Oil Ends Week On Bullish Note As Outages Persist

Hurricane Ida is now officially the most devastating hurricane ever in terms of oil production disruption, and experts expect the outages to last throughout the month of September

Friday, September 17, 2021

The US Gulf of Mexico is gradually bringing back idled production capacities - as of today roughly a quarter of oil output remains offline - however the overall anticipation of further stock draws in the US have weighed upon the market sentiment and helped Brent prices home in on the $75 per barrel mark. Ida-triggered supply disruptions will only exacerbate the market tightness in the upcoming weeks, as the pace of global demand recovery exceeds supply increments, despite OPEC+ pushing out more barrels into the market.

China's Oil Consumption to Peak in 2026. China's oil consumption is expected to peak around 2026 at 16 mbpd, whilst natural gas will see a much more protracted path to an apogee in 2040 (at 620bcm or 22Tcf), stated the acting chairman of China's leading refiner Sinopec (SHA:600028).

Petrobras Under Pressure as Fuel Prices Rise. Brazil's national oil company Petrobras (NYSE:PBR) is coming under increasing domestic scrutiny as the parliament's speaker claimed he was left unsatisfied with explanations provided by the oil firm's executive about recent fuel price increases in the Latin American country.

Nickel Prices Rise on Supply Constraints. Nickel prices have been nearing a 7-year high after Indonesia declared it is mulling an export tax on nickel products with less than 70% Ni content, pushing benchmark LME prices up by 3% on Friday, at $19,920 per metric tonne.

Dangote Invites Trading Majors to Finance Refinery. Africa's richest man Aliko Dangote is in talks with the world's leading oil trading firms Trafigura and Vitol to co-finance the 600kbpd Dangote Refinery as its cost has ballooned from $12 to $19 billion over the years.

BP Inks Abu Dhabi Clean Energy Deals. UK-based oil major BP (NYSE:BP) signed three agreements with UAE firms ADNOC and Masdar, aiming to develop 2 GW of low-carbon hydrogen production capacity in the UK and the Emirates, as well as to implement a "decarbonized air corridor" between London and Abu Dhabi. Related: The U.S. Is Set To Break Another Solar Record Despite Rising Costs

Saudi Aramco Officially Named Marketer of Guyana. Guyana's government confirmed that Saudi Aramco's (TADAWUL:2222) trading arm ATL will receive a one-year contract to market the state's crude entitlement, with the contract running until August 2022.

Fire Halts Key UK Power Interconnector. Just as power prices spiral out of control across Europe, fire on the IFA1 interconnector between the United Kingdom and France has forced 1GW of key interconnection capacity offline until at least until March 2022. Day-ahead British power prices surged 19% on Wednesday to £475 per MWh.

High Interest in Norway's Licensing Round. The most recent licensing round of new acreage in the Norwegian Continental Shelf has attracted bids from 31 oil firms including NCS regulars Equinor (NYSE:EQNR) and Lundin Energy (STO:LUNE), just as Norway's election winners, the Labour Party, reiterated their support for further drilling.  

Albemarle Ends Chile Strike. The world's largest lithium producer Albemarle (NYSE:ALB) reached a new 36-month labor contract deal with the workers' union of the Atacama salt flat plant, ending a month-long strike that jeopardized its production of battery-grade lithium carbonate.

EU Hesitant to Slap Duties on Chinese Aluminium. According to media reports, the EU should slap import duties of 14-25% on Chinese aluminium as it concludes internal investigations into dumping of flat-rolled products, however Brussels seems inclined to suspend their implementation by 9 months, wary of Beijing's reaction.

Tullow Upgrades Kenya Project Scope. UK-based oil firm Tullow Oil (LSE:TLW) increased the overall resource estimate of its Turkana project that should now have an output plateau of 120kbpd (up 50% from the previous estimate) with a total of 585 million barrels of oil recoverable.

Uranium Price Insanity Continues. The Sprott Physical Uranium Trust continued its purchases, having already aligned on an expanded equity sales program of up to 1 billion in the upcoming months, pushing uranium prices to a 9-year high of $48 per pound of U308.

PEMEX Gives up on Vitol. Mexican national oil company PEMEX cancelled a series of contracts with the world's largest trader Vitol amidst an ongoing graft investigation that has reportedly uncovered a system of kickbacks and bribes to land supply deals with the Mexican firm.

Hyundai and LG Start Working on Indonesia Gigafactory. Availing themselves of Indonesia's vast nickel resources, South Korea's Hyundai Motor (KRX:005380) and LG Energy Solutions started construction on the Southeast Asian country's first EV battery Gigafactory that would have an initial production rate of 150,000 EV batteries.

Australia's Coal Mines Might Get Stranded. A report issued by the Australian Central Bank sees the country's plentiful coal resources becoming stranded under three out of four scenarios that it charted, stoking fears that the world's biggest exporter of coal might be out of markets by 2030.

By Michael Kern for Oilprice.com

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