In this week’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets.
Chart of the Week
European Natural Gas Back to Pre-War Levels
- European natural gas prices have fallen to their lowest since February 2022 this week as extraordinarily warm weather in Europe and robust LNG arrivals kept the region’s supply safe.
- Front-month TTF spot prices are currently trading at €75 per MWh ($25 per mmBtu), down by €60/MWh from a month ago, as swathes of Europe see temperatures above 60° F.
- This has led to a paradoxical situation when European gas prices for the summer months of 2023 are trading higher (around 80-85/MWh) than supposedly peak-season January-February contracts.
- European gas inventories have been boosted by the warm weather, with EU average gas stock levels at 83.5% currently, only 8 percentage points lower than a month ago.
Market Movers
- U.S. oil major ExxonMobil (NYSE:XOM) is reportedly set to report $56 billion in profit last year, marking the highest number ever achieved by a non-state-owned company and almost triple its 2021 result.
- A Russian court ordered German that the assets of German industrial gas firm Linde (NYSE:LIN) worth $500 million be frozen at the request of a Gazprom-led JV, citing unfulfilled commitments.
- Adding insult to injury, South Korea’s regulator fined Tesla (NASDAQ:TSLA) for $2.2 million, citing the US carmaker’s failure to tell customers that in low temperatures its EVs have a shorter driving range.
Tuesday, January 3, 2023
Conflicting news coming out of China keeps oil prices rangebound, with ICE Brent futures still hovering around the $85 per barrel mark. On the one hand, weak factory activity data for December provided another indication of a slower-than-assumed return of China. On the other hand, Beijing seems intent on keeping its promise of gradual easing, an aim most recently demonstrated by means of a massive product export quota.
China Hikes Product Export Quotas. In a bid to prompt domestic refiners to run as hard as possible, the Chinese government issued its first batch of product exports quotas for 2023, hiking the total volumes by nearly half compared to 2022, coming in at 18.99 million tonnes.
Iran Sticks to China Exports. Brushing aside the apparent death of JCPOA negotiations, the Iranian government forecasts its 2023 crude exports to be around 1 million b/d, in line with the pace witnessed over the second half of last year, most of it still delivered to China.
New Petrobras CEO Eyes Renewables. With Lula da Silva inaugurated as Brazil’s new president, Jean Paul Prates was called in to become CEO of the Brazilian national oil company Petrobras (NYSE:PBR), pledging not to be interventionist and pay more attention to investment into renewables. Related: Coal Demand To Remain Robust In 2023
Germany Flirts with Lifting Ban on Fracking. Having banned hydraulic fracturing in 2017, Germany is now reconsidering its stance with Finance Minister Christian Lindner saying the high LNG prices it is paying should compel Berlin to let private investors decide if extraction is economical.
Equity Funds Keep on Bleeding. According to Refinitiv data, global equity funds recorded net outflows for the eighth straight week in the seven days to December 28, at $529 million, driven by U.S. firms as both Asian and European funds broke the spell and bounced into net inflows recently.
Vitol Leaves Russian Megaproject. Global commodities trader Vitol sold its 5% stake in the Rosneft-operated (MCX:ROSN) Vostok Oil project to largely unknown Dubai-based firm Fossil Trading, leaving the project two years after its initial $4 billion investment.
U.S. Lease Sale Fails to Impress. The U.S. lease sale for drilling rights off the Alaskan coast drew only one bid from privately owned Hilcorp Energy, for a measly $63,983, despite the BOEM offering a total of 193 blocks covering almost 960,000 acres across the Cook Inlet.
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Indonesia Wants Some Tuna Gas. Indonesian authorities approved the first development plan of the $3 billion Tuna gas field, expected to reach peak production of 115 mmcfd by 2027 and operated by the UK independent Harbour Energy (LON:HBR), brushing aside fears of China’s South China Sea claims.
Chinese Majors Drills Deepest Well. China’s national oil company Sinopec (SHA:600028) drilled the deepest well on record as the Yuanshen-1 exploration well in the Sichuan Basin reached a depth of 8,866m, overcoming the risks stemming from ultra-high temperatures.
Tesla Q4 Deliveries Underperform. EV carmaker Tesla (NASDAQ:TSLA) delivered 405,278 vehicles in the last three months, failing to meet analysts’ expectations by some 4-5%, despite cutting prices in China and offering $7,500 discounts in the US, flagging a potential demand problem.
Gold Hits Six-Month High. Gold prices have started off 2023 by reaching a six-month high, climbing to 1,833 per ounce, and might be in for even more should the soon-to-be-published US Fed policy minutes hint at a slower pace of increases and a lower than anticipated peak rate.
U.S. Vies with Qatar for Top LNG Exporter Spot. The United States has become the world’s largest exporter of liquefied natural gas alongside Qatar last year, with both countries supplying 81.2 million tons LNG, as the Freeport LNG force majeure curbed the U.S.’ export potential by some 5mtpa.
India Eyes Massive Subsidy Cuts in 2023. The Indian government is seeking to cut food and fertilizer subsidies by $44.6 billion going into this year, down 26% from 2022, in a bid to deflate a ballooning fiscal deficit of the South Asian country that is still yet to normalize after the COVID spending spree.
By Tom Kool for Oilprice.com
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