Oil prices have declined this week despite rising geopolitical risks, with markets focusing primarily on Joe Biden’s decision to withdraw from the presidential race.
– The Asian oil market witnessed a much-needed recovery in trading after the region’s main benchmark grade, Dubai, weakened so much against Brent and WTI that arbitrage flows from other continents became hardly workable.
– Following an extremely disappointing June performance, China’s state-owned oil companies Unipec and PetroChina have boosted spot purchases of Middle Eastern oil that are set to arrive in September-October.
– In July, Chinese buyers nominated the lowest Saudi Arabian volumes since March 2020 at 36 million barrels. However, resurgent nominations for August (44 million barrels) and high spot trading activity indicate things are set to improve.
– According to market sources, Chinese buyers might also ratchet up crude imports to satisfy Beijing’s mandate to add 8 million metric tonnes (60 million barrels) of oil to newly built SPR storage sites across the country.
Market Movers
– Global oil majors Shell (LON: SHEL) and ExxonMobil (NYSE: XOM) sold their NAM Offshore joint venture in the Dutch North Sea to Canada’s independent upstream firm Tenaz Energy for a mere US$180m.
– Colombia’s state oil firm Ecopetrol (NYSE: EC) is reportedly in talks with Occidental Petroleum (NYSE: OXY) to potentially buy a 30% stake in shale producer CrownRock in a deal worth US$3.6bn.
– Argentina’s state oil firm YPF is negotiating with US midstream major Energy Transfer (NYSE: ET) regarding potential financing for a cross-country oil pipeline connecting the Vaca Muerta shale play to the coast.
Tuesday, July 23, 2024
The withdrawal of US President Joe Biden from the re-election campaign has left the oil market confused. Oil prices weakened to their lowest in a month as ICE Brent dropped below 82 per barrel. It is not for lack of potentially bullish signals that prices have been lower. Normally, Israel’s attack on Yemen and promises of retaliation, as well as China cutting its short-term interest rates, would trigger some sort of response, but not now.
Dark Tanker Flees After Singapore Collision. Last Friday, the Ceres I VLCC tanker that collided with product tanker Hafnia Nile fled the collision scene and was found in the South China Sea and detained by Malaysian authorities, along with two tugboats towing the vessel northwards.
China Buys Even More Russian Crude. China’s imports of Russian oil have risen 5% year-on-year to 2.23 million b/d despite lower imports in June, consolidating Russia’s position as the number one crude supplier as demand for Saudi Arabian oil dropped by 13% year-over-year to 1.62 million b/d.
ExxonMobil Fully Quits Malaysia’s Upstream. Once a leading producer in Malaysia for more than 130 years, US oil major ExxonMobil (NYSE: XOM) has agreed to sell its oil and gas assets in the Asian country to state oil firm Petronas, equivalent to 15% of national output.
FTC Extends OPEC Probe to Occidental. Extending its initial investigation into Pioneer CEO Scott Sheffield, the US Federal Trade Commission is probing Occidental, Hess, and Diamondback executives over their communications with OPEC officials, citing potential collusion between the sides.
Woodside Risks It All with Tellurian Deal. Australia’s largest oil producer, Woodside Energy (ASX: WDS), agreed to buy US LNG developer Tellurian (NYSEAMERICAN: TELL) for US$1.2bn, including debt, at a more than 75% premium to its last closing price, taking over the embattled Driftwood LNG project.
Turkey Explores for Oil in Somalia. Turkey will send its navy to support its exploration effort in Somalia’s offshore sector. At the end of September, the Oruc Reis surveying vessel will be deployed to carry out seismic appraisal after the two countries signed a military pact and Turkey received three exploration blocks.
Europe Slaps Duties on Chinese Biofuels. The European Commission is set to introduce anti-dumping duties on biodiesel and hydrotreated vegetable oil (HVO) from China. The levies will be set at 23.7% or 36.4%, depending on the companies’ level of cooperation, although Brussels didn’t include SAF.
White House Renews Iraq’s Sanction Waiver. The Biden administration has renewed a waiver from US sanctions on Iran to allow Iraq to import natural gas and electricity from its eastern neighbour. The 22nd renewal of the authorisation will be valid until mid-November 2024.
Chevron Farms Out Suriname Stake to Qatar. Qatar’s national energy company, QatarEnergy, signed a deal with US oil major Chevron (NYSE: CVX) to purchase a 20% stake in the latter’s Block 5 production sharing contract in offshore Suriname, the fourth license that Qatar enters in the country.
Hedge Funds Turn Turbo Bullish on Gold. Hedge funds’ bullish wagers on gold soared to the highest in over four years by mid-July, with net long positions surpassing the 220,000-contract mark just as the bullion posted an all-time high of $2,483 per ounce last week.
Nigeria’s Government Turns on Its Only Refinery. Nigeria’s Parliament has set up a committee to investigate allegations of dirty fuels after the country’s midstream regulator accused the Dangote refinery, the only functional plant in the country now, of not meeting diesel sulfur restrictions.
Earthquake Disrupts Chile’s Mining Operations. Last week, a 7.4-magnitude earthquake rocked northern Chile, triggering power outages across the region where most of the Latin American nation’s lithium and copper production occurs. However, the pricing impact remained muted.
TMX Mulls Taking on Debt Before Sale. Canadian oil pipeline operator Trans Mountain is considering borrowing in the bond market to refinance some of its US$18.4bn outstanding debt before the Canadian government finds a buyer to sell it to, despite the recent launch of TMX.
Credit:
The Oil Prices Under Pressure Despite Bullish Catalysts first appeared on Oilprice.com on July 22, 2024
