Oil markets are ready for some bullish news

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Weekly chart

– Chinese refinery runs have dropped to their lowest in the country’s post-epidemic history, dropping to a monthly average of 12.6 million b / d per month.

– Since the Shanghai lockdown was complemented by restrictions on other key demand centers, it was the demand for jet fuel and gasoline that had the greatest impact on growing inventories.

– So far in the first four months of the year, Chinese crude demand has fallen 4% year-on-year to 13.6 million b / d, with the trend expected to be slightly higher than the April figure in May.

– The news of Shanghai’s reopening from June 1 has raised hopes of a quick return to Chinese demand, although this may be limited as China’s GDP growth slows to 4-4.5% this year.

Market movers

– Norway EQINOR (NYSE: EQNR) And XNomobile (NYSE: XOM) The giant Bacalhau has launched a field expansion drive, looking for a second FPSO, potentially doubling the field’s maximum capacity of 220,000 b / d.

– French power chief Total Energy (NYSE: TTE) Join the world’s largest offshore wind developer Rsted (CPH: ORSTED) To jointly submit a bid for the upcoming Dutch Offshore Wind Tender.

– Brazilian President Zaire Bolsonaro suggests he could tinker with national oil company’s dividend policy Petrobras (NYSE: PBR)Just days after the company decided to raise the price of transport fuel.

Tuesday, May 17, 2022

Oil prices have risen this week as Chinese lockdown rules gradually relaxed, reviving hopes that strong East Asian purchases will grow in the summer months. Although the European Union has yet to formalize an agreement on Russian oil and commodity sanctions, the agreement now appears to rely solely on one country, Hungary. If the EU is able to persuade Hungary to join the sanctions, prices will likely rise further. With Libya on the brink of civil war, OPEC + low production, and West Africa continuing to struggle with constraints, narrowing supplies are emerging as the main drivers of price increases.

Saudi Arabia Eyes 2027 Capacity Peak. According to Energy Minister Abdul Aziz bin Salman, Saudi Arabia is set to increase its crude production capacity to more than 13 million b / d by early 2027, with new Aramco projects and growth from the neutral zone that Riyadh is developing with Kuwait.

The EU clarifies the terms of purchase of Russian gas. The European Commission has said that European power companies can pay for Russian gas without violating the bloc’s sanctions if they pay in the contractual currency and declare the transaction complete if that currency is paid.

Libya has seen riots in Tripoli amid oil blockades. Clashes erupted in the Libyan capital after parliament-approved interim Prime Minister Fathi Bashagha tried to enter Tripoli, but was withdrawn after hours of intense fighting, making the prospect of a diplomatic settlement less realistic.

US SPR inventory has dropped to its lowest level since 1987. The 5-million-barrel weekly drop in the week ended May 13, falling to a total of 538 million barrels, the amount of crude oil in the U.S. Strategic Petroleum Reserve fell to a 35-year low.

Russia’s oil embargo depends on Hungary’s approval. Hungary is the only EU country that still opposes a ban on Russian oil. The country has said it will need € 750 million ($ 820 million) to rebuild its refineries and infrastructure in order to be able to phase out crude imports from Russia.

The UK energy regulator wants more frequent price cap reviews. With the country’s electricity price cap rising 54% year-on-year to £ 1,971 (2,450), UK power regulator Offgame announced that it would prefer a quarterly review of electricity price caps over the current biennial.

Iran to rebuild Venezuelan refinery Iran’s state-owned engineering company NIOEC has signed a $ 110 million deal with Venezuela to repair the country’s smallest refinery, 146,000 b / d El Palito in the northern state of Carabobo, again after the refinery is reopened.

Total Energy Nigeria wants Anshore to leave. Joining the post of oil chief of the United Kingdom Shell (LON: SHEL)French energy firm Total Energy (NYSE: TTE) Said it would consider the sale of its offshore oil licenses in Nigeria as a community disruption, such as crude theft and pipeline sabotage, disabling operations.

Asian LNG trend downtrends despite EU resetting Despite strong European buying to replenish stocks, Asian LNG prices have recently fallen to 23 23 per MMBTU, initially due to a new downturn in Chinese demand amid continuing lockdowns in the country.

Chinese coal production has further increased. China’s coal production rose 11% year-on-year in April, unhindered by the country’s multitasking restrictions, reaching the second-highest monthly level of 362.8 million tonnes of drilling amid massive government pressure to produce more.

Wheat prices have risen due to India’s export ban. Chicago wheat futures rose 6% to .5 12.5 per bushel, hitting a record high in early March, amid fears that the grain supply will always be tight.

Aluminum stocks continue to shrink. LME aluminum stock has already reached a 17-year low of 530,000 metric tons. In the face of multiple downside supply risks, base metal inventory is expected to decline further as at least half of the current London stock is off-warrant, due to delivery.

Peru has sued Spanish oil chief for 4.5 billion. The Peruvian government is expected to file a 4.5 billion civil lawsuit against the Spanish oil company Repsol (BME: REP)It claims that an oil spill near the country’s Repsol-powered La Pampilla refinery this January affected at least 700,000 people.

By Tom Cool for Oilprice.com

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