Oil is trading lower despite increased tensions in the Middle East
The prompt WTI contract advanced $4.60/Bbl to more than $78/Bbl last week, marking the second consecutive week of higher prices
The Federal Reserve will be meeting on Wednesday to discuss potential interest rate policy changes
Tanker carrying Russian fuel hit in the Red Sea, and US forces attacked in Iraq (BBG)
On Friday, a missile fired by the Houthi militants struck a tanker in the Red Sea transporting a cargo of Russian fuel, despite the Houthis saying they would not be attacking any Russian cargos
The attack could lead to a further reduction in ship traffic in the Red Sea
Over the weekend, three US soldiers were killed in a drone attack in Jordan launched by Iranian-backed militants, prompting the US to promise a response to the attack
US unlikely to return all Venezuelan sanctions (BBG)
Last year, the US suspended sanctions on Venezuela after President Maduro promised free and fair elections, which resulted in higher oil exports to the US
Last week, Venezuela’s top court upheld a ban on several members of the opposition party from holding office, dimming hopes that Maduro would follow through with the election promise
However, experts view US sanctions on Venezuela’s oil industry as unlikely to return
Francisco Monaldi of Rice University’s Baker Institute of Public Policy said, “It is highly unlikely that the Biden Administration will reimpose the same oil sanctions scheme that existed”, and that sanctions on the country’s gold industry are more likely
Natural gas prices trade lower ahead of expiry as the market assesses warmer weather until early February
February ’24 Henry Hub is down 20.8c this morning to trade around $2.504/MMBtu
The Winter ‘23/’24 strip is down 12.7c to $2.313, and the Summer ’24 strip is down 6.9c to $2.468
Today's Euro Ens showed mixed weather patterns, with cooler temperatures in the Northeast and Southeast but warming in other areas; overall, temperatures remain near the 10-year average
This week is expected to be the warmest of the next three, and mild cooling is expected next week
Over the weekend, Lower 48 gas production rose, reaching a high of 104.1 Bcf/d and steadying around 103.9 Bcf/d, with the Rockies and Appalachia maintaining strong outputs and the South Central nearing 54 Bcf/d (Criterion)
Additionally, Freeport LNG announced a month-long outage for one of its liquefaction trains at its 2.1 Bcf/d facility, operating below capacity at 1.1 Bcf/d since mid-January due to extreme cold
Appalachian producer CNX pursuing flat gas production as regional drilling levels off (S&P)
CNX plans to reduce spending and keep gas production stable in 2024, reflecting a consensus approach among operators in response to underwhelming pricing
CNX plans to produce 570-590 Bcfe in 2024 with 8%-15% lower spending, following 560 Bcfe output in 2023
During CNX's 4Q 2023 earnings call, CFO Shepard said that producers have consistently maintained flat production levels and plan to continue this in 2024, focusing on capital efficiency and fewer well activations
Despite rigs falling from 48 to 34 in the past year, production in the Appalachian Basin steadily rose, reaching new highs above 36 Bcf/d in December, supported by inventories of drilled but uncompleted wells
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