Oil is trading higher after continued Red Sea hostilities
The API estimates that US crude inventories fell by 5.2 MMBbls last week, ahead of the official EIA data release today
The EIA released its Short-Term Energy Outlook yesterday
The agency forecasts that US production will continue to climb, reaching 13.2 MMBbl/d in 2024 and 13.4 MMBbl/d in 2025
The EIA sees the OPEC+ cuts leading to global inventory withdrawals of 800 MBbl/d on average in Q1 2024, followed by a more balanced period from Q2 2024 through Q1 2025
Houthis launch largest Red Sea attack to date (BBG)
The Houthi rebels based in Yemen launched their largest attack since hostilities began earlier today, forcing a response from US and UK naval forces
American and British forces shot down 18 drones and three anti-ship missiles as the Iranian-backed group continues to escalate attacks on the vital shipping lane
Fears of further escalation in the region have led shipping firms to use alternative routes, which has led to a higher cost of shipping
Vitol’s Head of Asia sees a balanced oil market in 2024 (BBG)
While demand is expected to continue to grow strongly, it will mostly be matched by rising supply from the US, Brazil, and Guyana, said Mike Muller of trading firm Vitol
As a result of this balanced market, OPEC may be required to continue their production cuts to keep oil prices close to $80/Bbl
Muller added that “the big focus is on spare capacity and how OPEC or Russia keep their various partners in line”
Natural gas prices give up gains as early weather models seen warmer later this month
February ’24 Henry Hub lost 17.8c this morning to trade around $3.012/MMBtu
The Winter ‘23/’24 strip is down 11.9c to $2.795, and the Summer ’24 strip is down 7.4c to $2.788
The weather model indicates slight warming in most areas but significant cooling in the Southeast/South Central, with peak cold around mid-next week, with a gradual warm-up expected by January 26
Lower 48 natural gas production remained steady at 102.1 Bcf/d, ahead of upcoming winter storms in the Rockies, Northeast, and South, with the Rockies experiencing a 0.5 Bcf/d drop in the last week (Criterion)
The Biden administration is scrutinizing the climate impact criteria for approving LNG export facilities, which may delay upcoming projects
The DOE is reassessing its methods for evaluating the climate effects of proposed LNG plants
A White House-convened panel of government officials is expected to present policy recommendations by the end of the month
The US currently has five LNG export facilities under construction and several more permitted and awaiting FID
US EIA estimates 2024 coal exports down 9% on year at 91 million st (S&P)
EIA revises 2024 coal export forecast to 91 million short tons (st), a 9% decrease from 2023's 100 million st. Recovery is projected in 2025, with exports rising to 95.4 million st
2024 US coal production is estimated at an all-time low of 489.3 million st, a 15.9% yearly drop, further decreasing to 428.8 million st in 2025
Total coal consumption for 2024 is projected at 391.3 million st, up 1.6% from Dec projection, and power sector's coal consumption is forecasted at 351.9 million st, expected to hit an all-time low of 322.2 million st in 2025
Coal's share in US power generation is expected to fall to 14.8% in 2024 and 13.3% in 2025, while renewables rise to 24% in 2024 and 25.9% in 2025
Additionally, EIA estimates natural gas generation share to slightly decrease from 41.9% in 2023 to 41.5% in 2024 and 41.1% in 2025
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