Prices of crude oil retreated on Monday, with fears of recession dampening the sense that energy demand is recovering. Reports out yesterday showed weak manufacturing data from China, Japan and other countries. WTI moved down by $4.73/bbl to settle at $93.89/bbl, the lowest close since April 11. The market is looking to the next meeting of OPEC+, scheduled for tomorrow for a signal about what will happen next with crude supplies. This morning WTI is off by about 70 cents/Bbl to the $93/bbl range.
Permian natural gas production remained robust last week and averaged 15.39 Bcf/d, up 0.12 Bcf/d when compared to the prior week and about 0.23 Bcf/d ahead of our July forecast of 15.16 Bcf/d. For the month of July, production averaged 15.18 Bcf/d, just above our outlook.
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The price of spot liquefied natural gas (LNG) in Asia climbed last week to the highest so far this year, but slipping demand in the top-consuming region shows the market is still being driven largely by Europe's Russian gas crisis.
The weekly spot price was assessed at $42.50 per million British thermal units (mmBtu) on July 29, exceeding the previous 2022 high of $40.50, reached on March 4 in the wake of Russia's Feb. 24 invasion of neighbouring Ukraine.
Weekly Commentary Highlights
- Crude Exports Hit Record Levels as Brent-WTI Spread Widens
- Keystone Pipeline Damage Cuts PADD 2 Imports
- Crude Supply Jumps by 200 Mb/d, Growth in Rig Count Stalls
Prices of crude oil retreated in early Monday trading, in part due to reports of weak manufacturing data from China and Japan. On Friday, the WTI September contract moved $2.20/bbl higher to settle at $98.62/bbl, but this morning WTI is off about $1.60/bbl to trade in the $97/bbl range. The market is looking to the next meeting of OPEC+, scheduled for August 3rd for a signal about what will happen next with crude supplies. Two months ago, the OPEC+ cap was increased by 648 Mb/d for July and August volumes.
The implied demand of jet fuel has risen to 1.8 MMb/d last week, nearing the most since August 2021, as stocks remain near 5-year lows.
- Cash basis in the Appalachian basin was little changed despite tighter regional balances, driven primarily by higher demand.
- After jumping to seasonal highs for weekend trading, Mid-Atlantic cash prices crashed in trading Monday as demand eased temporarily.
- Appalachian outflows slipped as slightly lower production and higher demand tightened local supplies.
- The Appalachia rig count was flat at 49.
Prices across most of the Southeast U.S. remained above $10/MMBtu this week. Continued maintenance at Transco's Station 60 has constrained gas flow into the region, where demand for natural gas is seasonally high.