AEGIS Hedging : January 24, 2024

Oil is trading higher near $75, ahead of today's EIA inventory report
- The US military struck more targets in Iraq yesterday in retaliation to attacks on US forces in the region
- The API forecasts US crude inventories to have drawn down by 6.67 MMBbls last week, with Cushing drawing 2.03 MMBbls
Red Sea turmoil causes biggest international trade diversion in decades (BBG)
- Repeated strikes by the US and UK, as well as an international maritime coalition, have been unable to stop the attacks on vessels in the Red Sea by the Houthi militants
- With insurance rates surging and sailors demanding increased pay for the passage, trade flows through the Red Sea have fallen significantly
- Shipping companies say they expect the disruption to last for months, with vessels for the longer route around Africa being booked as far ahead as this summer
Tullow Oil ramping up Ghana production (BBG)
- Tullow Oil expects to increase production at Ghana’s flagship Jubilee field in 2024
- A multi-well drilling program that began in 2021 has been completed early, with a similar campaign beginning in 2025
- Production from the Jubilee field is forecast to be 68 MBbl/d this year, up from 63 MBbl/d in 2023 but down from 100 MBbl/d in 2017

Natural gas prices continue to rebound from one-month lows, backed by slight cooling in near-term forecasts
- February ’24 Henry Hub is up 14.8c this morning to trade around $2.598/MMBtu
- The Winter ‘23/’24 strip is up 8.6c to $2.422, and the Summer ’24 strip is down 4.3c to $2.573
- Today's Euro Ens forecast shifted to colder temperatures, especially in the 11-15 day period, but still indicates above-normal temps and limited demand into early February
- Last night's increase in Lower 48 gas production, led by the Northeast and South Central, lifted volumes to 100.99 Bcf/d, with continued gains aligning with pre-winter storm levels at 101.95 Bcf/d (Criterion)
Slow LNG capacity growth leaves the US gas market awaiting 2025 (S&P)
- LNG feedgas demand hits all-time highs outside of recent weather-related disruptions, averaging nearly 14.8 Bcf/d in early January and occasionally surpassing 15 Bcf since mid-December
- Room for demand growth is constrained until late 2024, with most capacity additions slated for year-end before a major increase in 2025
- An additional 8.4 million mt/year of capacity is expected by the end of 2024, adding to the current 84 million mt/year, according to S&P Global
- Early 2025 forecasts suggest a rise in capacity by approximately 18 million mt/year, aiming for a total increase of over 53 million mt/year throughout the year

January 24, 2024