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Last Look - July '21 WTI expires at $73.06; Gas gains 6.7c to climb to $3.25

June 11, 2021

  • Oil prices are on track for a third consecutive week of gains on continued signs of an improving demand outlook
    • The International Energy Agency (IEA) warned that the market would need extra supply next year
    • The agency said Friday that OPEC+ would need to increase output to keep the market adequately supplied, though forecasted demand won’t reach pre-virus levels until late 2022
    • Road traffic in the U.S. and most of Europe is essentially back to pre-pandemic levels, but jet fuel remains much further away from where it was in 2019 (Bloomberg)
  • One of the biggest wild cards for the oil market is when Iranian crude will return to the market
    • Nuclear talks involving Iran are set to resume in Vienna this weekend
    • OPEC will need to add about 1.4 MMBbl/d – or less if Iran clinches a deal to remove U.S. sanctions (IEA monthly report)
  • The prompt-month (July ’21) Henry Hub contract is on track for its largest weekly gain since April
    • The contract is up 16.3c on the week as weather forecast have tilted warmer, while hydropower in the U.S. West has fallen off due to droughts
    • According to Bloomberg, three-fourths of the Western U.S. is gripped by a drought more severe than anything recorded in the history of the U.S. Drought Monitor
    • The reservoir level at the iconic Hoover Dam has plunged to its lowest level since 1937, which has caused its power generation capacity to slip by 25%. The dam provides power for nearly 8MM people in Arizona, SoCal, and Nevada (Bloomberg)
      • According to EIA930 data, U.S. hydropower generation is averaging 3,407 MW/d or -9.6 % lower year-over-year so far in June
  • Texas Eastern Transmission co. issued a new update on their 30” TETCO system outage
    • The company does not expect the 30” pipeline between Uniontown and Kosciusko to return to full service until late 3Q2021, at the earliest. A scope-of-work report is expected by the end of June
    • Dominion South differentials have fallen throughout the week, with the prompt contract trading 10c lower at around $-1.06, and the Summer ’21 strip down 8c at around $-1.20 behind Henry Hub
      • The reduced flows on TETCO are also tightening the Southeast gas market, helping support Henry Hub prices

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