In this week’s newsletter, we'll take a fast examine a number of the critical figures and data within the energy markets. we'll then examine a number of the key market movers early on before providing you with the newest analysis of the highest news events happening within the global energy complex over the past few days. We hope you enjoy.
For the second straight week, the most oil futures contracts have seen a marked rejuvenation in open interest, primarily coming from bullish long positions. this means that, despite ongoing fears of an economic recession, traders believe that the selloff earlier this month was overdone. This has also translated into the markets largely ignoring the return of Libyan oil. additionally, Europe’s fossil fuel woes have strengthened demand prospects for middle distillates, with diesel switching within the winter months now a really real possibility. With the Brent-WTI spread as wide as ever, ICE Brent has been flirting with the $107 per barrel mark in today’s trading session.
- The spread between the world’s two leading crude benchmarks, Brent and WTI, is as wide because it has been in additional than three years, moving as far as $8.50 per barrel recently.
- Previous strength in WTI has been tangibly beaten down by weakening gasoline demand and several other consecutive stock builds.
- While Europe has lots of its own demand problems, mostly consequences of Russia’s invasion of Ukraine, the strength within the prompt months remains there, with the 1-month ICE Brent spread surging to an all-time high of $5 per barrel today.
- US crude exports have seen a considerable drop compared to record highs seen in April-May, but the wide Brent-WTI spread will provide a large boost to European buying of the American benchmark.
Market Movers
- With Chinese drillers entering into ever more sophisticated offshore projects, state-owned oil firm CNOOC (HKG:0883) has opened bidding for 13 blocks within the South China Sea, actively seeking foreign participation in China’s upstream industry.
- Despite Trafigura leaving the project earlier this month, Russian state-controlled company Rosneft (MCX:ROSN) started construction of the 600,000 b/d capacity Vostok Oil terminal within thepolar zone, expected to begin operations in late 2024.
- UK energy major Shell (LON:SHEL) made a final investment decision on the Jackdaw gas field, initially rejected by British authorities, and now expects to succeed in 40,000 boe/d of peak gas production by the mid-2020s.
Gazprom Squeezes Gas Supply Even Further. Russia’s Gazprom (MCX:GAZP) squeezed pipeline gas supply to Europe even further on, with Nord Stream 1 flows dropping to 33 Mcm per day because the Russian firm argued that it needed to halt the operation of yet one more turbine at a compressor station.
OPEC+ Compliance Drops to Lowest in Years. Proving that OPEC+ has been facing difficulties in ramping up new production capacity, the oil group’s underproduction rose to a whopping 2.84 million b/d in June, bringing the compliance rate to a staggering 320%.
EU Ministers Oppose Gas Cut Mandates. the EU Commission is seeking to break through an inspiration that may require each EU member state to chop their gas use by 15% from August 2022 to March 2023, but opposition from France, Italy, et al will see it softened to voluntary participation.
Libyan Production Is Back not off course. but one week after the Tripoli government lifted the blockade of oil ports and infrastructure, production rates within the country have surged above 1 million b/d, almost doubling month-on-month.
US LNG to Europe Still Going Strong. When President Biden vowed to produce European buyers with a further 15 bcm of LNG this year, the pledge was met with skepticism, but in H1 this year the US sent over it did altogether twelve months of 2021 (39 bcm vs 34 bcm), getting within touching distance of fulfilling the pledge.
Mexico Maximizes heating oil Exports to the US. Exports of Mexican fuel to the u. s. rose to the best level on record in H1 2022, averaging 5.3 million barrels a month, as higher residue output has been met with increased US demand, seeking to switch sanctioned Russian volumes.
Gasoline Cracks Plummet Amid Oversupply Fears. Gasoline cracks across the planet have fallen by quite 100% over the course of July, with Asian margins dropping to a marginal discount to Brent after hitting a premium of $38 per barrel earlier, with oversupply resulting in high stock builds recently.
Germany’s Coal Sector Runs into Resource Availability Issues. Coal operators in Germany have run into a series of difficulties in bringing back idled coal plants, coming from low coal availability and aged production units. thus far it appears that only 1 coal plant of the 16 that were planned has been reconnected.
US Energy Authorities Assist GM Battery JV. The US executive department announced it might loan $2.5 billion to a venture of General Motors (NYSE:GM) and LG Energy Solution (KRX:373220) to finance lithium-ion battery cell manufacturing facilities in Ohio, Tennessee, and Michigan.
Algeria Records Further Two Oil and Gas Discoveries. Italian oil and gas major ENI (NYSE:E) has made another two oil and gas discoveries in Algeria’s gas-rich Berkine basin, working during a JV between ENI and Sonatrach, only four months after it had reported two significant finds within the same region.
Europe Greenlights Third Party Russia Deals. Brussels has tweaked its Russia sanctions regime, allowing European countries coping with Russian state-owned companies Rosneft and Gazprom to shop for and ship oil to 3rd countries provided they are doing not reach EU destinations.
US Shale Firms Complain of Growth Headwinds. consistent with a recent survey by the US central bank Bank of Dallas, most oil and gas executives believe the continuing supply chain delays are having a cloth impact on new projects, primarily specializing in shortages of labor and soaring equipment costs.
