Oil prices have been largely rangebound since the OPEC+ announcement that it would cut production sent prices soaring at the start of last week. While strong U.S. job growth and the resultant strengthening of the dollar took some steam out of the rally, demand optimism and Russia's production cut helped to keep prices from falling.
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Chart of the Week
- Intraday prices for natural gas traded at the Permian Basin’s Waha hub went into negative territory earlier this week, with next-day supply changing hands at -$0.33 per mmBtu, Platts reports.
- Natgas prices are under pressure due to maintenance at two key pipelines delivering those volumes to the coastal consumption areas, Kinder Morgan’s 2 BCf/d Gulf Coast Express and the 2.1 BCf/d Permian Highway Pipeline.
- Gas producers in the Permian anticipated the outages by cutting total production by over 600 MMCf/d to 16.5 BCf/d, however this seems to have not been enough as pipeline outages were double the size.
- The US mid-term gas production outlook has been hampered by Henry Hub dropping below breakeven levels for non-associated output, as the prompt month still hovers around $2.2 per mmBtu.
Market Movers
- World’s largest gold producer Newmont Corp (NYSE:NEM) presented its best and final offer for Australia’s Newcrest Mining at $19.5 billion, seeking to extend its lead ahead of all competition.
- French major TotalEnergies (NYSE:TTE) is coming under increasing stakeholder pressure as a group of major investors joined climate activists Follow This in demanding more ambitious emissions cuts ahead of the May 26 annual general meeting.
- One of Europe’s largest utility firms, Italy’s Enel (BIT:ENE) said it would sell its equity in two Peruvian assets for $2.9 billion to China’s Southern Power Grid International as it scrambles for cash.
Tuesday, April 11, 2023
In part due to the Easter holidays across the Atlantic Basin, oil prices have been rangebound at the start of this week. The strong U.S. jobs growth and the subsequent appreciation of the US dollar took the steam out of last week’s price rally, but Russia’s alleged production cuts, the prospect of French strikes ending soon, and strong Chinese mobility data have kept prices from falling any lower.
ExxonMobil Moves to Shock M&A Community. In what could become the biggest oil industry M&A deal of this year, US oil major ExxonMobil (NYSE:XOM) is reportedly in talks with Pioneer Natural Resources (NYSE:PXD) to buy the third-largest Permian basin oil producer.
US Jobs Strength Cools Gold Spike. News of U.S. unemployment sliding back to 3.5% amidst strong hiring has capped the rapid growth of gold prices and pushed them below $2,000 per ounce again, as the strength of the economy rekindled hopes for a soft landing.
Russian Diesel Makes Inroads in Latin America. In March alone, Russia supplied some 5 million barrels of diesel into Latin America with Brazil buying some 105,000 b/d, almost tenfold the 2022 annual average as sanctions nudge Russian sellers to find new markets.
Teck Brushes Off Unsolicited Bids. Whilst base metals watchers have expected more to come from Glencore’s (LON:GLEN) bid for Teck Resources (NYSE:TECK), the Canadian miner warned that its implied value was an “illusion” and that its current restructuring plan is the only viable option for the firm.
EPA Fines Struggling California Refiner. In addition to the recent capping of refining margins in California, US refiner Valero Energy (NYSE:VLO) was fined $1.2 million by the US EPA over its failure to report releases of hazardous substances at the Benicia refinery in 2017-2019.
Saudi Aramco to Prioritize Asian Markets. According to market reports, Saudi NOC Saudi Aramco (TADAWUL:2222) informed all its Asian customers that it would supply full contract volumes for cargos loading in May 2023, despite the promised 500,000 b/d cut as other continents are given less priority.
Largest U.S. Gateway Closes After Strikes. The busiest ocean trade gateway in the United States, the ports of Los Angeles and Long Beach, has been effectively shut down with only two terminals working after months of labor negotiations between workers and their employers hit a dead end.
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Tesla to Build Shanghai Megapack Plant. The world’s largest EV carmaker Tesla (NASDAQ:TSLA) will be opening a Megapack battery factory in China’s Shanghai, saying production will start in Q2 2024 and aiming for a production capacity of 10,000 Megapack units per year.
Copper Prices Brace for Chile’s Output Rebound. Chile’s copper production has soared to the highest since December 2021, overcoming restrictions on water utilization and project delays, sending prompt-month copper prices back below the $4 per pound mark.
Iraqi Refinery Launches Production. Iraq’s oil minister Hayan Abdulghani announced the country’s long-delayed 140,000 b/d Karbala refinery has finally started commercial operations, expected to supply 50% of currently unmet domestic diesel and 75% of domestic gasoline requirements.
Subsidy Cut to Jeopardize California Solar Growth. Residential solar panel installers in California are in for an unpleasant surprise as the government of the Golden State is set to scrap a tariff subsidy that maximized the credit from sending solar-generated electricity into the state grid.
Who Wants a Century-Old Refinery? The state-controlled holding firm of the little Caribbean Island of Curacao restarted its search for a buyer of its 335,000 b/d Isla refinery built in 1918 and shuttered for years after PDVSA sanctions derailed its use, saying they want to see it operational as soon as possible.
Coking Coal Prices Plunge on Weak China Demand. Weak steel demand amidst abundant post-reopening supply in China has been weighing on prices of metallurgical coal as they have plunged to a 5-month low of ¥1,695 per metric tonne (or $245/mt).
By Michael Kern for Oilprice.com
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