AEGIS Hedging : February 12, 2024

Oil is trading lower after posting a weekly gain of more than $4 last week
- The US rig count remained unchanged for the second week in a row at 499 rigs, according to data from Baker Hughes
- Speculators reduced their net long position by 84.5k contracts through last Tuesday but likely added length last week as crude rallied
Saudi Aramco sees strong oil demand growth in 2024 (BBG)
- The CEO of Aramco said, “We see 104 million barrels of demand this year, so a growth of 1.5 million barrels”
- While most analysts anticipate higher oil demand this year, the pace of demand growth is expected to slow down compared to 2023
- Aramco’s projections are about halfway between estimates by OPEC and the International Energy Agency, which have taken differing views on 2024 demand
Iraq production now in-line with OPEC+ accord (BBG)
- According to the country’s oil minister, Iraq is now meeting its OPEC production quota
- In November, Iraq pledged a 220 MBbl/d production cut from January through March, along with several other OPEC nations
- Iraq is also in talks with operators in the Kurdistan region to resume oil exports through Turkey’s Ceyhan port, which were halted last year due to a payment dispute

Natural gas prices trade lower as mild February is expected to limit heading demand
- March ’24 Henry Hub is down 1.7c this morning to trade around $1.83/MMBtu
- The Summer ’24 strip is down 2.7c to $2.233, and the Winter ‘24/’25 strip is down 1.2c to $3.373
- Today's Euro Ens shows a net increase of 7.3^o F across the Lower 48 in the 1-15 day period, with a temporary cold spell this weekend before trending warmer towards late February
- Lower 48 gas production fell by 0.85 Bcf/d from Friday's record high of 104.799 Bcf/d to 103.95 Bcf/d, with the largest decrease in the South Central (-0.5 Bcf/d) (Criterion)
European gas option volatility falls to its lowest since July 2021 (Bloomberg)
- Implied volatility, which reflects the market's expectation of future price volatility, in European natural gas options falls to 63.15%, the lowest since July 2021, as winter nearly comes to an end
- Record gas inventories, renewable energy, and relatively mild weather have weighed on prices
- European gas storage levels reached 67% full on Feb 10, surpassing the five-year average of 52% for this time of year, according to GIE data
- Furthermore, TTF futures have fallen nearly 20% since the year's start, with demand significantly below historical averages and mild temperatures continuing

February 12, 2024