In this week’s newsletter, we are going to take a fast study a number of the critical figures and data within the energy markets.
We will then have a look at a number of the key market movers early in the week before providing you with the most recent analysis of the highest news events happening within the global energy complex over the past few days. We hope you enjoy.
OPEC+ is reimagining its role within the oil markets and although its promise of a small cut certainly doesn't impress outright, one should never underestimate the geopolitical symbolism of its actions. By signalling that the oil group is raring to create swift changes just in case geopolitical realities change (Iran), the lower October production target is additionally a mirror into the center Eastern psyche – as oil started moving closer to the fiscal breakeven levels of Kingdom of Saudi Arabia or Iraq, maintaining crude prices within the $90-100 per barrel bandwidth will remain a top item on the OPEC+ agenda.
OPEC+ Brings End to Era of Production Hikes. OPEC+ agreed to chop collective output by 100,000 b/d, reversing the oil group’s decision from last month, marking the primary month in additional than two years after they curb production targets amidst unprecedented price volatility.
Demise of Gas Paves the Way for Reenergized Coal Sector
- Coal prices across all continents have soared to all-time highs on, almost triple what it had been a year ago, as uncertainty over gas flows in Europe and stagnant LNG volumes favor “king coal”.
- Asia’s benchmark contract, the ICE Newcastle futures, jumped to $463.75 per weight unit on Monday, whilst spot physical coal loaded in Australia was priced only a $30/mt lower.
- strangely enough, the coal price rally might still see further upside as La Nina weather events might impact the provision side, especially with rainfall-driven weather disruptions in Australia.
- In Europe, the rebound in gas prices triggered by Gazprom’s halting of Nord Stream-1 flows, with front-month spot prices around $75/mmBtu, has pushed the 2023 yearly API2 coal contract to $340/mt.
Market Movers
- EQT Corp. (NYSE:EQT), the biggest dedicated gas producer within the U.S., is nearing a pander to peer firm THQ Appalachia, a producer of some 760 mcf per day, for around $4 billion.
- U.S. royalty company Sitio Royalties (NYSE:STR) said it'd buy oil and gas rights firm Brigham Minerals (NYSE:MNRL) for $4.8 billion in an all-stock deal, expected to shut by Q1 2023.
- Germany’s largest gas importer Uniper (ETR:UN01) signed a 16-year cope with Australian LNG exporter Woodside (ASX:WDS) for the availability of 1 bcm of liquefied fossil fuel, biting into volumes traditionally visiting Asia.
Iran Talks ‘In Danger’ Again. The EU’s chief negotiator within the nuclear talks with Iran, Josep Borrell, stated that the negotiations are in peril as Washington and Tehran started diverging on several contested points, most notably guarantees that the US cannot withdraw unilaterally again from the JCPOA.
EU Wants to Cap Russian Pipeline Gas Prices. EU is looking into ways to cap the value of Russian pipeline gas that has been intermittently exported by Gazprom (MCX:GAZP), though some countries remain wary of such measures, fearing a complete discontinue in retaliation.
New UK Prime Minister Faces $150 Billion Dilemma. Liz Truss, the new prime minister of the uk, is considering ways to freeze households’ gas and electricity bills at the present maximum level of $2,281, avoiding another 80% hike set to materialize this October, in an exceedingly $150 billion move.
PEMEX’s Methane Leaks Show No Sign of Abating. Merely two months after Mexican scientists discovered huge methane leaks at PEMEX’s offshore fields in Mexico, a large methane plume was seen at the Ku-Maloob-Zaap cluster throughout August, stoking concerns of dilapidated infrastructure.
Conoco Pioneering U.S. Hydrogen Gas Production. U.S. oil major ConocoPhillips (NYSE:COP) are going to be developing a hydrogen burning bush to be jointly managed with Japan’s JERA, with the latter providing fossil fuel for the plant (to be located along the Gulf Coast) furthermore as running its CCS facility.
Heat Waves Put California Power Prices stressed. Amidst a protracted wave, electricity prices in California have risen to their highest since the state’s electric grid operator imposed rotating outages in August 2020, with SP-15 power prices trading above $500 per MWh.
Indonesia Braces for Widespread Fuel Protests. Seeking to ease budget pressures coming from a bloated $44 billion set of energy subsidies, Indonesia’s President Joko Widodo raised subsidized fuel prices by 30%, with analysts expecting widespread protests and disruption in its wake.
Canada Refinery Blast Jeopardizes Revamp. a large explosion at the idled 140,000 b/d Come inadvertently refinery in Canada’s Newfoundland and Labrador province injured eight people, even as the refinery is undergoing a change into a biofuel producer specializing in SAF and renewable diesel.
Shell and Exxon Put Up Europe’s Largest Gas Field available. The UK’s Shell (LON:SHEL) and U.S. major ExxonMobil (NYSE:XOM) decided to sell their jointly owned NAM venture within the Netherlands, among others operator of the supergiant Groningen gas field that's mandated to shut (by government decree) in 2024.
Markets Rejoice at Chile Rejecting New Constitution Bill. Chile’s securities market and Chile-focused firms soared on Monday after citizens of the country rejected the new constitution proposed by President Gabriel Boric, easing fears that Chile’s left turn might jeopardize the interests of metal companies.
U.S. to Announce Blending Mandates in November. With the oil industry lacking any long-term vision of biofuel blending mandates amidst constant delays, the Biden Administration is ready to announce a three-year blending target for 2023-2025 this November.
Hitting Bottom, ore Gradually Bounces Back. With Chinese benchmark Dalian ore prices slumping to a contract low of 92 per metric weight unit, ore futures have rebounded on to 100/mt despite ongoing COVID restrictions in China with 33 cities under some sort of lockdown.