Oil markets are bracing for a flurry of bullish news

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Chart of the week

– Chinese refinery runs have fallen to the lowest level in the country’s post-pandemic history, down 1.2 million bpd month-on-month to a monthly average of 12.6 million bpd.

– Jet fuel and gasoline demand have been hit the most amid soaring inventories due to the Shanghai lockdown coupled with restrictions in other key demand centres.

– China’s crude oil demand fell 4% year-on-year to 13.6 million bpd in the first four months of the year, with May demand expected to be only slightly higher than April’s figure.

– News of Shanghai’s reopening from June 1 has rekindled hopes of a quick rebound in Chinese demand, although this year’s slowdown in China’s GDP growth to 4-4.5% may limit that.

market mover

– Norway Equinor (NYSE: EQNR) and ExxonMobil (NYSE: XOM) Expansion plans have been launched at the huge Bacalhau field, with an eye toward a second FPSO that could potentially double the field’s peak production capacity of 220,000 b/d.

– French energy major TotalEnergies (NYSE: TTE) join in Partnering with the world’s largest offshore wind developer Ørsted (CPH:ORSTED) Co-bid for the upcoming Dutch offshore wind tender.

– Brazilian President Jair Bolsonaro hints he may revise Petronas’ dividend policy Petrobras (NYSE: PBR)just days after the company decided to raise the price of transportation fuel.

Tuesday, May 17, 2022

Oil prices climbed this week as China’s gradual easing of lockdown rules rekindled hopes that East Asian buying would grow strongly in the summer months. While the EU has yet to formally reach a deal on Russian oil and product sanctions, the deal now apparently depends on only one country, Hungary. If the EU can persuade Hungary to join the sanctions, prices could climb even higher. Tight supply is becoming a key driver of price growth as Libya returns to the brink of civil war, OPEC+ production runs short and West Africa continues to struggle with disruption.

Saudi Arabia eyeing peak capacity in 2027. according to For Energy Minister Abdulaziz bin Salman, Saudi Arabia will increase its crude production capacity to more than 13 million bpd by early 2027, with increments from new Aramco projects and Riyadh and Kuwait Neutral zone developed together.

EU clarifies terms of Russian gas purchases. European Commission statement European energy companies can pay for Russian gas without violating EU sanctions, provided they pay in the contract currency and declare the transaction complete when paying that currency.

Libya sees unrest in Tripoli amid oil blockade. Clashes erupted in the Libyan capital after parliament-sanctioned interim Prime Minister Fati Basaga tried to enter Tripoli, only to pull out after hours of heavy fighting, making the prospect of a diplomatic solution even more unrealistic.

US SPR inventories fell to the lowest level since 1987. In the week ended May 13, it fell 5 million barrels week-on-week to a total of 538 million barrels, and crude oil storage in the U.S. Strategic Petroleum Reserve has been fall fell to a 35-year low.

Russian oil sanctions depend on Hungarian approval. The only EU country that appears to still oppose a ban on Russian oil is Hungary. The country said it would need as much as 750 million euros ($820 million) to revamp its refineries and infrastructure so it could phase out crude imports from Russia.

UK energy regulators want more frequent price cap reviews. UK energy regulator Ofgem sees the country’s electricity price cap increase by 54% a year to £1,971 ($2,450) Announce It would prefer a quarterly review of the electricity price cap, rather than the current biennial review.

Iran to rebuild Venezuelan refinery. Iranian state-owned engineering company NIOEC sign Signed a $110 million deal with Venezuela to rehabilitate the country’s smallest refinery, the 146,000 bpd El Palito in the northern state of Carabobo, which also agreed to reopen after the refinery restarted Provide supplies.

TotalEnergies seeks Nigerian onshore export. Join the ranks of British oil majors Shell (London: SHEL)French energy company TotalEnergies (NYSE: TTE) said it would consider selling its onshore oil licenses in Nigeria as community disruption, namely crude oil theft and pipeline damage, made operations unsustainable.

Asian LNG is trending lower despite EU restocking. Asian LNG prices edged down recently to $23 per million British thermal units despite strong European purchases to replenish inventories, largely as Chinese demand fell to new lows amid the country’s ongoing lockdown.

China’s coal production has soared further. China’s coal production jumped An 11% year-on-year increase in April, unaffected by multiple movement restrictions in the country, reached its second-highest monthly level of 362.8 million tonnes amid a broad government push to boost production.

India’s export ban caused wheat prices to soar. Chicago wheat futures after India announced it would ban wheat exports as heatwave curbs its output soar 6 percent to $12.50 a ½ bushel, the highest level on record in early March, amid fears of tightening food supplies.

Aluminum inventories continue to shrink. LME aluminium inventories have hit a 17-year low of 530,000 tonnes amid multiple supply downside risks, in stock The base metal’s 8% is expected to fall further as at least half of current London inventories expire, or due for delivery.

Peru sues Spanish oil giant for $4.5 billion. Peruvian government is expected Filed $4.5 billion civil lawsuit against Spanish oil company Repsol (BME:REP)claims an oil spill next to the country’s Repsol-operated La Pampilla refinery in January affected at least 700,000 people.

By Tom Kool for Oilprice.com

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