Hopes of Fed Cut Jolts Oil Prices

Brent crude jumped above $80 per barrel again on Friday morning following the ECB rate cut decision on Thursday. 

Friday, June 07, 2024

The oil markets got their breath back after the Monday sell-off saw WTI plunge to $73 per barrel, with Saudi Arabia and Russia insisting that the gradual return of crude to the markets should be seen as a positive signal rather than a bearish one. The interest rate cut of the European Central Bank has provided some macro upside to prices, raising the hopes for a potential Federal Reserve interest rate cut in September. 

OPEC+ Ministers Defend Extension of Supply Cuts. The energy ministers of Saudi Arabia, the UAE and Russia have defended the extension of OPEC+ production cuts into Q3, saying they could pause or reverse policy if needed and lashing out at Goldman Sachs for calling the new deal 'bearish'.

Texas Revives Grand Plan for New Refinery. Element Fuels Holdings, a Dallas-based startup, has revived plans to build a 55,000 b/d capacity refinery in Texas, the first greenfield refinery to be built in the US in nearly 50 years, seeking to process naphtha feedstock into gasoline.

US Could Speed Up SPR Replenishments. US Energy Secretary Jennifer Granholm stated that the United States could expedite the rate of replenishing the Strategic Petroleum Reserve as underground storage sites return from year-long maintenance and WTI remains below $79 per barrel. Related: Algorithm Trades Worsened The Oil Price Slump after OPEC's Decision

Exxon's LNG Megaproject Gets Delayed. The official launch of the $11 billion Golden Pass LNG project, co-developed by US oil major ExxonMobil (NYSE:XOM) and QatarEnergy, has been delayed by at least six months to mid-2025 following the bankruptcy of Zachry Holdings.

Brazil Seeks Billions from Iron Mining Majors. The government of Brazil has presented a claim towards iron ore giants BHP (NYSE:BHP) and Vale (NYSE:VALE), demanding that their JV Samarco pay $20.75 billion as reparations to be paid across 12 years for the 2015 Brumadinho dam collapse.

Taiwan Wants a Part of Qatar's LNG Expansion. Taiwan's CPC Corporation signed a deal with QatarEnergy to purchase a 5% interest in one of the 8 mtpa trains of the North Field East expansion project, simultaneously inking a supply deal for 4 mtpa of LNG over a period of 27 years.

Suriname Readies for First Oil Project. The South American nation of Suriname might finally see its first ever FID after TotalEnergies (NYSE:TTE) and APA Corp (NASDAQ:APA) vowed to make a final investment decision in Q4 2024 on the 700 million-barrel Sapakaru-Krabdagu production hub.

India Eyes Larger Shipping Role. India has grand plans to set up a new shipping company, to be jointly owned by state-run oil companies, that would allow it to expand its maritime fleet by at least 1,000 ships in the next decade and capture a larger chunk of commodity trading.

Sudan's Refinery Bombed by Rebel Militia. Sudan's 100,000 b/d Khartoum refinery has been bombed again following heavy fighting between the government army and paramilitary Rapid Support Forces, debilitating the country's product supply as it relies on South Sudan for diesel.

Venezuela's Oil Production Growth Defies Sanctions. Thanks to plentiful condensate and improving drilling activity, Venezuela reported a 4% month-over-month increase in crude production as it reached 911,700 b/d, defying the recent snapback of US sanctions.

BHP Struggles to Quash Threat of Chile Strike. Australia's mining giant BHP (NYSE:BHP) has started government-mediated talks aimed at preventing a strike of more than 1,100 workers at its Spence copper mine in Chile, accounting for slightly more than 1% of global supply.

Citgo's Assets Might Be Up for Grabs Soon. As next week will see the final round of the Citgo Petroleum marketing process held by a US court in Delaware, several candidates eyed its 167,000 b/d Corpus Christi refinery in Texas, with ConocoPhillips and Koch Industries both reported to be interested.

Clean Energy Investment to Soar to Record Highs. The International Energy Agency expects global investment in clean energy technology and infrastructure to reach $2 trillion this year, twice as much as fossil investments in 2024, with China accounting for $675 billion out of that total.

By Michael Kern for Oilprice.com

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