Oil prices fell on Tuesday morning as fears grew that Asian demand would not recover as quickly as originally expected. Supply disruptions from Hurricane Ida were not significant enough to counter this bearish news.
Energy Market Chart of the Week
- Europe is struggling to contain a double whammy of high natural gas and electricity prices, just as it had been bouncing back from a prolonged slump, Bloomberg reports.
- The gas replenishment rate in Europe’s gas storage sites has continued to slow down, standing only 69% full (a 10-year low for this time of the year), pushing TTF forwards above Brent prices.
- Amidst disappointing wind generation figures, some countries are increasing their coal purchases, which in turn maintains the upward pressure on carbon prices as they have breached another threshold this week, trading above €62 per metric ton of CO2 equivalent.
- Germany, France, and the United Kingdom all saw their year-ahead contracts for 2022 reach an all-time high on Monday, with all of them trending well above €90 per MWh (almost $110 per MWh).
Market Movers
- Italian oil firm ENI (NYSE:E) joined forces with UAE-based Mubadala Petroleum to cooperate in hydrogen and carbon capture projects across the world, fortifying its presence in the Emirates.
- UK major BP (NYSE:BP) teamed up with investment firm Macquarie Group (ASX:MQG) for a potential green hydrogen hub, to be built at the former’s now-shut Kwinana Refinery.
- Canadian pipeline company Enbridge (TSE:ENB) will be buying Gulf Coast-focused logistics company Moda Midstream, giving it access to Moda’s Ingleside terminal and other conduits like the Cactus II pipeline.
Oil Prices Today, September 7th, 2021
Saudi Arabia’s drastic cuts to its October 2021 OSPs have sparked fears of a potential slower-than-anticipated demand recovery in Asia as OPEC+ continues to gradually bring part of its idled production back online. Whilst US outages are still hindering crude production in the Gulf of Mexico, the supply constraints appear to be insufficient to stop oil prices from sliding, albeit marginally. As of Tuesday, global benchmark Brent traded below $72 per barrel, whilst WTI was changing hands around $68.5 per barrel.
Chinese Crude Imports Up in August.
Chinese customs data shows that Chinese buyers have ramped up imports over the last month, bringing in 10.5 mbpd of crude, up 8% month-on-month. With teapot refiners still constrained by unavailable import quotas, state-owned companies did most of the buying.
Related: Oil Erases Early Gains On Stronger Dollar And Demand Concerns
Chevron Seeks to Sell Eagle Ford Assets.
US major Chevron (NYSE:CVX) is reportedly trying to sell its oil and gas assets in Texas’ Eagle Ford Basin, a legacy of its taking over Noble Energy last year, foreseeing a selling price as high as $3.8 billion.
Next Brazil Auction Sparks Surprisingly Low Interest.
The forthcoming concession model licensing round of Brazilian oil regulator ANP has seen only 9 companies qualifying for the bidding, the lowest number ever, though the list contains oil majors like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), Shell (NYSE:RDS), and TotalEnergies (NYSE:TTE).
Gazprom Finishes Nord Stream-2 Pipelaying.
Russian gas giant Gazprom (MCX:GAZP) finished the subsea laying of its $11 billion gas conduit, with only some welding works between the German and Danish sections remaining. Gazprom stocks soared on Monday, adding almost 4% on the day.
TotalEnergies Clinches Iraq $27 Billion Megacontract.
French oil major TotalEnergies (NYSE:TTE) signed a monster deal with Iraq that would see it build several seawater injection facilities at southern oil fields, a $2 billion gas processing plant to curb Iraq’s dependence on Iranian gas imports as well as a solar plant.
Aluminum Prices Rise Further on Guinea Coup.
Having risen 40% this year already, aluminum prices continued their upward movement this week on the back of a coup in Guinea, home to a quarter of global bauxite production, nudging the three-month LME aluminum contract to a 10-year high, above $2,780 per metric tonne.
Norwegian Sovereign Wealth Fund Bans India’s ONGC.
Norway’s sovereign wealth fund excluded India’s state-run upstream firm ONGC (NYSE:ONGC) from its investment list over concerns that the company might be breaching human rights in South Sudan, having stakes in two projects where it sides with Chinese firms.
Rio Tinto Sweetens Terms on $14 Billion Copper Deal.
UK-based miner Rio Tinto (NYSE:RIO) stated it is ready to reduce interest rates on loans it made to the Mongolian government on the $14 billion Oyu Tolgoi copper monster project, trying to eschew further delays beyond its October 2022 deadline.
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ADNOC Sells 7.5% of Its Drilling Unit.
The UAE national oil company ADNOC stated it would float 7.5% of its drilling subsidiary ADNOC drilling at its second-ever IPO in October, following up on a 2018 listing that saw 5% going towards Baker Hughes (NYSE:BKR) for $550 million.
Shell Tempted by South Africa’s Gas Finds.
Buoyed by the Luiperd and Brulpadda discoveries in South Africa’s offshore over the last two years, Anglo-Dutch major Royal Dutch Shell (NYSE:RDS.A) completed a 50% farm-in into the Transkei and Algoa license blocks in the country’s deepwater zone, covering a total area of more than 45,000 km2.
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Saudi Trading Arm to Market Guyana Crude.
ATL, the London-based trading arm of Saudi Aramco (TADAWUL:2222), has been selected by the Guyanese government to market its upcoming crude entitlement, bidding $0.025 per barrel as its proposed commission, potentially indicating the prospective winner of the country’s long-term marketing tender.
Mexico Seeks to Repay PEMEX Debt with International Money.
Mexican President Lopez Obrador claimed Mexico would try to use funds provided by the International Monetary Fund (IMF) – namely, a $12 billion allocation of SDRs - to repay the national oil company PEMEX’s staggering $115 billion debt.
Russia’s Nornickel Lists First-Ever Carbon-Neutral ETC.
Russia’s leading nickel producer Nornickel (MCX:GMKN) listed the first-ever exchange-traded commodity (ETC), offering a nickel contract with supplies produced in a carbon-neutral fashion at the Vienna Stock Exchange.
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