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Chart of the week
– After more than 2 years of coordinated production cuts, OPEC+ has reached the point where it no longer needs to increase production targets and needs to rethink the future of the 23-member oil group.
– Most analysts expect no or only very moderate changes to OPEC+ production guidance for September 2022: With June numbers already reaching a whopping 320% compliance rate, l ‘incremental supply remains the main challenge for members.
– The worsening demand outlook will play an important role in OPEC+ decision-making as the group seeks to keep oil prices high enough to generate excessive profits without hindering adequate supply to the market.
– With Russia facing a series of sanctions from 2023 and therefore susceptible to production cuts, Saudi Arabia seeks to maintain OPEC+ as a coordinating force in the oil market, preferring to avoid shocks market sudden as Riyadh has finally grown to enjoy an extended period of unexpected.
Market movers
– Saudi Aramco (TADAWUL:2222) has bought US lubricants producer Valvoline (NYSE:VVV) as it looks to expand its position in the downstream business, for a reported sum of $2.65 billion.
– The world’s largest electric vehicle battery maker, China’s CATL (SHE:300750) saw its vice chairman Huang Shilin resign this week, with founder and chairman Zeng Yuqun taking over as CEO, raising the shares Monday 5%. ground.
– One of the world’s largest wind turbine producers, Siemens Gamesa (BME:SGRE) is considering cutting around 10% of its current workforce, or 2,500 jobs, following another drop in guidance for 2022.
Tuesday, August 2, 2022
One oil major after another is announcing phenomenal quarterly earnings and accelerated share buyback programs, with BP, Marathon and Devon Energy joining the list this week. Meanwhile, Brent prices have been stuck around $100 a barrel so far this week. If tomorrow’s OPEC+ meeting turns into another campaign of smoke and mirrors, structural weakness in demand stemming from weak global manufacturing data and Europe’s continued struggle to contain Russia’s energy blackmail could resurface , pushing oil further down into double-digit territory.
Taxation of US crude imports raises questions. President Biden’s $433 billion tax and climate bill, which could see a Senate vote as early as this week, aims to impose a 16.4 cents per barrel tax on crude oil and imported products , raising fears that this could inadvertently increase inflation as USGC refineries rely on heavy crudes. from Latin America and elsewhere.
The US is again targeting the Iranian oil trade. The US State and Treasury Departments imposed sanctions on six more companies, based in Hong Kong, Singapore and the United Arab Emirates, for allegedly facilitating trade in Iranian oil and petrochemicals, the third round of blacklisting in the last two months.
OPEC asks Russia to stay in the oil group. Haitham al-Ghais, the new OPEC secretary general, stated that Russia’s participation in OPEC+ is vital to the success of the deal, adding that the group does not control oil prices but which fine-tunes the market in terms of supply and demand.
Nord Stream Blame Game Never Stops. With markets still clueless about the whereabouts of the ominous Nord Stream 1 turbines, Russia has said there is little it can do to renew pumping along the pipeline as it continues to supply only 20% of plate capacity with a single turbine operating.
Iran indicates it is ready for a new round of talks. With the European Union still proposing new initiatives to bridge the gap between the US and Iran, with Brussels presenting a new draft text on the revival of the JCPOA, Tehran said it is ready to hold new talks as long as they lead to a “sensible and stable” arrangement. .
Australia wants to keep its gas at home. Australia is considering curbing its LNG exports after a national watch that more natural gas is needed to meet the needs of its east coast amid a sharp decline in onshore production, with some restrictions likely even looking to 2023.
Luxembourg moves to freeze Ecuador’s assets. Luxembourg banks were ordered to freeze assets held by Ecuador after the Latin American failed to make a $391 million payment to Anglo-French oil company Perenco, as a result of its termination il· legal of a production sharing agreement.
ADNOC finds gas offshore. UAE national oil firm ADNOC, along with block operator ENI (NYSE:E) and PTTEP, discovered a second gas play in offshore Block 2, adding 1-1.5 TCf to a shallower target assessed earlier this year, all this just three years after the acreage was awarded in the first round of Abu Dhabi block bidding.
Nigeria’s top export grade was halted amid leaks. The Forcados terminal, operated by Shell ( LON:SHEL ), has been out of action since July 17 after an underwater hose leak was found, with August cargoes already postponed to September, already that the flow of 200,000 b/d continues to be affected by force majeure events.
US Diesel becomes new hedge fund favorite. Hedge funds and other money managers bought the equivalent of 9 million barrels in U.S. diesel futures in the week to July 26, according to CFTC figures, a sign that the slow build in stocks of middle distillate poses problems for the diesel prices that are being targeted.
Boiling in turmoil after a giant Chilean hole. Chilean authorities launched an official investigation into an 82-foot-diameter giant sinkhole at Lundin Mining’s (TSE:LUN)-operated Alcaparrosa mine that could spell trouble for copper production in the regions of north of Chile, where almost 30% of world copper production is concentrated.
China is a pioneer in offshore shale oil drilling. With China’s upstream segment increasingly focusing on shale plays, state-controlled oil company CNOOC (HKG:0883) successfully tested production at the Weiye-1 well, the first well of the country’s offshore shale oil.
Texas struggles with unbearable heat. The Electric Reliability Council of Texas (ERCOT) issued a warning that power use in the Lone Star State will again break records this week, with peak demand expected to reach 80,076 MW on Wednesday (the previous all-time high was reached two weeks ago). , at 78,828 MW).
By Tom Kool for Oilprice.com
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