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First Look - Blinken meets with Saudi Arabia, urges Israel to seek peace | South Central gas storage overhang on cusp of flipping to deficit

October 24, 2024 | Rishi Rajanala

Oil is trading slightly higher after falling more than $1/Bbl yesterday
- Traders are currently holding a record number of Brent call options
- Market participants are continuing to focus on risks in the Middle East with the US still pushing for a ceasefire
Blinken meets with Saudi Arabia, urges Israel to seek peace (BBG)
- The US Secretary of State held talks with Saudi Arabia’s MBS on efforts to reach a peaceful conclusion to the conflict in the Middle East
- Blinken said, “Its very important that Israel responds in a way that does not create greater escalation and does not risk spreading the conflict”
- Israel has continued air strikes on Lebanon as it expands the war away from Gaza, and is still expected to retaliate against Iran in the coming days
OPEC needs lower prices or more demand to combat US shale (BBG)
- Oil supply growth is set to outpace demand in 2025, which could lead to a weaker price environment
- Bloomberg expects US shale production to be cut back if prices fall below $56/Bbl
- OPEC still expects strong demand growth, which will likely be needed to offset the increases in global supply

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Interest Rate Charts and Tables

Gas trades sharply higher ahead of storage data
- Prompt gas was 8.8c higher to $2.43/MMBtu (As of 7:46 AM)
- Winter ‘24/’25 strip is up 0.5c to $2.917, and the Summer ’25 strip is down 0.3c to $3.083
- Today’s European Ensemble indicates cooler temps east of the Rockies and warmer in the Rockies and West, resulting in a net -6°F adjustment, mainly affecting the 11-15 day range, with below-normal conditions expected for early November (Criterion)
South Central gas storage overhang on cusp of flipping to deficit, could boost prices (NGI)
- South Central gas storage surplus fell sharply from 42% in March to just 1.7% by mid-October, driven by persistent cooling demand, inconsistent wind power, and steady LNG exports, putting the region on the verge of a deficit
- The Matterhorn Express Pipeline is gradually easing Permian supply constraints, already delivering 1.2 Bcf/d to key interconnects, with expectations to reduce Waha price volatility as it ramps up capacity toward 2.5 Bcf/d
- Meanwhile, total Lower 48 storage was 4.6% above the five-year average as of Oct 11, with recent injections consistently below historical norms, reflecting strong weather-driven demand and a modest dip in production from summer peaks
LNG buyers push for flexible supply contracts to adapt to fluctuating power demand (PGJ)
- Japan, China, and other top LNG buyers seek flexible contracts to manage variable power demand, while suppliers like Qatar favor long-term deals for project financing
- Japan's LNG demand has declined, partly due to nuclear restarts and renewables, with imports dropping 8% last year to a 14-year low
- While long-term deals remain vital for new projects, suppliers are gradually adapting to shorter, more flexible contracts, with intermediaries like Mercuria helping to reconcile buyers' demand for adaptability with producers' need for financing stability

First Look - Blinken meets with Saudi Arabia, urges Israel to seek peace | South Central gas storage overhang on cusp of flipping to deficit

October 24, 2024 | Rishi Rajanala

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First Look - Blinken meets with Saudi Arabia, urges Israel to seek peace | South Central gas storage overhang on cusp of flipping to deficit

October 24, 2024 | Rishi Rajanala

Looking for interest rate charts? We moved them here

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