Oil Prices Lifted by Ongoing Supply Disruptions
Crude prices recovered on Friday, breaking the four-week losing streak in oil, with WTI rising to $70 per barrel.
Friday, September 13, 2024
Hurricane Francine helped oil prices edge higher after bearish sentiment overtook the market, taking off some 700,000 b/d of oil supply from the market, even if for several days. A large amount of Libyan production remains shut-in after UN-brokered talks have collapsed, meaning supply disruptions now total 1.5 million b/d already. However, with China pessimism hitting its apex in the entire post-pandemic period, it would take more than supply disruptions to lift Brent above its current price of $73 per barrel.
Hurricane Francine Shuts in Offshore Output. As Hurricane Francine made landfall in Louisiana this week as a Category 2 hurricane, some 42% of crude oil and 53% of natural gas production was pre-emptively shut in across the US Gulf of Mexico, equivalent to 730,000 b/d and 992 million ft3/d.
Saudi Arabia Ramps Up Chinese Exports. Following unprecedentedly weak lifting demand from Chinese customers over the summer months, the country’s NOC Saudi Aramco is set to increase its supplies to China in October, with nominations soaring to 46 million barrels, up by 3 million barrels from September.
Gold Hits All-Time High on US Fed Rate Cut Promise. The price of gold climbed to an all-time high after US inflation surpassed analyst expectations again, with the combined dip in US Treasury yields and US dollar prompting investors to send the bullion to a record $2,551 per ounce this week.
Scotland’s Only Refinery Confirms 2025 Closure. The only crude processing plant in oil-rich Scotland, the 150,000 b/d Grangemouth refinery, is set to close in the second quarter of 2025 after exactly 100 years of operation, with operator Petroineos seeking to refurbish it into a fuel import terminal.
UAE Invests Big into US Blue Hydrogen Gigaproject. After months of speculation, the national oil company of the United Arab Emirates confirmed its 35% farm-in into Exxon Mobil’s (NYSE:XOM) Baytown, with ADNOC expecting an FID on the world’s largest blue hydrogen project in mid-2025.
Russia Mulls Uranium and Metal Export Restrictions. Russian President Vladimir Putin stated that Moscow would consider limiting exports on uranium, titanium and nickel in retaliation for Western sanctions, sending the three-month LME nickel contract 3% higher to $16,150 this week.
BlackRock Invests into Bahrain’s Pipeline Grid. BlackRock’s (NYSE:BLK) Diversified Infrastructure unit bought a minority stake in a pipeline linking the island state of Bahrain to Saudi Arabia’s oil infrastructure for an undisclosed sum, five years after it bought 40% of ADNOC’s pipeline business for $4 billion.
US Refiners Suffer Minimal Francine Damage. The supply of US refinery products in the US Gulf Coast, especially the 3 million b/d Louisiana refining capacity, has been largely unaffected by Hurricane Francine, with Shell’s Norco and Citgo’s Lake Charles refinery reporting no damage and returning to normal operations.
Russian Crude Prices Drop Below Oil Price Cap. For the first time since January, the free-on-board price of Russia’s main export grade Urals fell below the G7 price cap level of $60 per barrel on the back of the freefall in flat prices, potentially prompting higher utilization of Greek shipping companies ahead.
Argentina Cuts Energy Subsidies. The reformist Milei government in Argentina has cut energy subsidies in the Latin American nation by $2.7 billion in the first seven months of 2024, with the Energy Ministry claiming the country achieved an energy trade balance surplus of $2.9 billion in January-July.
Uzbekistan Starts Processing Taliban-Produced Oil. Uzbekistan’s oil refiner Saneg has signed a deal with Afghanistan’s Taliban government to start refining rail-delivered Afghan crude oil at its 40,000 b/d Fergana refinery, with upstream production boosted by Chinese investments over the past years.
Australia Launches Ambitious Hydrogen Strategy. Australia’s federal government launched a new hydrogen strategy, eyeing production of 15 million tonnes per year of green hydrogen by 2050, with a lower 0.5 mtpa target for 2030, replacing the previous strategy that didn’t set output targets.
Detroit Refinery Finally Allowed to Run Higher. Michigan’s environmental agency has issued a new air permit to the Detroit refinery operated by Marathon Petroleum (NYSE:MPC), allowing the plant to lift throughput rates that were heretofore capped at 140,000 b/d notably higher if it curbs emissions.