A cold snap in the U.S. and continued attacks on ships in the Red Sea have boosted bullish sentiment in oil markets, although increasing product stocks could counter that narrative.
Chart of the Week
- India’s state-owned refiners are considering resuming imports of Venezuelan barrels after the country’s private refiners started buying last month, with ONGC Videsh waiting for loading dates in February.
- An investor in Venezuela since 2008, ONGC Videsh has more than $600 million in dividends due, which it plans to convert into heavy sour Merey cargoes, despite its differentials strengthening to -$8 per barrel to Dated.
- Venezuela has been producing 800,000 b/d of crude since US sanctions were lifted in October, becoming a market dominated by three main buyers – US, India, and China – ending years of Chinese prevalence in Venezuela.
- According to Kpler data, India’s largest refiner Reliance purchased two VLCCs from Venezuela in December, followed up by a further two cargoes in January, making it the largest buyer globally on a company level.
- US investment giant BlackRock (NYSE:BLK) agreed to buy Global Infrastructure Partners for 12.5 billion, boosting its infrastructure assets to $150 billion and adding a sizable renewables portfolio.
- Spain’s oil major Repsol (BME:REP) is facing a 1 billion lawsuit after a group of 34,000 alleged victims took it to court over an oil spill at its Pampilla refinery next to the capital city of Lima.
- US offshore-focused oil producer Talos Energy (NYSE:TALO) struck a deal to acquire privately held producer QuarterNorth Energy in a $1.29 billion cash and stock deal, boosting its presence in Mexico.
Tuesday, January 16, 2024
Continued attacks in the Red Sea and the U.S. cold snap have been making headlines this week, both indicating a more bullish outlook for oil as ICE Brent continues to hover around $79 per barrel. With up to 500,000 b/d of oil production temporarily shut in across the United States, supply disruptions in the Atlantic Basin might be offsetting the bearish narrative of increasing product stocks. As EIA figures on the United States will only be made available Thursday, smaller macro events such as China’s no-change Central Bank meeting are poised to become the main bearish market narratives.
Houthis Strike US-Owned Bulk Tanker. Houthi forces struck the US-owned dry bulk tanker Gibraltar Eagle with an anti-ship ballistic missile as it sailed some 100 miles off the Gulf of Aden, claiming the attack was done as retaliation for US strikes on Yemen’s Hodeidah airport earlier this week.
Cold Snap Lifts Power and Natural Gas Prices. The expected 4% drop in US natural gas output due to the extreme freeze taking over the central and eastern parts of the country lifted Pacific Northwest power prices to $1,075/MWh, the highest on record, whilst Waha gas prices soared to $17/mmBtu.
Bakken Production Freezes Up. The extreme cold rampaging through the US Midwest has led to a 425,000 b/d decline in oil production from the Bakken shale as operators shut in wells, whilst gas output in the same basin is down almost 50% to 1.1 billion cubic feet per day.
Nigeria Tenders Its Revamped Refinery. Nigeria’s state-owned oil company NNPC has tendered for an operator of its 210,000 b/d Port Harcourt refinery, calling on “reputable operators” to help meet the nation’s fuel supply, aiming to restart the plant towards the end of Q1 2024.
White House Sanctions Iran Traders. The US Treasury expanded sanctions on Iran-linked entities as it placed two Hong Kong and UAE-based companies and four tankers they operate on its sanctions list for allegedly shipping Iranian crude for the benefit of Iran’s Islamic Revolutionary Guard Corps.
Zinc Prices Buoyed by European Closures. Zinc prices increased by 4% this week to $2,615/mt after Trafigura-controlled metal producer Nyrstar announced that it would place its Budel zinc smelter in the Netherlands on care and maintenance due to high energy costs and weaker regional demand.
Kerry Steps Down as US Climate Envoy. The US climate envoy John Kerry is planning to step down as the top climate diplomate over the upcoming weeks, according to media reports, with his departure coinciding with that of his Chinese counterpart Xie Zhenhua, right after the COP28 summit ended.
TMX Pipeline Clears Key Regulatory Hurdle. The Canada Energy Regulator approved a route change proposed by the operator of the 590,000 b/d Trans Mountain expansion pipeline, clearing the last regulatory barrier before TMX starts seeking nominations for line filling, expected to happen in Q2.
Libya Eyes 2024 Licensing Round Despite Protests. Brushing aside the 300,000 b/d Sharara field still being down due to protests, Libya is preparing to launch its first upstream licensing round since 2007, aiming to boost oil production to 2 million b/d within the next five years.
Baghdad Wants Kurdish Firms to Produce Less. As Baghdad seeks to adhere to its 2024 OPEC+ production targets, it is increasingly pressuring the Kurdish Regional Government to curb crude output as recently restarted projects ramped up supply to more than 200,000 b/d.
Court Clears Australia’s Key Gas Project. Australian gas major Santos (ASX:STO) can continue with the construction of a subsea pipeline that is vital for its $4.3 billion Barossa gas project following a three-month hiatus thanks to a court decision that dismissed a claim from indigenous groups.
Biden Administration Lays Out New Methane Rules. The US Environmental Protection Agency proposed new rules for methane emissions, introducing a financial penalty of 900 per metric tonne above a specified amount, expected to raise $750 million this year across 2,000 oil and gas facilities.
Chinese EV Giant Taps Brazil’s Lithium Supply. The largest EV carmaker globally, China’s BYD (SHE:002594) has been holding talks with Brazil’s Sigma Lithium over a potential lithium supply agreement, joint venture, or even outright acquisition, seeking to build EVs in Brazil from mid-2024.
By Michael Kern for Oilprice.com
More Top Reads From Oilprice.com:
- A Houthi Retaliation Could Send Oil Prices Soaring
- Is the Texas Grid Ready for This Year’s Polar Vortex?
- More Drilling Slowdowns for U.S. Oil, Gas Industry