AEGIS Hedging : February 15, 2024

Oil is up slightly to $76.75 after falling more than $1 yesterday
- Last night, Israel struck targets belonging to Hezbollah in Lebanon as conflict in the Middle East continues
- Iraq and Kazahkstan stated they have failed to fully cut production below promised levels
IEA sees oil market in surplus this year (BBG)
- The latest report by the International Energy Agency shows global oil demand increasing by 1.2 MMBbl/d in 2024, about half the growth rate of 2023
- Meanwhile, supply growth from non-OPEC countries is expected to come in at 1.6 MMBbl/d
- The IEA's view on oil balances continues to differ from the view of OPEC, which sees global oil markets in a deficit for 2024
- The IEA noted that the market was in a deficit last month due to winter storms shutting output in North America but expects the effects to be short-lived
Refining growth to be led by the Middle East, China, and Africa in 2024 (EIA)
- The Middle East will add 630 MBbl/d as the Kuwait Al Zour refinery reaches total capacity
- China’s refining capacity is expected to increase by 340 MBbl/d despite closures in Shandong
- Africa’s capacity will grow by 260 MBbl/d as the Dangote refinery continues to start-up

Natural gas prices recovered modestly as overnight weather models were seen shifting somewhat cooler
- March ’24 Henry Hub is up 4.2c this morning to trade around $1.651/MMBtu
- The Summer ’24 strip is up 2.7c to $2.077, and the Winter ‘24/’25 strip is up 2.5c to $3.247
- Today's Euro Ens shows a modest 0.4°F rise in the Lower 48 due to warming in the Northeast/Southeast offsetting cooler temperatures, indicating a continued warm pattern into March
- Lower 48 natural gas production remains flat at around 104.1 Bcf/d, with the South gaining 0.1 Bcf/d and minor decreases in the Northeast and Gulf (Criterion)
EQT not ready for further production cuts, eyes natural gas market rebound (NGI)
- CFO Jeremy Knop cited a data vendor's lowered supply estimates, implying the market is not as oversupplied as most think
- EQT, the nation's largest gas producer, produced over 2 Tcfe last year and expects to guide 2.2-2.3 Tcfe this year
- Knop mentioned that if production remains steady and weather follows usual patterns through the injection season, gas inventories by the end of summer could match the five-year average
- He noted that EQT, responding to market demands for lower production, has already reduced its activity, with Appalachian production decreasing by 1.5 Bcf/d since December, and anticipates further declines

February 15, 2024