Oil is trading higher, around $72.85, as shipping risks persist
The US crude oil rig count decreased by two rigs to 499, with the rig count now down by 124 year-over-year
According to CFTC data, speculators' net-long position in WTI futures increased by 65k contracts through last Tuesday
Red Sea risks remain high, insurance costs jump (BBG)
A US-owned commercial shipping vessel was struck with a ballistic missile fired from Yemen on Monday, as attacks on shipping continue in the vital waterway
The cost of war-risk insurance in the Red Sea has surged, with underwriters now charging between 0.75-1% of the value of a ship to pass through the region, further impeding trade flows
Shipments of Iraqi crude may face delays as several tankers carrying about 6 MMBbls of crude changed course before reaching the Red Sea, one of which has already been rerouted around Africa
Russian oil facing delivery issues in India (BBG)
Increased enforcement of the G7 price cap and challenges with shipping relating to the Red Sea have created issues with getting Russian crude into Indian ports, according to India’s Oil Minister
The minister said in an interview with Bloomberg, “In the Russian case, it is a question of the price cap, and it is also a question of some of their shipping entities coming under adverse notice of others”
Last month, the US increased enforcement of the price cap and sanctioned several traders of Russian oil
India’s Oil Minister said further, “When Russian prices don’t conform, we buy from Iraq, the UAE, and Saudi Arabia”
Natural gas prices reverse last week’s gains ahead of warm weather forecast
February ’24 Henry Hub is down 34.3c this morning to trade around $2.97/MMBtu
The Winter ‘23/’24 strip is down 10.6c to $2.747, and the Summer ’24 strip is down 5.3c to $2.679
The weather model indicated a warming trend of +29o F to +31o F in the Midwest and Southeast, with a return to 10-year average temperatures expected by late January following the current week of intense cold
Due to freeze-offs, Lower 48 gas production fell to 91.55 Bcf/d, slightly recovering to 91.9 Bcf/d, but visibility is limited in many southern basins like Barnett and Eagle Ford Shale (Criterion)
Rockies production fell by 0.37 Bcf/d to 9.0 Bcf/d due to drops in the DJ Basin and San Juan, while the South Central struggled with harsh conditions, although Haynesville's rebound contributed to a regional increase to 46.1 Bcf/d
Appalachian gas production fell to 33.78 Bcf/d, a nearly 5% decrease from Friday, with average regional temperatures at 14o F
LNG tankers divert from Red Sea as Qatar warns of escalation (S&P, Bloomberg)
LNG tankers from Qatar and Russia are avoiding the Red Sea due to Houthi attack risks and escalation warnings from Doha
Qatar rerouted three Europe-bound LNG tankers away from the Red Sea towards southern Africa or southeast Asia, with two others, including a Russian-controlled vessel
At the World Economic Forum, Qatari PM Al Thani warned that US-led attacks on Houthis in Yemen risk escalating the conflict
Gas vessel traffic through the Red Sea dropped 96% month-over-month
Rapidan Energy Group estimates a 30% chance of significant disruption in oil and LNG flows from the region, a sharp increase from previous near 0% market expectations
Wind and solar to drive U.S. power generation growth in the next two years (EIA)
EIA, in its STEO report, forecasted U.S. solar power generation to increase 75% from 163 billion kWh in 2023 to 286 billion kWh in 2025
Wind power generation is expected to grow 11% from 430 billion kWh in 2023 to 476 billion kWh in 2025
Coal power generation is projected to decline 18% from 665 billion kWh in 2023 to 548 billion kWh in 2025
Natural gas remains the largest U.S. electricity source, with ~1,700 billion kWh annually in 2024 and 2025; nuclear power generation is to rise slightly from 776 billion kWh in 2023 to 797 billion kWh in 2025
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