A plethora of bearish factors is driving oil prices lower, with both WTI and Brent set for a third weekly loss in a row.
Friday, November 12th, 2021
Whilst crude prices have been relatively range-bound recently, hovering within the $80-85 per barrel range, they are poised to suffer their third weekly decline in a row. Beyond the backwardation in the futures markets, several trends point towards a further weakening in crude. The Biden Administration is expected to take a decision on further SPR releases in the upcoming days. In addition, demand prospects have soured a bit lately as OPEC cut its Q4 2021 demand forecast by 330,000 b/d as high energy prices and inflation hamper economic recovery. Last but not least, a strengthening dollar is putting additional pressure on crude. Against this background, the Brent global benchmark traded around $82 per barrel, whilst WTI was assessed around $80.5 per barrel.
COP26 Communique Exposes Rifts. The suggested final wording of the COP26 communique calling for “the phasing out of coal and subsidies for fossil fuels” proved to be a tough nut to crack for climate negotiators as leading crude producers such as Saudi Arabia publicly voiced their opposition to the draft.
Investors Ready for Rare Lease Sale in US GoM. Oil companies are to submit their bids for some 15,000 tracts across the Gulf of Mexico that might hold up to 1.1 Bbbls of crude, probably the last offshore auction ever as the Biden Administration is expected to ban further leasing.
Belarus President Threatens to Cut off Russia Gas Flows. Belarusian President Alexander Lukashenko threatened to cut off transit supplies of Russian piped gas flowing through the 33 bcm per year Yamal-Europe pipeline if the European Union imposes further sanctions on the embattled country, sending TTF prices up.
Drilling Giants Merge in Bid to Stay Competitive. Denmark’s Maersk Drilling (CPH:DRLCO) and US peer Noble Corp (NYSE:NE) will merge in an all-shares $3.4 billion deal, keeping the latter’s name, in a bid to optimize costs and create a global network of offshore drilling operations.
Europe’s Largest Oilfield Shut Down After Power Glitch. The giant Johan Sverdrup field, operated by Equinor (NYSE:EQNR) in Norway’s continental waters, experienced a shut down on Thursday following a power supply issue and was brought back only a day later.
China Buys More Iranian Barrels. Iranian exports to China, either direct or via ship-to-ship transfers in the Malacca Strait, have moved above 500,000 b/d in the past couple of months as laxer oversight from the Biden Administration and higher outright prices gave an additional impetus to purchases.
Russia’s Energy Ministry Backs Rosneft Export Rights. Following up on Rosneft’s request to be allowed into Russia’s pipeline gas exports stream, the country’s Energy Ministry is backing the oil major’s claim under an agent agreement with Gazprom, stating it could help solve the third-party access issues of Nord Stream 2.
Tullow Oil Seeking Asset Sales in LatAm and Africa. UK-based upstream-focused Tullow Oil (LON:TLW) is moving ahead with its divestment program, seeking farm-down opportunities in its Guyanese and Argentinian portfolio as coronavirus ramifications and 2021 hedging losses battered company finances.
India Wants More Qatari LNG for Less. India’s main liquefied gas importer Petronet LNG (PLNG) is seeking higher volumes from Qatar Gas as it is trying to renegotiate its long-term supply contract beyond its current deadline of 2023, simultaneously asking for a decrease in its Brent-linkage (to 10.2% from the 12.7% it has now).
Sweden Charges Lundin Executives with War Crimes. In an unprecedented move, Swedish prosecutors charged two upstream executives of Swedish upstream firm Lundin Energy (STO:LUNE) with war crimes allegedly committed in South Sudan between 1999 and 2003. The oil firm’s stock plunged 5% on the day.
Guyana to Start Auctioning New Blocks in Q3 2022. Putting a halt to its current system of direct license awards, the government of Guyana will start auctioning for offshore blocks in Q3 2022 as it tries to move beyond its dependence on the Exxon-operated Stabroek block (that was directly awarded back in 1999).
Infrastructure Bottlenecks Force YPF to Refocus on Oil. Argentina’s state-controlled oil company YPF will shift its focus on shale oil, currently producing more than 60,000 b/d, after its ramp-up of gas production hit a wall of lacking pipelines in the Vaca Muerta region.
Mexico Wants to Squeeze Funding of Energy Regulator. Only several months after Mexico’s energy regulatory office (CRE) found national oil company PEMEX misreporting its crude production, the federal government announced it would cut the budget of CRE in 2022 despite an overall surge in budgetary spending.
Nigeria Seeks Foreign Assistance to Stop Oil Spill. Nigeria is seeking help from abroad to help plug an oil spill in the OML 29 license block operated by Nigerian firm Alteo Energy as some 10,000 b/d of crude might be leaking into the Niger River.
Russian Oil Firm Sees Surprise Stock Surge. The shares of Surgutneftegaz, Russia’s fourth-largest oil producer, have soared by 45% in just two days with no apparent reason, fueling speculation that the company might be on the brink of a huge announcement.
By Michael Kern for Oilprice.com
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