Oil prices continued to climb on Friday despite worrying import data from China, with traders choosing to focus on increasing oil demand elsewhere.
Friday, October 15th, 2021
The ongoing rally in natural gas prices continues to drive gas-to-products switching and driving oil prices higher. In Asia, there is a counter-seasonal mini-renaissance of HSFO utilization. Concurrently, demand for crude remains strong, with OECD stockpiles recording a week-on-week decline. Oil prices did come under pressure on Thursday from data that showed weakening Chinese imports, but bullish sentiment retook markets on Friday.
China Drops Independent Import Quotas for First Time Since 2015. Having issued the much-anticipated fourth batch of import quotas for independent refiners, Chinese authorities have reduced the total volume of crude to be imported for the first time in six years, despite at least 1 million b/d capacity coming online this year. The 2021 total of import allowances, at 177 million tons, is 7.4 million tons lower than that of 2020. Related: The Facts Behind Saudi Arabia’s Outrageous Oil Claims
India’s Worst Power Shortage in More than 5 Years. India’s crippling power shortage triggered by an acute shortage of coal has been the worst since March 2016 in terms of its severity, with power supply falling short of demand by a whopping 750 GWh in the first 12 days of October.
Chinese Majors Woo US LNG Exporters. Several Chinese majors including Sinopec (SHA:600028) and CNOOC (HKG:0883) are in talks with US LNG exporters, mainly Cheniere and Venture Global, to conclude long-term supply contracts as current LNG prices highlighted the deficiencies of spot trades.
Brazilian President Wants to Privatize Petrobras. Unable to control runaway fuel prices, Brazilian President Jair Bolsonaro stated he is inclined to privatize the state oil company Petrobras (NYSE:PBR), following the 2019 privatization of the Vibra fuel distribution company and the upcoming 2022 Eletrobras denationalization.
US Department of Energy Picks Shell Consortium for Hydrogen Storage Pilot. The US Department of Energy picked a consortium of companies led by Royal Dutch Shell (NYSE:RDS) to carry out testing with the aim of gauging whether a large-scale hydrogen tank could be viable at import and export terminals.
Turkey Seals New Gas Supply Deal with Azerbaijan. Turkey has signed a three-year gas supply contract with Azerbaijan that would see the delivery of 11 billion cubic meters until the end of 2024, coming 6 months after the expiry of the erstwhile Shah Deniz-1 deal. Related: The U.S. Shale Industry Desperately Needs To Drill
Volvo Produces First Fossil-Free Vehicle. Chinese-owned truck maker AB Volvo (STO:VOLV-B) claimed it produced the world’s first fossil-free steel vehicle as it seeks to become climate-neutral by 2040, hoping for prototype production this year and small-scale series production by 2022.
Chevron Joins Suriname Offshore Spree. US major Chevron (NYSE:CVX) signed a 30-year production-sharing contract for the Block 5 shallow-water license offshore Suriname, to the south of Block 58 operated by TotalEnergies (NYSE:TTE) that already saw four discoveries, that would see it assume operatorship with a 60% stake.
Tesla Lands New Caledonian Nickel Supply Deal. US carmaker Tesla (NASDAQ:TSLA) signed a multi-year deal with New Caledonian miner Prony Resources that would see some 42,000 metric tons of nickel supplied to cater for Tesla’s battery supply chain in Asia, the second metal supply contract that the US firm clinched recently.
PEMEX Sticks to HQ Relocation. As Mexico’s authorities seek to decentralize policy planning and boost economic development, the state oil company PEMEX still wants to relocate its headquarters to Ciudad del Carmen, Campeche, a long-time exploration hub.
China Approves New Import Terminal for Sinopec. China is already the world’s largest LNG importer, and inflows there should increase further as Chinese authorities approved the construction of a 6.5mtpa capacity LNG terminal in Longkou, Shandong, to be operated by state oil company Sinopec (SHA:600028).
US Wants to Hold 7 New Wind Lease Sales by 2025. In a bid to reach the Biden Administration’s plan to reach 30 GW of offshore wind capacity by 2030, the US Secretary of Interior Deb Haaland stated that the US would hold lease sales in the Gulf of Maine, New York Bight, Central Atlantic, Gulf of Mexico and off the coasts of Carolinas, California, and Oregon in the upcoming four years.
France Wants to Build Nuclear Plants in Poland. France’s EDF (NYSE:EDF) has submitted an offer to build 4-6 nuclear reactors in Poland, the only European country wanting to join the nuclear club, with its non-binding offer providing for 6.6-9.9 GW of capacity depending on Warsaw’s ambitions.
EU Seeks to Ban Oil and Gas Exploration in the Arctic. The European Union is intent on banning oil, gas, and coal exploration in the Arctic, a region arguably most impacted by climate change as it has warmed three times as fast as the global average in the past 50 years, though none of its members have a sizeable footprint there.
Rio Tinto Cuts 2021 Iron Ore Forecast. The UK-headquartered mining giant Rio Tinto (ASX:RIO) cut its 2021 iron ore shipments forecast to 320-325 million tons on the back of a tighter labor market in Australia and by project completion delays elsewhere, putting it on course to lose its spot as the world’s largest iron ore producer to Brazil’s Vale.
By Michael Kern for Oilprice.com
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China’s action should be seen as part of its decision to secure its energy needs at all costs at a time of growing shortages in the market and rocketing prices.
China’s crude oil imports are projected to average 12.0-12.5 million barrels a day (mbd) in 2021.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Anyhow all of these massive price increases act as a "stealth US Federal Reserve" obliterating the US economic recovery narrative and turning it into exactly what it is: Weimar USA.
"just moar debt requiring moar hyperinflation."
Long $unp Union Pacific Railroad
Long $ko Coke
Long $slb strong buy
I could go on and on and on and on and on and..