Bullish sentiment appears to be building in oil markets as summer
demand for fuel kicks in, pushing Brent back above the $81 per barrel
mark.
- Supply disruptions have ratcheted up
pressure on gas prices globally, with prices across Europe, Asia, and the
United States simultaneously edging higher to their highest in 2024 so
far.
- European TTF gas futures soared 13% in one day after cracks were found
in Equinor’s Sleipner platform and even though the repairs concluded
already, the regional benchmark
continues to
hover around €35 per MWh ($11 per mmBtu).
- A string of Australian force majeure events, the latest of them coming
from Chevron’s Wheatstone facility which was forced to halt production
after an outage this Monday, has pushed the regional LNG prices to $12 per
mmBtu already.
- Sentiment arpund natural gas in the US has improved markedly, too, with
Henry Hub closing above $3 per mmBtu for the first time since early
January 2024 and hedge funds’ positioning turning sustainably net long
after two years of suffering.
Market Movers
- Global trading major Glencore (LON:GLEN) has won a
crude supply tender to Prax’s 113,000 b/d Lindsay refinery in the UK,
dealing a painful blow to trading competitor Trafigura which used to be
Prax’s main supplier.
- Warren Buffett’s Berkshire Hathaway (NYSE:BRK)
bought some
2.57 million shares of common stock in Occidental Petroleum (NYSE:OXY),
further increasing its ownership of the oil majors from the 28% stake it
had up until now.
- French major TotalEnergies (NYSE:TTE) agreed to
purchase the UK power generator West Burton Energy from EIG for a total of
$576 million,
boosting its
gas capacity by 1.3 GW and renewables by 1.1 GW.
Tuesday, June 11, 2024
Following weeks of lukewarm demand statistics, we might finally be on the
brink of seeing summer demand kicking in. A reported jet fuel shortage in
Japan, Goldman Sachs’ relatively bullish view on transportation fuel
demand over the summer, and the prospect of a US SPR replenishment boost
have lifted Brent futures above the $81 per barrel mark.
Return of OPEC+ Barrels Triggers Huge Sell-Off.
Portfolio investors
exited a record
amount of long positions in the week ending June 4 as the prospect of
OPEC+ bringing back production into 2025 soured the bullish sentiment,
selling a total of 194 million barrels in the six leading futures
contracts.
Iraq Eyes Restart of Idled Kurdish Pipeline.
Iraq’s oil minister Hayan Abdel-Ghani noted
progress in
negotiations with Kurdistan regional officials on a potential deal to
resume oil exports via the idled 450,000 b/d capacity Kirkuk-Ceyhan oil
pipeline, halted since March 2023.
Saudi Aramco SPO Exceeds Expectations. The
shares of Saudi national oil company Saudi Aramco (TADAWUL:2222)
gained this week after the company
raised $11.2
billion in its secondary share offering, with at least half of sales
reportedly going towards international investors.
New Zealand Makes U-Turn on Oil Exploration. The
government of New Zealand
vowed to
introduce legislation that would remove a disputed ban on offshore oil
exploration, in place since 2018, by the end of this year, reversing the
oil policy of the previous center-left Labour government.
Niger-Benin Spat Turns Ugly Again. Having just
loaded the first-ever Meleck cargo last month, exports could halt again as
the Benin-Niger geopolitical spat took another turn this week, with the
former arresting 5 people it believes to be Nigerien soldiers working
undercover at the port of Seme.
Japan to Fund New Nuclear Plants with Bonds.
Japan’s Kansai Electric Power is
planning
to issue transition bonds to finance future nuclear power projects,
aiming for some ¥30 billion ($190 million), the second Japanese firm in
two months to turn to bonds as a nuclear financing tool.
Russia Seeks Iran Corridor to India. Russia has
announced it plans to export coal to India via Iran’s railway network
system as Moscow seeks to ramp up supplies to the world’s second-largest
coal consumer, to be ultimately shipped from the Iranian port of Bandar
Abbas.
Houthis Strike Two Western-Owned Container Ships.
Houthi militias have
targeted two
container ships this week, the Swiss-owned Tavvish and the German-owned
Norderney, damaging both with anti-ship ballistic missiles some 70
nautical miles southwest of Aden.
Suncor Triggers the Ire of Environmentalists.
Environmentalist
groups sued
Canada’s leading oil firm Suncor Energy (TSO:SU) for
alleged air pollution violations at its 98,000 b/d Commerce City refinery
in Colorado, claiming they’ve recorded more than 1,000 emission violations
in 2019-2023.
IEA Sees Upstream Investment Growth Slowing Down.
The International Energy Agency
forecasts that
global upstream spending would increase by 7% this year to $570 billion,
slightly lower than the 9% year-on-year pace of 2023, insisting that it’s
much more than is needed.
Chinese Demand for Saudi Crude Weakens. Saudi
crude exports to China are
expected to
bottom out in July as Chinese refiners nominated only 36 million barrels
for next month, opting for other sources of crude as Middle Eastern
barrels get more expensive as margins flatten out.
Port of Baltimore Fully Reopens After Tanker Crash.
Less than three months after the Dali tanker crashed into the Francis
Scott Key Bridge the port of Baltimore has fully reopened as the operating
dimensions of the navigation channel were lifted to 700 feet wide and 50
feet deep.
Oil Sands Producers Riot Against Emissions Cap.
Canada’s leading oil producers have
objected to the
government’s plan to cap emissions, saying that a carbon tax would be the
preferred way of climate impact mitigation, as limiting emissions would
also impact future production growth.
Tom Kool
Editor, Oilprice.com
Green Play Ammonia™, Yielder® NFuel Energy.
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