The calm before the storm in the oil markets

The first week of May could usher in a much-anticipated paradigm shift, although markets still evaluate the impact of China’s COVID lockdown amid massive testing in Beijing and the prospect of a broader European embargo on Russian oil. With no clear path for any of these, Brent futures remained range-bound on Tuesday, closing around $106 a barrel.

Amidst faltering demand prospects

– While OPEC+ is expected to be widely agreed upon for a monthly increase of 432,000 b/d, the widening gap between the oil group’s stated objectives and reality is becoming too obvious to ignore.

– As for March, the last month for which official OPEC+ data is available, the discrepancy has widened to 1.45 million b/d and is only set to increase in April as Russia’s output goes downhill.

Africa itself has been a source of headache, with Libya’s major infrastructure blockade depleting nearly 550,000 b/d of global supplies, while Nigeria and Angola are dwindling amid major force majeure incidents and terminal collapses.

– A release of 240 million barrels by the IEA in the following months and a fall to 1 million b/d on the heels of China’s COVID lockdown has compounded demand-side issues, although demand bounces back in the summer Should it do, the tightness may get worse again.

market movers

– French energy chief total energy (NYSE:TTE) said it will continue shipping LNG from the 17.5 MTPA Yamal LNG project in which it holds a 20% stake, while protecting its core interests in Russia.

– US oil major beam (NYSE: CVX) raised its production target for the Permian by 15% from 2021 levels, spurring expected production of 725,000 b/d, while a $10 billion buyback pledge remained unchanged.

– of Portugal fiction energy (ELI: GALP) is reportedly considering the sale of its upstream operations in Angola, one of its key production areas, indicating that its drive towards renewable energy is becoming more timely. .

Tuesday, May 03, 2022

Germany opposed the Russian oil embargo. Top German government officials confirmed that Berlin would be ready to support an immediate EU ban on Russian oil imports, although yesterday’s EU summit failed to address widespread disagreements over the ban.

The Libyan blockade squeezed inventories. Libya’s NOC has warned the country’s warring two governments that the risks of storing certain grades of Libyan grades are long-term consequences – the likes of Bu Atifel require continuous heating, otherwise they may be in tanks and pipelines due to their high wax content. accumulate in.

Rocket Attack Rock Kurdish Refining. In a missile attack that no one claimed, a string of rockets targeted two refineries in the Kurdish capital city of Erbil, damaging oil storage capacity at the complex, only two months after Iran’s IRGC fired missiles at the area. attacked.

US Gulf of Mexico to see explosion of new activity, In the coming months, BP will be commissioning (NYSE:BP) Argos and Shell (NYSE:SHELL) VITO floating production rigs, falling behind Murphy Oil’s recently commissioned King Quay rig, with some 280,000 b/d Includes new output capability. , RELATED: US Shell Patch Facing Many Problems

Shell Pioneers stick with payouts. Shell drillers Diamondback Energy (NASDAQ:FANG) and Devon Energy (NYSE:DVN) have boosted their dividend payouts while keeping production essentially flat, the former to quintuple their quarterly payouts, coming from the Biden administration to ramp up. Despite the pressure of above production.

Unprecedented heat has increased India’s electricity demand. Seeing the warmest spring months in decades, India’s electricity demand hit a record low of 135 billion kWh last month, triggering widespread power cuts across the country as supply fell short of demand by 2.4 billion units.

Russia wants to make latest African gas pipe deal, Nigeria’s Petroleum Minister Timipre Silva said Russia has expressed interest in investing in the long-running Nigeria-Moroccan gas pipeline, which has been discussed since 2016, without specifying whether the route would be offshore or onshore. Will happen.

South African coal miners struggling with logistics. Mining companies in South Africa have resorted to transporting coal to ports amid widespread disruptions to the country’s railway network – with the Newcastle coal trade at $320 a metric ton, rail is four times cheaper yet cost pleasant.

US gas futures rise again amid volatility in LNG US natural gas prices are rising again, with the June ’22 delivery contract above $8 per mmBtu amid an ever-increasing export pull on domestic gas production, with production falling marginally to 92-93 bcfd.

Surprised with PEMEX Q1 profit. Mexico’s national oil company PEMEX reported $6.17 billion in Q1 2022 net profit, reversing a $2 billion loss in the year-ago period, as rising production and higher crude oil prices allowed it to reduce overall financial debt. from $109 billion to $108 billion.

The UK government asked the oil industry to reinvest. UK Trade Minister Quasi Quarteng has written to companies operating in the UK North Sea asking for a clear cut to re-establish their profits in the North Sea, with growing swathes of opposition advocating for an unpredictable tax on oil and gas producers. Make a plan.

Mauritania attracts investors for offshore licensing. BP (NYSE: BP) 13 tcf Bir-Allah, Mauritania A number of world-class offshore gas discoveries have opened bids for 28 new offshore blocks surrounding existing acreage, as well as investments for green hydrogen for low-cost reliable electricity. want to lure. supply.

Ukraine faces storage tightness, According to media reports, Ukraine is facing a significant shortage of storage facilities as grain and oilseed stocks have already hit an all-time high of 21 million tonnes amid limited export opportunities weighing on agricultural prices across the world.

By Tom Cool for

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