AEGIS Hedging : April 11, 2024

Oil is trading lower, near $85.50, after rallying almost $1 yesterday
- Oil climbed yesterday after it was reported that the US believes Iranian missile strikes are imminent in Israel
OPEC says close monitoring will be needed amid robust summer demand (BBG)
- In OPEC’s latest monthly report, the organization said that oil demand will require close monitoring to ensure a “sound and sustainable market balance”
- OPEC maintained its bullish demand forecast, calling for an annual increase of 2.7 MMBbl/d in the third quarter
- While OPEC kept their demand forecast unchanged, they did lower their supply growth estimate by 100 MBbl/d to 1.2 MMBbl/d
- In June, OPEC will review its current supply cut policy, which is currently removing 2 MMBbl/d from the market
Largest US refinery experiences power loss (BBG)
- The Motiva Port Arthur refinery was halted following a power loss due to strong storms on Wednesday
- About half of the refinery’s 630 MBbl/d capacity was taken offline

Natural gas prices trade modestly lower ahead of storage report
- May ’24 Henry Hub is down 3c this morning to trade around $1.855/MMBtu
- The Summer ’24 strip is down 2c to $2.286 and Winter ‘24/’25 strip is down 0.9c to $3.403
- Today's Euro Ensemble indicates a cooler coastal but warmer Midwest, South Central, and Southeast, maintaining a warm trend that shifts to near or below-normal temperatures next week
US shale producers reduce hedging for 2024 due to low gas prices (S&P Global)
- Nine of the largest North American E&P companies cut back on 2024 hedging due to a 20% fall in natural gas futures in Q4 2023, with only 38% of forecast production hedged, down from a four-year average of 61%
- The median proportion of 2024 production that was hedged among these large shale gas drillers was 45%, at a median implied price of $3.29/Mcf, according to an April 9 report by S&P
- "If a company believes that prices are currently low and will rebound later, it would not make sense to hedge prices," said S&P’s Thomas Wilson, indicating a strategic shift due to current low prices and favorable net debt positions among producers

April 11, 2024