Oil prices are back round the levels they were at before Russia invaded Ukraine, highlighting that a world recession and demand destruction are now the central focus of traders.
It is hard to flee from the actual fact that just about every single piece of reports and analysis appears to be indicating that a recession is looming. Be it the Bank of England’s warning of a five-quarter-long recession drag or the dearth of action from OPEC+ on drilling, the bad omens just carry on coming. Inevitably, this has impacted oil prices, too, almost falling back to where they were before the onset of Russia’s invasion, with ICE Brent trending around $96 per barrel. For the primary time in weeks, oil futures contracts began to reflect expectations of a weak winter, with monthly spreads halving week-on-week. We are still firmly in backwardation, but it now not seems as drastic because it had been before the summer.
OPEC+ Increases September Target by a Meager 100,000 b/d. Meeting to line its collective September 2022 production target, OPEC+ has agreed to the bottom monthly quota increase since 1986, at 100,000 b/d, implying that the oil group continues to be assessing the risks of recession to require more radical steps.
Giant Kazakh Oil Field Halted Amidst Gas Leak. Crude production at Kazakhstan’s 13-billion-barrel Kashagan field was completely halted mid-week amidst fears that pipelines connecting the shallow-water platforms to the shore can be leaking, probably because of equipment corrosion.
UN Head involves Taxing “Grotesquely Greedy” Oil. UN Secretary General Antonio Guterres called governments globally to tax these excessive profits and redistribute them, saying oil companies are making immoral profits on the backs of the poorest people.
OPEC Promises to own More Capacity for Winter. KSA & UAE are apparently ramping up spare production capacity to be able to deliver any significant demands just in case of a winter supply crisis, seeking to melt the reputational blow following the 100,000 b/d quota hike for September.
Diesel Stocks Indicate Trouble Brewing Ahead. Whilst the markets at large are that specialize in rising gasoline inventories within the US, middle distillate stocks are nearing critically low levels with this week’s data showing another 2-million-barrel decline, with total inventories quite 21 million barrels below the corresponding point in 2008.
China Doubles Down on Ultra High Voltage Power Lines. Connecting China’s far western regions where most solar and wind producing plants are located to big coastal cities, the country’s State Grid expects to speculate some $22 billion in ultra-high-voltage power lines this year still, boosting the prospects of copper and aluminum for H2.
Russian Government Gives Sakhalin-2 to Gazprom. A Russian government decree issued in the week saw Gazprom receiving 50% of the Sakhalin-2 LNG project, with the remained of shares split across those project partners who reapply for his or her share, with Shell (LON:SHEL) seeking to sell its 27.5% stake before it gets too late.
India Wants to Stimulate Fuel Exports. Just a month after the introduction of fuel export taxes, the Indian government has halved export taxes on gasoline, jet fuel, and diesel, whilst simultaneously hiking taxation on domestically produced crude, raking in $30 per barrel of local output.
Germany Runs into Legal Issues with Gas Levy. The German government acknowledged that it might need to amend its recently adopted energy security law because it clad it cannot impose the oft-mooted gas levy on consumers who have their gas contracts with fixed prices, roughly 1 / 4 of all deliveries.
Bad News Will Now Come More Frequently within the UK. With the Bank of England expecting the cap on energy bills to soar to three,500 pounds, British people energy market regulator Ofgem announced it might review the country’s price cap on a quarterly basis instead of twice a year.
Russia Bans Western Firms from Selling Energy Stakes. The Russian government has banned companies from so-called unfriendly countries from selling shares in key energy projects until the top of the year, implying that US major ExxonMobil (NYSE:XOM) won't be able to get out of Sakhalin-1.
Singapore Bans Glencore from Bunkering Pool. The Maritime and Port Authority of Singapore has banned Switzerland-based trading major Glencore (LON:GLEN) from the country’s bunkering marketplace for two months after a March chlorine contamination accident drastically curbed fleet availability.
Chesapeake Seeks Sale of South Texas Assets. US shale-focused oil firm Chesapeake Energy (NYSE:CHK) is reportedly considering a purchase of its Eagle Ford shale assets amidst an ongoing shift towards gas production, possibly struggling from private equity firm Kimmeridge Energy for changes.
Nickel Smelting Drops to 5-Year Low. Satellite imagery indicates nickel smelting has dropped to its lowest point globally in additional than 5 years of information tracking, with high power prices curbing activity in Europe and Africa whilst China remains hamstrung by weak demand recovery following lockdowns.
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