The entire energy complex was down, strategist highlights

In an exclusive interview with Rigzone on Tuesday, Art Hogan, chief market strategist at B. Riley Wealth, said the entire energy complex collapsed on Tuesday and Monday “because Israel did not target Iranian oil fields this week.”

“In recent days there have been fears of an interruption in the supply of hydrocarbons. That quickly dissipated when there was no damage to oil production,” he told Rigzone yesterday.

“This appears to be one of those moments where the entire energy company acts together,” Hogan added.

In a separate exclusive interview late Tuesday, Frederick J. Lawrence, former chief economist for the Independent Petroleum Association of America (IPAA), told Rigzone: “This week, one of the main reasons for the natural gas decline is geopolitical reasons and related contexts.” .

“Israeli's retaliatory strike against Iran over the weekend spared energy infrastructure and focused primarily on military targets. This led to a decline in the geopolitical premium for oil, which in turn impacted natural gas,” he added.

“Colder weather in the Rocky Mountains and northern US was not enough to turn the tide on gas, although prices rose on Tuesday. Weather analysts are monitoring a low pressure zone in the Caribbean as hurricane season enters its final stages,” Lawrence continued.

In the interview, Lawrence emphasized that in the U.S. Energy Information Administration's (EIA) latest weekly natural gas report, “natural gas production … remained fairly robust at 101.5 billion cubic feet per day, while demand declined due to milder weather in many of the higher-consumption years.” regions of the country”.

“Encouraging fundamentals and a certain easing of geopolitical pressures in the Middle East continue to determine the mood in the natural gas market for the time being,” he said.

Lawrence also noted in the interview that the U.S. is “experiencing record production of ethane” and that “exports of the product have also increased due to increasing activity in areas such as the Permian Basin.”

“Natural gas byproducts such as ethane will remain an important supply niche to watch given its growing role as a petrochemical feedstock,” he added.

In its latest Short-Term Energy Outlook (STEO), released earlier this month, the EIA forecast that total U.S. dry natural gas production will average 103.5 billion cubic feet per day this year. In its most recent STEO, released in September, the EIA forecast that U.S. dry natural gas production would average 103.4 billion cubic feet per day in 2024.

According to data on the EIA website showing monthly U.S. field production of ethane from January 1981 to July 2024 and last updated on September 30, the highest monthly value for U.S. field production of ethane came in May of this year at 2,953 Million barrels per day. The second highest was recorded in April at 2.938 million barrels per day and the third highest was in June at 2.862 million barrels per day, the data presented said.

Data on the EIA website showing annual U.S. ethane field production from 1983 to 2023, last updated on September 30, shows that the highest annual figure for U.S. ethane field production was in 2023 at 2.652 million barrels per day was reached. The second highest came in 2022 at 2.406 million barrels per day and the third highest came in 2021 at 2.149 million barrels per day, the data showed.

In a market analysis sent to Rigzone on Wednesday, Tickmill managing director Joseph Dahrieh stressed that oil prices “continue to remain near one-month lows after two days of declines as the market assesses the potential for a ceasefire in the Middle East. along with increased crude oil supplies from OPEC+.”

“Crude oil futures are currently reflecting reports that efforts could be made to discuss a diplomatic solution to the ongoing conflict,” Dahrieh said in the analysis.

“Suggestions that a ceasefire could be reached in the coming weeks could ease concerns about further escalation impacting the oil market,” he added.

“This possible solution could reinforce the bearish sentiment in the market as traders can expect lower geopolitical risks, which will lead to lower prices in the short term,” Dahrieh continued.

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