Uncertainty is dominating the oil market in this week, with recession fears being countered by physical tightness and growing supply risks. Oil market watchers became senior macroeconomists lately, with price swings increasingly smitten by larger market sentiment. This week’s seesawing was in large part driven by the market expecting a 100 basis point hike, sending all global crude benchmarks crashing right down to double digits, however as soon because the US FRS opted for a lower 75 bps hike, ICE Brent bounced back to $102 per barrel. Following the recent hedge fund sell-off, it seems that there's still no consensus on the most driving trend within the markets – fears of economic recession are even as strong because the feeling of immediate physical tightness.
Biden Visit Ends Without Production Boost Promise. With President Biden’s visit to KSA - swing, senior US officials have confirmed that Washington isn't expecting Riyadh to spice up crude production immediately, lifting crude prices by $2/barrel in Friday’s trading. Asian LNG Prices Feel the EU Heat. Spot Asian LNG prices are trending above $40 per mmBtu lately, with increasing cooling demand and outages in several key suppliers (Peru, Australia) adding a layer of upward pricing pressure, whilst gas-strapped Europe continues to determine prices well above those in Asia.
Algeria Becomes Largest Gas Supplier to Italy. In an ongoing diplomatic row with Morocco and Spain, Algeria has been rerouting its gas exports to Italy and is now set to produce the southern state with 25 bcm of fossil fuel, with increased throughput rates starting next week already.
Iraqi Export Capacity Upgrades Get Delayed. Whilst Baghdad has been maintaining that it might expand crude export capacity by 150,000 b/d (to 3.4 million b/d in total) because of new infrastructure in Basra, that goal is now postponed into Sept-Oct amidst pump house upgrade setbacks.
China’s Power Supply Strained Under Record Heat. Peak power loads in several Chinese regions (Zhejiang, Jiangxi, Jiangsu etc.) have hit all-time highs on, with temperatures above 40 degrees Celsius, resulting in 5-6% year-on-year increases in average electricity consumption rates.
ConocoPhillips Doubles Down on Port Arthur LNG. US oil major ConocoPhillips (NYSE:COP) agreed to shop for a 30% stake in Sempra Energy’s 13.5mtpa Port Arthur LNG project, agreeing to buy 5 mtpa of LNG produced by the primary phase of the project and provide the fossil fuel for its share of output.
Tripoli Government complete stakeover. The UN-backed Government of National Unity has sacked the long time chairman of Libya’s NOC Mustafa Sanalla and replaced him with former financial organization governor Farhat Bengdara, storming the oil company’s headquarters to put in the new head.
China Might Scrap Australia Coal Ban. in line with a Bloomberg report, Chinese officials are proposing to finish a ban on Australian coal, introduced in October 2020, wary that Europe’s buying spree after the sanctions on Russian coal kick in will cause increased competition for supplies.
Brussels Cozies Up to Azerbaijan. the EU Commission has been engaged on a memorandum that will stipulate its goal of accelerating Azerbaijani gas imports to a minimum of 20 billion cubic meters by 2027, currently taking in 8 bcm via the Trans-Adriatic Pipeline (TAP) that ends in Italy.
Nationalization Boosted EDF Shares. Trading in shares of French energy firm EDF was suspended on, up 13% week-on-week, because the French government prepares to nationalize the remaining 16% of shares it doesn't own still at a buyout price of near €13 per shares, a 30% premium to current prices.
Indonesia Discovery Buoys Mubadala Upstream Plans. The UAE-based Mubadala Petroleum discovered a net 118-meter gas column with its Timpan-1 exploration well offshore North Sumatra, with the Indonesian find de-risking a minimum of several TCF gas reserves within the basin.
Warren Buffett Still Likes Occidental much. Warren Buffett’s Berkshire Hathaway has continued buying up shares of Occidental Petroleum (NYSE:OXY), adding another 4.3 million shares on and taking total ownership of the oil firm to 19.2% (the equivalent of 179.4 million shares).
Japan Accelerates Nuclear Restart Amid Power Supply Qualms. the Japanese government is functioning towards the restart of 4 nuclear reactors before the onset of the 2022/2023 winter season, bringing the overall number of operating units to nine, the best number since the Fukushima incident.
China Moves to Limit Fertilizer Exports. China is rolling out a quota system to limit exports of phosphates, a key ingredient to producing fertilizers, that ought to see the sunshine of the day at some point in H2, with early reports indicating the quotas are set significantly not up to current export levels.
Thanks for reading and we’ll see you next week.