WTI and Brent Trade Higher on Sharara Oilfield Outages, Natural Gas Gains; Subzero Temperatures to Impact Production Next Week
Dow (0.51%), S&P 500 (0.23%), Nasdaq +0.01%, Russell 2000 (0.98%)
US equities were mostly lower in Tuesday trading, with Treasuries narrowly mixed and the Dollar index up +0.3%. The S&P 500 Energy Index closed down (1.63%) versus the S&P 500 which lost (0.15%). The XLE was down (1.60%), the XOP fell by (1.22%) and oil E&Ps finished the day lower.
WTI and Brent traded higher on Tuesday due to ongoing Sharara oilfield outages, with WTI up +2.1% to $72.24 and Brent up +1.9% to $77.59. Natural gas closed up +7.1% following Monday’s +3.0% gain. Single-digit to sub-zero temperatures are likely to impact crude production early next week, specifically in the Permian basin.
Top performers in the PRISM Oil & Gas Index were Imperial Petroleum ($IMPP), which gained 7.93% during the day, Comstock Resources ($CRK) which was up 3.81% and Mexco Energy Corporation ($MXC), which rose 2.20%. Index decliners included Independence Contract Drilling ($ICD) which was down (7.29%), Trio Petroleum ($TPET) which fell by (7.13%) and Gran Tierra Energy ($GTE) which was down (4.68%) by the closing bell. The PRISM Oil & Gas index value is $145.00 and performance is up by +45.00% since inception.
Trader’s Lens
$IMPP is leading the Prism MarketView Oil & Gas index today. It looks like it could have some more room to go up on its weekly chart, and around its 50WMA could be a possible support level.
Independence Contract Drilling Corp.
$ICD is the biggest laggard of the day on the Prism MarketView Oil & Gas index. And looking at its monthly chart, the $2.50 area seems to be a very important long term support level. The stock is currently retesting levels not seen since mid 2020.
Light Crude Oil – Continuous Contract (EOD)
$WTIC continues to trade in a downward channel. Oil prices slid yesterday after a surprise cut in price by top exporter Saudi Arabia as well as a rise in OPEC output.
PRISM Analysis: Why is Southwestern on the Move Today?
Southwestern Energy Company (NYSE: SWN) is topping the PRISM Emerging Energy Index with more than 20 million shares changing hands by midday on Tuesday. According to a report in the Wall Street Journal this week, Chesapeake Energy Corporation (Nasdaq: CHK) and Southwestern are reportedly close to finalizing a merger that could reshape the national natural gas industry.
Today’s Top Headlines
Dutch Government ‘Turns on Pilot Light’ at Groningen Natural Gas Field
The European natural gas benchmark, the TTF, is trading down (8.4%) to €31.64 per MWh on Tuesday in spite of colder temperatures pushing into the UK, Germany and France. The Dutch government has agreed to turn on production at two stations in the Groningen natural gas field, which represents minimal production. Groningen is the largest gas field in Europe and was closed last year due to earthquake concerns. The government is exercising an option left open to resume minimal production in the event of a deep cold snap.
EIA Short Term Energy Outlook
The EIA has introduced its 2025 estimates today and expects solar power to be the leading source of growth in electricity generation in both 2024 and 2025 as 36 gigawatts (GW) and 43 GW of new solar capacity come on line, respectively. The new capacity will boost the solar share of total generation to 6% in 2024 and 7% in 2025, up from 4% in 2023. The organization forecast that overall U.S. electricity generation will grow by 3% in 2024 and be unchanged in 2025.
The EIA expects growth in global liquid fuels consumption will be lower over the next two years: forecast consumption grows by 1.4 million b/d (1.4%), in 2024 and by 1.2 million b/d (1.2%) in 2025. The organization said it expects US production of dry natural gas to grow between 1% and 2%, or about 1.5 billion cubic feet per day (Bcf/d) in 2024 and 1.3 Bcf/d in 2025, down from growth of 4.0 Bcf/d in 2023. The EIA also stated it expects the spot price of natural gas to average $2.70 per million British thermal units (MMBtu) in 2024 and rise to an average of about $3.00/MMBtu in 2025, up from an average of $2.54/MMBtu in 2023.
The Strategic Petroleum Reserve Rises by +600K Barrels
The Department of Energy has announced that stockpiles of the strategic petroleum reserve rose +600K last week to reach 355 million barrels. Sour barrels rose by +600K to 211.2 million, while sweet crude stocks were unchanged at 143.8 million.
