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Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations

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Oil Prices Recover After Manic Monday

Despite a major oil price crash on Monday, oil prices are now on course to close out the week more or less unchanged.

Friday, July 23rd, 2021

The news of OPEC+ bringing back withheld production in August 2021, following through with 400kbpd monthly increments over the remainder of this year, triggered a spectacular tumble in oil prices earlier this week. Despite pandemic-related risks surging in Southeast Asia and U.S. crude inventories rising for the first time since May, the second half of the week saw a surprising rebound as the market has grown to realize that additional OPEC+ supply would be offset by recovering global demand.

Venezuela Buys Diluents Again. The VLCC Rene discharged a cargo of condensate in Venezuela’s main export terminal of José, previously used by PDVSA to dilute extra-heavy Orinoco barrels to create transportable and refinable blends. The origin of the cargo is unknown, the supertanker’s last port of call was in Sri Lanka. 

Iberdrola Might Spin-Off Wind Business. The Spanish wind energy giant Iberdrola (BME:IBE) is considering a spin-off of its wind business to raise funds, it said when presenting H1 2021 results this week. Beyond its traditional markets in Europe, Iberdrola has been increasing its presence in the Asia Pacific region, going after new markets like Vietnam, Korea, or Vietnam. 

Germany-US Agree on Nord Stream-2 Deal. The White House will scrap sanctions targeting the nearly completed Nord Stream 2 gas pipeline that would bring Russian gas into Germany, in return for Berlin’s pledge to ensure Gazprom (MCX:GAZP) does not fully cut off transit via Ukraine. 

Coal Prices Surge to Highest Level in More than Decade. Decreasing Chinese domestic production, unrest in South Africa, and weak hydro generation across the continent have pushed Asian coal prices to their highest level in 13 years, with Newcastle thermal coal FOB prices flirting with the $150 per metric ton threshold, double of what it was in early May. 

Tesla Patents New Lithium Extraction Method. Tesla Motors (NASDAQ:TSLA) has filed a patent on a new lithium extraction method from ore using sodium chloride, a more environmentally friendly way of getting lithium, avoiding the usage of acid leaching. According to Tesla officials, the new method might lead to a 33% reduction in lithium cost. 

India Seeks to Commercialize Crude Stocks. India has decided to commercialize half of its strategic reserves to encourage private participation in its SPR – companies would have the option to re-export 1.5 million tons of crude stored at SPR sites if Indian companies refuse to buy it. ADNOC remains the only oil major to commit to SPR participation in India. 

TAP Fails the Expansion Test. The 10 BCm per year TAP pipeline that brings Azeri gas to Turkey and Europe failed to trigger any shipping interest as no binding bids were submitted for potential capacity bookings, stoking concerns that the European case for further gas conduits was overblown. 

Iran Inaugurates Jask Terminal. Iranian officials claimed the new crude export terminal at Jask began operations on Thursday, even though no vessel-tracking data was able to spot a ship alongside the jetties. The 300kbpd capacity Jask will supplement Iran’s main export port at Kharg Island.  Related: U.S. Shale Sees Light At The End Of The Tunnel

US Natgas Futures Highest Level in Almost 3 Years. US natural gas futures rose to their highest level since December 2018 on the heels of warmer-than-expected weather and higher air conditioning power demand, writes Reuters. The front-month NYMEX Henry Hub futures for August surpassed the $4 per mmBtu mark, rising more than 55% this year to date. 

Saudi Aramco Data Stolen. Saudi Arabia’s national oil company Saudi Aramco (TADAWUL:2222) confirmed media reports that there has been a data leak of company data (reported to amount to 1 terabyte) yet declined to comment whether the data had been used in a cyber-extortion attempt. Media reports indicate the ransom was set at $50 million.

India Considering Obligatory Green Hydrogen. India’s government is considering the introduction of obligatory green hydrogen use in certain industries, with the oil, steel, and chemical industry listed as prime candidates to fall under the effect of such measures. No details were provided on the assumed deadlines.   

BHP Seeking an Oil Exit. Australia’s BHP Group (NYSE:BHP) is mulling a complete exit from the oil business, with its assets estimated at $15 billion or more, seeking to focus on its giant iron ore and copper businesses instead. Media reports suggest that Woodside Petroleum would be the prime candidate to pick up BHP’s oil and gas portfolio.  

Barents Sea Prospects Cooling. In another blow to Norway’s strategic quest to tap into the Barents Sea’s assumed hydrocarbon bounty, Aker BP (AKRBP.OL) made only a minor discovery with its wildcat in licensing block PL858, sapping hopes that the Arctic shelf could maintain the European country’s production profile. 

France Softens Narrative on China Nuclear Woes. The French EDF (EPA:EDF) suggested it would shut down the Taishan nuclear reactor if similar rod fuel sealing issues were to happen in France. Taishan, the first EPR-type reactor to become operational, has been reporting build-ups on inert gases, compelling nuclear watchdogs to monitor levels of radiation. 

Rwanda Seeks Its Place Under the Sun. Rwandan authorities have reportedly allocated funds to start a 2D seismic survey around Lake Kivu, in the hope of finding hydrocarbons reserves similar to the ones TotalEnergies (EPA:TTE) is developing at Lake Albert in Uganda, soon to be a new 200kbpd producing hub in East Africa.

By Tom Kool for Oilprice.com 

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Leave a comment
  • George Doolittle on July 23 2021 said:
    Collapse of Chinese coal production would be a big deal.

    "As goes lumber so goes US coal prices" both coking and thermal.

    US (pure domestic) steel production has become oddly "physically centralized"(around Indiana, Ohio and Illinois) so those prices even if record low could in theory still be economic.

    Definitely long the US Dollar strong buy with all energy product at this price.

    Don't need silver to make quality solar panel anymore so might see a flood of physical silver product start circulating *as a form of money* in the United States.

    That would be hugely deflationary if that came to pass ("Gresham's Law.")

    But again that would depend on very low prices and still be economic for product realized and at retail.

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