Oil is trading higher, near $72, reversing some of yesterday's losses
Yesterday, prices fell more than $3/Bbl following news that Saudi Arabia had cut its official selling price to Asia by a significant margin, potentially signaling weakness in the spot market
Russian exports start the year in line with OPEC+ cut (BBG)
Russia’s seaborne oil exports have started 2024 in line with the country's pledge to reduce exports as part of the wider OPEC+ supply cuts
3.34 MMBbl/d were shipped from Russian ports in the four weeks leading up to January 7, down 120 MBbl/d from the prior four-week period
Russia has said they will reduce exports by 500 MBbl/d below the May-June average during the first quarter of 2024
Oil tanker rates surge following large booking (BBG)
Following a large number of bookings by a South Korean shipowner Sinokor, the supply of available tankers has been reduced
The ships were booked for long-haul voyages, but the reason behind the unusually large order is unknown
Shipbroker Braemar said, “Sinokor continues to charter VLCCs in what appears to be a major punt on the VLCC freight market”
Freight rates have already risen sharply this year following the Panama Canal constraints and the Red Sea shipping attacks
Natural gas prices extend rally as long-awaited winter weather moves across the US
February ’24 Henry Hub lost 12.5c this morning to trade around $3.105/MMBtu
The Winter ‘23/’24 strip is up 14.7c to $2.890, and the Summer ’24 strip is up 9.3c to $2.847
The weather model indicates a colder shift across all regions, with the Midwest and South Central experiencing significant drops, leading to a peak in heating demand on Tuesday but returning to 10-year normal in the next two weeks
Lower 48 natural gas production in the Lower 48 declined to 102 Bcf/d, with drops in the Northeast, Rockies, and Gulf of Mexico, partially offset by increases in the South (Criterion)
Additionally, the latest weather model indicates a heightened risk of production freeze-offs across all major US and Canadian basins
Higher seasonal price volatility is possible as reliance on LNG exports increases (AEGIS)
U.S. LNG’s expected export capacity expansion to 25 Bcf/d by 2028 could cause more natural gas price volatility amid seasonal utilization patterns
Henry Hub's forward curve shows a tighter supply-demand balance and higher far-dated futures, driven by increasing U.S. LNG export demand
Seasonally wider future Oct-Jan spreads suggest stronger winter demand risk and weaker summer/fall pricing, with significant spread changes since late 2021
Expected rise in LNG export capacity by 2025 and potential facility outages contribute to market volatility, while summer utilization rates are impacted by maintenance and efficiency loss
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