First Look - OPEC extends production cuts and sets a timetable for supply return

• Oil is trading lower, around $76.50, despite an extension of OPEC+ supply cuts
  • Speculators' positioning in WTI futures decreased according to data through last Tuesday, falling by 39.2k contracts
  • The US crude oil rig count fell by one last week to 496 total rigs, now down 59 year-over-year
• OPEC extends production cuts and sets a timetable for supply return (BBG)
  • On Sunday, an agreement was reached between OPEC+ countries on the future of its supply cut program, with 3.66 MMBbl/d of production remaining offline into 2025
  • However, some voluntary supply cuts will begin to be rolled back in October, earlier than many anticipated
  • It is expected that by January, about 750 MBbl/d will have been returned to the market from the eight countries participating in voluntary cuts
  • Saudi Arabia’s Energy Minister said, “We will maintain our precautious and preemptive approach”
  • JP Morgan said in a note that voluntary cuts should keep the market tight until September and potentially boost prices by as much as $10/Bbl before pressure on prices could build in 2025 as non-OPEC production grows and demand slows

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Interest Rate Charts and Tables

• Natural gas prices surged by nearly 17c on Monday morning amid bullish weather forecast, lower production and signs of a narrowing storage surplus
  • July ’24 Henry Hub is up 17.2c this morning to trade around $2.759/MMBtu (As of 7:50 AM)
  • The Summer ’24 strip is up 15.4c to $2.797 and Winter ‘24/’25 strip is down 10.2c to $3.555
  • Today’s Euro Ensemble indicates generally warmer conditions in the upcoming 11-15 day period, and some of the warmest temperatures are expected in mid to late June (Criterion)
• Vistra announces plans for 2,000 MW in added Texas gas generation (Reuters, Criterion)
  • Vistra Energy plans to develop 2,000 MW of natural gas power in West, Central, and North Texas
  • Includes 860 MW of advanced simple-cycle peaker plants in West Texas to support growing power needs and the state's oil and gas industry
  • Coleto Creek Power Plant in Goliad, TX, will be repowered for 600 MW of gas capacity after its coal unit retires in 2027
  • Existing gas plants will be upgraded to add >500 MW of summer capacity and 100 MW of winter capacity, with over half of this capacity online by Summer 2025