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Michael Kern

Michael Kern

Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, 

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Economic Fears Hold Oil Prices Steady Despite Bullish Catalysts

Oil prices were flat on Friday morning as fears of an economic slowdown were countered by a decline in OPEC+ production and news that China may be easing its Covid restrictions. 

Oilprice Alert: If you believe that inflation fears are going to overwhelm supply fundamentals and drag oil prices down from here, then you really have to read last week's Global Energy AlertThe Inside Opportunities column outlines one trading strategy for playing a pullback in oil prices, and it's certainly not too late to give it a go.

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Friday, October 21st, 2022 

As President Biden’s announcement of a 15-million-barrel SPR release (the remaining volume of the 180 million barrels initially suggested) failed to stir the market, prices have trended sideways in recent trading sessions, with ICE Brent hovering around the $92 per barrel mark. The increasingly bearish US outlook, with the Federal Reserve confirming that it would keep raising its short-term target to fight inflation, has been offset by news of easing Chinese COVID restrictions and OPEC+ crude flows having already recorded a month-on-month decline in October.  

The Oil Industry Needs $12 Trillion in Investment. OPEC’s secretary general Haitham al-Ghais said that the oil industry will need a total of $12.1 trillion of investment to meet a 23% increase in global energy demand by 2045, with most of the upcoming increase coming from gas utilization in Asia and Africa. 

White House Sets Limits for SPR Refill. The Biden administration released a fact sheet saying it would start refilling the US Strategic Petroleum Reserve when oil prices are between $67 and $72 per barrel, with the SPR continuing to edge lower and tally 405 million barrels in the week to October 14.

Uniper Bailout Keeps Ballooning. What started as an $8 billion nationalization of embattled gas importer Uniper (ETR:UN01) is gradually becoming a nightmare for the German government as current estimates of financial support needed to keep the company afloat already reach $40 billion.

US Softens Tone Against OPEC. Striking a conciliatory tone with OPEC after last week’s fiery exchanges, the US Treasury stated that the Russian oil price cap will not be replicated against OPEC producers, nor would the move signal the beginning of a buyer’s cartel. 

ADNOC Eyes Another IPO. ADNOC, the national oil company of the United Arab Emirates, has invited banks to pitch for roles in the upcoming IPO of its marine services and logistics unit, planned for 2023, in another instance of non-core divestments that might garner at least $1 billion.      

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Let There Be Pipelines. Portugal, Spain, and France agreed to build a subsea pipeline to carry hydrogen and gas between Barcelona and Marseille, breaking the gridlock of France not wanting to extend the existing MidCat pipeline across the Pyrenees, with the timeline and financing to be decided upon by December. 

ExxonMobil Sells its Montana Refinery. US oil major ExxonMobil (NYSE:XOM) agreed to sell its 63,000 b/d refinery in Billings, Montana, along with related pipeline properties to Par Pacific Holdings (NYSE:PARR) for $310 million, focusing on assets in the US Gulf Coast and the Midwest.

EU Wants Multiple Gas Price Caps. With EU leaders meeting to align on the bloc’s latest proposals to curb energy prices, Brussels might opt for different forms of capping gas prices such as a dynamic price corridor in spot TTF quotes as well as capping the price of gas in electricity generation.

White House Funds Battery Metals Output. The Biden administration will be awarding $2.8 billion in grants to boost US production of battery minerals and EV battery production, with Albemarle (NYSE:ALB) becoming one of the chosen firms as they ramp up lithium, graphite, and nickel mining.  

PEMEX Hedges 2023 Output at $68.70/bbl. Mexico’s national oil company will keep its annual hedging program for 2023, with next year’s insurance kicking in if oil prices drop below $68.70 per barrel and the collective hedge covering some 250 million barrels. 

Germany Calls Upon Europe to Drill. The German government has called upon all members of the European Union to expedite the development of new gas fields, triggering the ire of climate activists who claim Europe’s long-term reliance on fossil fuels is in breach of its Paris climate commitments.  

Tesla Hits Record Production Numbers. EV carmaker Tesla (NASDAQ:TSLA) delivered a record total of 343,830 electric vehicles in Q3 2022, up 43% year-on-year and 35% quarter-on-quarter as all of its key production hubs (Shanghai, Berlin, Fremont) saw output spike, yet the company still missed revenue expectations.

UK Fracking Greenlight Questioned. Following the abdication of UK Prime Minister Liz Truss, the House of Commons launched an investigation into the recent vote that scrapped the government’s moratorium on fracking, as reports of bullying and manhandling by senior Tory party whips started to appear. 

Venezuela’s Refining Halted by Blackout. Venezuela’s giant 955,000 b/d Paraguana refinery complex halted all operations after a fire and a subsequent blackout at the site, with the national state oil company still struggling to restore power in the refinery. 

By Michael Kern for Oilprice.com

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