to escalate the conflict after the attack, investor concerns about flagging global oil demand growth for this year and next rose to the fore.

Declining oil demand from China, the world's largest crude oil importer, has been a drag on global oil consumption and prices.

Global refining margins are dismal as global demand growth for oil-based products (primarily transportation fuels) remains below average due to sluggish economic activity in China, BP CEO Murray Auchincloss told Reuters.

Demand will return to normal growth rates after Chinese President Xi Jinping introduces new stimulus measures to the economy, Auchincloss added.

"Following Israel's retaliation, event risk has faded, leaving the oil market to face up to macroeconomic realities. China, where industrial profits are slumping, will be front and centre," said Harry Tchilinguirian, group head of research at Onyx Capital Group.

Still, tensions in the Middle East remain high. Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Monday that Iran will "use all available tools" to respond to Israel's weekend attack.

The U.S. on Monday said it was seeking up to 3 million barrels of oil for the SPR for delivery through May next year, a purchase that would leave the government with little money to buy more until lawmakers approve more funds.

The U.S. announcement introduces a fundamental buyer into a category which at present has been sparsely populated, PVM's Evans said.

However, Tchilinguirian said the barrels are not enough to offset the broader pessimism around oil demand centred in China and Europe.

Crude oil and gasoline stockpiles in the U.S. likely rose last week, while distillate inventories were seen down, a preliminary Reuters poll showed on Monday.

The American Petroleum Institute industry group is scheduled to release a weekly report on Tuesday and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, will issue one on Wednesday.

(Reporting by Arunima Kumar in Bengaluru, Yuka Obayashi in Tokyo and Emily Chow in Singapore; Editing by Himani Sarkar and Christian Schmollinger, Kirsten Donovan and Sharon Singleton)

The energy sector has become the “Peyton Place” of investing. Let’s hope that it doesn’t need “General Hospital”.