AEGIS Hedging : March 4, 2024

Oil is trading slightly higher, around $80, after OPEC extended supply cuts
- Speculators have increased their net-long position in WTI futures to the highest level since October, according to CFTC data through last Tuesday
OPEC+ extends output cuts (BBG)
- The OPEC+ alliance will extend its supply cuts through the end of June in a move that was primarily in line with expectations by traders and analysts
- Russia said it would be strengthening its role by focusing more on production cuts rather than exports
- OPEC said that the latest output curbs will be “returned gradually subject to market conditions” after the second quarter
- The extension of the supply cuts should help prevent oversupplied conditions in the market
BP to start up offshore operations in Brazil (BBG)
- BP is preparing to drill a deepwater well in Brazil in the latest attempt by oil majors to develop the offshore area
- Shell and ExxonMobil had previously spent billions attempting to develop the offshore fields but did not find any significant discoveries and, in some cases, returned blocks to Brazil’s oil regulator
- Despite this, the region could hold the country’s most productive oil fields

Natural gas prices trade higher following EQT’s production curtailment announcement
- April ’24 Henry Hub is up 12.3c this morning to trade around $1.958/MMBtu
- The Summer ’24 strip is up 10.8c to $2.423, and the Winter ‘24/’25 strip is up 7.5c to $3.480
- Today's Euro Ens forecasts a significant warming shift in the South Central, Rockies, and West, with milder increases in the NE/MW/SE, peaking this week and remaining warm into mid-March
- Since Friday, L48 production fell an additional 0.75 Bcf/d across the Northeast, Rockies, and South Central, reducing supply to 100.3 Bcf/d, nearly matching the 2023 injection season's rates (Criterion)
EQT trims gas output in response to warm winter and surging supplies (Bloomberg)
- Facing an oversupply and mild weather, EQT reduces its output by 1 bcf/day, or 5%-7% of its quarterly production, leading to a 6.7% rise in Henry Hub futures
- This move, cutting 30-40 Bcf through March, mirrors broader industry actions with Chesapeake Energy and Comstock Resources also scaling back production
- Furthermore, the production curbs come as Appalachian drilling shows signs of scaling back to address oversupply, with the current price environment reflecting high storage levels and reduced demand

March 4, 2024