The EIA came out w/ their Short Term Energy Outlook. These are the largest revisions in key data points impacting crude oil markets today. Although many adjustments are small, it shows the directional bias the EIA sees with its forecasting models - a thread #oott #WTI OPEC Total Spare Oil Capacity was revised lower by 12% or 0.6 mln bbls/d for 2024 (mostly due to Iraq that relied on the northern Iraq to Türkiye pipeline, for access to global markets, that has now been out of commission since Mar 2023) #crude

What's leading to Oil & Gas volatility? A considerable part could be attributed to Portfolio Managers being forced to sell their oil & gas investments as they face continued & unprecedented net mutual fund redemptions (at -$5.1 bln for July 2023) and $26 bln YTD now #energy #oott These redemption concerns are still likely influencing PMs’ decision-making choices, with these PMs likely keeping their focus/investments in larger, more liquid energy names. Ultimately, smaller Oil & Gas names may not be seeing the attention they otherwise should deserve #TSXV

The EIA released its Annual Energy Outlook
Here's 15 forecasts that went right and wrong over the past decade - a thread #oott #oil #natgas #renewables
Oil Demand: In 2011, oil demand was forecast to be 19.1 Mbbls/d by 2022 (actual: 17.7 Mbbls/d) Part of the energy revisions reflect changes to U.S. population growth (which has been revised down 6% since the 2018 - the first year with forecasts out to 2050). By 2050, U.S. population is expected now at 370 mln vs. 395 mln people previously.

The risk factor with energy investments continues to drop. The combined loan book by Canada's 6 big banks shows a 92% decrease in impaired loans to Oil & Gas (to $230 mln). What are the additional implications? -a thread #oott #energy #oilandgas The banks comfort in the Oil & Gas sector plays a major role in capital spending plans (and ability for M&A). Despite loan impairments down, the banks have still reduced their overall lending to Oil & Gas by 54% since 1Q20 to $27 bln.

These are the EIA's key forecast revisions impacting natural gas markets. Although many of the adjustments are small, it shows the directional bias within their models. Overall, negative revisions for production; upward revisions in consumption for 2024, as NYMEX prices come down LNG volumes are taking longer to pick-up in early 2023 but ultimately are still expected to grow to 13.5 bcf/d by YE 2024 #LNG #Natgas

EIA came out with their Short Term Energy Outlook
- These are the largest revisions in key data points impacting oil markets today. Although many of the adjustments are small, it shows the directional bias the EIA sees with its forecast models - a thread
#oott #oilandgas #WTI With China showing more signs of opening, oil demand was revised up 1% (160 mb/d). Is there more oil demand revisions to come? Possibly. Expected crude demand in 2023 is still only up 5% to 15.8 mln b/d (from 14.4 mln b/d in 2020) #oott

NYMEX natural gas prices have recently slumped, but could this reverse? The U.S. has relied on ~5.5 bcf/d of 'cheap' Canadian natgas imports but that may soon end

With W. CDN natgas storage at record lows now (only 64% full), the AECO / NYMEX diff is nearly gone.

A thread: 2/ AECO prices are now C$6.85/mcf (to incentivize natural gas to stay in Canada). Previously, when W. CDN storage levels were this low (2019), we saw very little CDN natural gas exports. We likely begin to see a drop in exports, that should be bullish for NYMEX natgas pricing

Thread: Why has Oil & Gas been so volatile? Since 2018, the majority of all CDN E&P buying has come from high-turnover funds. Thus any WTI weakness had them rushing to the exits. Encouragingly, low-turnover funds have become the main buyer in 3Q

More energy inst. buying trends: 2/ As CDN Oil & Gas names hinted at bigger dividends & more growth post Q2 earnings, we saw these 'style' of funds be the dominant buyer in Q3. This theme likely continues as balance sheets allow for more ‘shareholder friendly’ items and growth into 2023 #WTI

Thread – The unemployment rate within CDN Oil & Gas continues to drop, now at 2.5% (w/ Alberta even lower at 1.8%). This budget season, even if mgmt teams wanted to spend more, finding technical staff is increasingly more difficult, likely capping any large capex plans #yyc #yeg /2 There’s been quite the hiring spree over the last couple years, with jobs in the Exploration & Production group rising ~20% since Jan 2020. That said, levels have plateaued now, even while WTI oil and NYMEX natgas prices have increased, showing the difficulty in hiring #oott

Could we see a NYMEX natural gas price spike this winter? The U.S. just might not be able to rely on 'cheap' Canada natgas imports w/ western CDN storage near record lows (at only 71% full).

A thread on CDN natural gas dynamics #AECO #oilandgas #LNG #alberta A number of issues why CDN natgas storage is low, but we've already begun to see a reversal, with AECO difs improving dramatically over the last week (now at US$2.50/mcf). Last time storage was at current levels, the differential went on to reach $0.50/mcf a year later; 2/ #NYMEX

A thread – Our takeaways from the Dallas Fed Energy Survey (and how sentiment has changed from prior surveys)

Costs: Expected Finding & Development costs have slowed. Only 66% of Oil & Gas companies surveyed expect costs to rise (vs 72% last quarter) #oott #WTI #oilgas #invest A thread –Dallas Fed Energy Survey
The drop in WTI has ‘Company Outlooks’ falling quite hard from prior quarters – with only 39% reporting a better outlook (vs. a high of 82% seeing a positive outlook in 1Q22). #oott #oilandgas #WTI

Thread (1/5) Why have Oil & Gas stocks been so volatile? Since 2019, nearly all buying of CDN midcap E&Ps has come from high-turnover funds. Thus the first sign of WTI weakness had them rush to the exits. Encouragingly, low-turnover funds were the main buyer in 2Q buying $1.4 bln Thread (2/5): Since 2019, most buying of CDN midcap Oil & Gas names have been from energy focused funds. Q2 was the moment where the 'Generalist' investor has finally come back (and in size), buying $1.1 bln! The sector is 'investable' again #energy #yyc

Thread (1/5): EIA Short-Term Oil Outlook Highlights

A top concern we hear from investors is the "Backwardation in the oil strip". This price reflects a recovery in crude inventories but as the EIA revisions show today, they’re back to revising inventory levels lower again #oott Thread (2/5): EIA Short-Term Oil Outlook Highlights

Despite recession fears & high gasoline prices, global oil expected consumption was left essentially unchanged (OECD countries revised 0.2% lower; offset by non-OECD countries higher) #crude