Macro data dominates the oil markets

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Graph of the week

Freight transport is the new Achilles heel of the oil market

– Major shifts in oil trade flows appear to trigger a new form of upheaval, with tanker freight rates rising due to low ship availability amid ever longer supply routes.

Following the recent surges in Aframax and Suezmax freight transport, rental demand has shifted to VLCCs, bringing freight rates to their highest level since May 2020, with daily earnings exceeding $ 45,000 across all commercial regions.

– According to Platts, monthly shipments of VLCC will increase 26% in the third quarter to 135 cargoes, as favorable arbitrage is calling on US, Middle Eastern and West African exporters to target Asia.

– For a VLCC delivery from the US to China the flat rate prices went up to $ 10.7-10.8 million, equivalent to $ 5.1-5.2 per barrel, but even at this level it is still more profitable than renting a Suezmax.

Market Operators

– Germany is expected to announce the nationalization of the country’s largest gas importer, the sick Uniper (ETR: UN01)tomorrow, in a deal that will cost Berlin more than 30 billion euros.

– Greater US energy Chevron (NYSE: CVX) It is reportedly selling its stakes in three unmanaged Alaskan oil fields with offers due this month, in a move that could fetch around $ 500 million.

– Privately owned upstream US company focused on the Gulf of Mexico Fourth North is considering a potential sale of over $ 2 billion, cashing in while prices are still high.

Tuesday 20 September 2022

One would be tempted to think that news of ever-increasing OPEC + underproduction or further disruptions to Nigerian and Kazakh production would have a sizeable impact on oil prices, however, over the past 4-5 trading sessions ICE Brent has been immune to the wild volatility seen. for most of this year. The reason is that supply / demand no longer determines major price trends, but macro data does, so all eyes are on the upcoming Fed policy meeting this Wednesday.

OPEC + underproduction is still spectacular. The gap between OPEC + production targets and actual production continues to widen, reaching 3.6 million barrels per day in August, a whopping 0.7 million barrels per day on a monthly basis due to the worsening of the compliance by Russia and Nigeria.

Venezuela’s best-performing refinery is still on fire. Venezuela’s 190,000 b / d refinery in Puerto La Cruz is still burning after lightning struck a water treatment oxidation lagoon, just days after another fire caused by a broken hose on a cargo of gasoline.

Germany takes over Russian-owned refineries. The German government has placed all three refineries in which the Russian one Rosneft (MCX: ROSN) has stakes under the trusteeship of the Federal Network Agency, a move that could trigger further retaliation from the Russian side.

US coal producers protect themselves from fuel prices. With U.S. diesel inventories hitting their lowest level in decades, surface coal miners across the country have begun to link sales deals to diesel indices as distillate prices continue to hover around $ 5. / USG, a 75% year-on-year increase.

Wavering European fears of Nigeria’s LNG feeders. With Nigeria’s oil and gas production heavily hit by theft and sabotage, long-term buyers of the country’s LNG production such as Portugal are looking forward to the next few months with concern as Bonny LNG continues to operate at 60% capacity.

The troubles for Kazakhstan’s supply seem to never end. Producing at reduced rates since early August, Kazakhstan’s supergiant Kashagan field will not return to full capacity until at least October, according to the country’s energy minister, struggling to contain a previous gas leak.

Add salt to Germany’s nuclear damage. One of the two remaining nuclear reactors in Germany, the Isar-2 plant will be forced to disconnect in October for repairs after a leak was detected this week, only to be completely shut down by December 31, 2022.

The United States warns Africa against huge gas projects. US climate envoy John Kerry warned against investing in long-term gas projects in Africa, a continent where 43% of the population does not have access to electricity, saying recovering investments will be difficult. since renewable energies must have the highest priority.

Turkey and Russia resolve nuclear discrepancies. Presidents Tayyip Erdogan and Vladimir Putin reached an agreement to resolve a dispute over the Akkuyu nuclear power plant, built in Russia in southern Turkey, with Turkish contractor IC Ictas resuming the deal to build the $ 20 billion project. .

European solidarity under threat. According to the media, the French state-controlled utility company FES (EPA: EDF) had sent a written notification to Italy that it could stop electricity exports to the country, potentially up to 2 years, due to continuing problems with nuclear generation.

Chinese coal production hindered by rain. Ending a record hot streak, China’s daily coal production dropped to a three-month low of 11.95 million tons per day amid heavy rains in Inner Mongolia and Shaanxi and ongoing lockdown measures. .

The Netherlands moves to limit energy prices. The Dutch government will limit gas and electricity prices to the January 2022 level from January onwards, also forcing energy companies not to cut any customers in the next six months, a move it plans to cover by increasing wealth and taxes on society.

Forecasts for Nigerian oil production remain disastrous. Just as Nigeria’s oil production fell to a decades-long low of 1.18 million barrels a day last month amid sabotage and oil theft, production is set to drop even lower as the 225,000-strong Bonga field. barrels per day will be closed for maintenance in October.

By Tom Kool for Oilparmi

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