AEGIS Hedging : June 2, 2023

Oil heads for a weekly loss despite partial rebound following the U.S. debt deal
- July ’23 WTI gained $1.71 this morning to trade around 72/Bbl
- Equities trade higher while the U.S. dollar weakened relative to its recent highs
- The U.S. Senate has passed legislation to suspend the debt ceiling and limit spending until 2024
- Prices were also supported by US job growth beating expectations in May; the unemployment rate rises to 3.7%
- The market awaits this weekend’s OPEC meeting, with expectations of unchanged output despite Saudi Arabia's energy minister warning speculators
OPEC's Voluntary Cuts Decrease May's Crude Output (Bloomberg)
- OPEC's production dropped by 0.5 MMBbl/d to 28.26 MMBbl/d in May due to voluntary cuts, according to a Bloomberg survey
- Despite major cuts from Saudi Arabia, a rebound in production in Angola, Nigeria, and Iraq offset the cuts partially
- Crude prices briefly surged following OPEC's announced cuts in early April but concerns over global economic health soon dampened the rally

Natural gas prices are higher, around $2.18, set to finish lower for the second week
- The Winter ‘23/’24 strip is up 5c to $3.38, and the Summer ’24 strip is higher by 5c to $3.20
- Lower 48 weather forecasts cooled by a total of 8.9 °F over the two-week period
  - Midwest region forecasts shifted cooler by 28.8 °F, and the South Central regions forecast cooled by 18.4 °F
- LNG feedgas flows are lower due to maintenance at Sabine Pass LNG, which has brought two trains offline
- Yesterday, the EIA reported a storage build of 110-Bcf, bringing the storage surplus to 349-Bcf above the five-year average
Dominion shuts down 2 GW of coal and oil generating capacity in Virginia (S&P)
- The company has shut down a 1,032-MW coal plant and a 792-MW oil-fired unit as part of a push to phase out higher-emission sources of electricity
- Two natural gas-fired units will remain open at the facility, with Dominion saying that the units play an important role in grid reliability
- The continued retirement of coal capacity across the US has led to the power sector relying much more heavily on natural gas to shore up generation shortfalls

June 2, 2023