Oversupply Fears Are Pushing Oil Prices Lower
Fear of an oversupply of oil on the back of reports that Saudi Arabia is considering returning to its strategy of pursuing market share rather than supporting prices has sent both WTI and Brent falling this week.
Friday, September 27th, 2024
China’s economic stimulus measures and US hurricanes have provided firm fundamental support for oil prices; but the big story of this week has come from Saudi Arabia, with media outlets alleging Riyadh is considering a strategy revamp of retaking market share in the oil markets. Fearing oversupply, market participants witnessed a $3 per barrel drop from a week ago, with WTI dipping below $70 per barrel again.
Saudi Arabia Mulls Pros of Higher Production. According to the FT, Saudi Arabia is preparing to raise its crude oil production to win back market share, abandoning its unofficial $100 per barrel oil price target even if that means lower prices, raising hopes that OPEC+ would go ahead with its December hikes.
Libya Gets Closer to a Negotiated Settlement. The UN-brokered negotiations between Libya’s rival governments have made substantial headway this week, reportedly agreeing on the procedures of Central Bank staffing and decision-making, seeking to defuse the ongoing oil blockade.
Eastern US Ports Ready for Strike. Port authorities in New York, New Jersey, Virginia, New Orleans, Louisiana and Texas have started to inform customers that some operations will stop effective September 30 as a regionwide strike of port workers risks debilitating container cargo traffic.
UK’s Key New Upstream Projects Derailed by Litigation. The two largest upcoming oil and gas projects in the UK’s continental shelf, Shell’s Jackdaw, and Equinor’s Rosebank, might be stalled after environmental campaign group Greenpeace initiated a legal review of the two fields in Scottish courts.
FTC to Bar John Hess from Chevron Board. The US Federal Trade Commission is expected to prohibit Hess CEO John Hess from taking a board seat at US major Chevron (NYSE:CVX) as a condition of the latter’s $53 billion purchase of Hess, just as Pioneer CEO Scott Sheffield was barred from Exxon’s board.
US Natural Gas Cuts to See Gradual Phaseout. The chief executive of EQT (NYSE:EQT) confirmed that the United States’ largest gas producer would be reversing some output curtailments implemented earlier in 2024 on the back of lower gas prices, preparing for a surge in LNG feedgas demand.
Kazakhstan Wants Billions from Oil Majors. Kazakhstan’s Energy Ministry said it expects preliminary results of multi-billion arbitration proceedings by the end of this year, launching claims against stakeholders of the Kashagan and Karachaganak fields, worth $13 and $3.5 billion, respectively.
Brazilian Major Seeks More Domestic Exposure. Brazilian upstream firm Prio (BVMF:PRIO3) reached an agreement with Chinese state-controlled major Sinochem (SHA:600500) to buy its 40% stake in the offshore Peregrino oil field for $1.92 billion, boosting its proprietary output with the 110,000 b/d field.
BP Wants to Lure Investors by Shedding US Wind. British oil major BP (NYSE:BP) has reportedly put its US onshore wind business up for sale in a bid to attract investor interest as it rethinks its vast portfolio of low-carbon assets, selling 1.7 GW of gross generating capacity across seven US states.
Copper Surges Past 10,000 on China Stimulus. Copper futures for December delivery surged past the $10,000 per metric tonne threshold as China unveiled wide-ranging stimulus measures to breathe life into its ailing real estate market, settling above $10,200/mt and sending mining stocks up by 6-7% this week.
Belgium Calls for EU-Wide Ban on Russian LNG. Belgium, the fourth largest recipient of Russian LNG in 2023, has called for a coordinated EU approach to end the imports of Russian LNG into the European Union, over and above the expected ban on transshipment, set to take effect from the end of March 2025.
US Gulf Recovers from Hurricane Helene Impact. At the peak of Hurricane Helene, some 30% of US offshore oil output was offline as 27 producing platforms were evacuated, equivalent to an outright impact of 510,000 b/d, but shut-ins had dropped by Friday as oil companies resumed operations.
Sinking Barge Disrupts Venezuelan Production. At least two people died and four were declared missing after an oil barge operated by a PDVSA contractor sunk in Lake Maracaibo, the largest crude production hub in the country, reportedly capsizing whilst carrying out well maintenance services.