Current Market Pricing
Crude Oil
The Nov 2023 WTI contract rolled off the board last Friday, down $0.62 to $88.75/bbl. Dec 2023, fell sharply on its first day as prompt month, losing $2.59 to $85.49/bbl and trading as low as $82.08 Wednesday before settling back in the mid-$80 range to $85.39/bbl yesterday. The contract has retreated yet again in today’s session, currently down $2.28 to $83.18/bbl as China and EU weak economic numbers and rising Russian crude exports (3 mo. high) spooked traders this week, not to mention a slight rise in overall U.S. crude storage (+1.4mm bbls) as well as the Cushing hub (+0.2mm bbls). Refinery utilization also continues to lag as maintenance season is well underway in advance of the upcoming winter season. Last but not least traders will continue to keep their eyes on the Israel/Hamas conflict and the potential for a wider spread conflict, as Israel continues to stack troops and equipment for a full invasion of the Gaza Strip.
Full Report Here: U.S. Weekly Petroleum Report
Rig Count Update
The U.S. oil and gas rig count jumped 15 to 702 on the week, with oil rigs adding nine to 563 and nat gas rigs picking up six to 139. Permian picked up over half with eight and the SCOOP/STACK continues to drop, losing two to 22. The three major gas plays each stood pat, with all six of the new rigs coming from the non-core plays. The six-rig drop from the previous week could very well be the floor the industry has been speculating about for some time now. Time will tell.
Natural Gas
In a week of mild US temps and cooling and heating demand subdued, natural gas futures hung around the $2.90’s for much of the week before crossing $3.00 mid-week. The longer-term forecast looks to bring a cooling pattern to much of the US and should kick start demand and help support higher seasonal prices as we look toward November. Items of note this week include the latest IEA reports projecting global natural gas demand to start dipping at the end of the decade but continuing near historic peak levels through 2050. In the LNG market, floating storage continues to rise, and IEA projections have new LNG projects adding more than 250 bcm per year by 2030, which in turn should ease price and supply concerns but may create a supply glut. November looks to stay with bears as we wait for the colder weather to jump start prices.
Despite projected demand decline, prices in the Midcontinent have increased for next-day flows. Chicago city-gates spot prices are trading a $.81 discount to Henry Hub at $2.05 while ANR and NGPL are both $.85 back. In the futures market, Chicago city-gates is trading a $.38 discount to Henry Hub while ANR OK and NGPL Midcon are $.44 and $.52 back. According to S&P Global Commodity Insights data, total demand in the Midcon is projected to come in at 13.23 bcf/d with production in the Midcon seeing a 2% increase from the previous day to just over 10 Bcf/d. Year to date production has continued to rise and currently sits 2% above last year’s totals.
The EIA released storage numbers this morning, coming in at 3,700 Bcf, representing a net +74 Bcf increase from the previous week. This increase was within range of marketplace expectations of +70-80 Bcf increase. Stocks were 313 Bcf less this time last year and come in 183 Bcf above the 5 yr. historical range of 3,517 Bcf.
Natural Gas Liquids
Liquids prices in both Belvieu and Conway were lower compared to week ago prices, with exception of Isobutanes, which were both up 2%. Propane in both markets took decent hits, losing 9% and 10%, respectively. MB Purity Ethane took a dip as well, losing 7%.
ANCOVA DISCLAIMER: The opinions expressed in this report are based on information which Ancova believes is reliable; however, Ancova does not represent or warrant its accuracy. These opinions represent the views of Ancova as of the date of this report. These opinions may be subject to change without notice and Ancova will not be responsible for any consequences associated with reliance on any statement or opinion contained in this report. This report should not be considered as an offer or solicitation to buy or sell any securities.