Oil prices continued to sell off on Tuesday morning, with WTI losing more than 3.5% after China’s PMI data for April came in lower than expected.
Chart of the Week
– Ever since Pure Oil drilled its first well approximately a mile offshore in the US Gulf of Mexico back in 1938, the region has defined deepwater drilling in the country even as the Deepwater Horizon spill has tarnished its reputation.
– Production of oil and natural gas in the US Gulf is set for an almost 20% increase over the next three years, moving from its current level of 2.2 mboepd to an all-time high of 2.6 mboepd by 2025.
– This year has already seen two new producing platforms, Shell’s 100,000 b/d Vito and BP’s 140,000 b/d Argos, to be boosted in 2024-2025 with the launches of Whale, Anchor and Salamanca that are to add a further 235,000 b/d in capacity.
– Carbon capture and storage projects will become the next thrust of offshore developments in the US Gulf of Mexico as this year’s Offshore Technology Conference is dominated by CCS panels and renewable energy.
Market Movers
– UK-based energy major BP (NYSE:BP) agreed to buy out Shell’s (LON:SHEL) 27% stake in the $20 billion Browse gas project, taking its overall ownership to 44%, overtaking operator Woodside Energy.
– US oil major ExxonMobil (NYSE:XOM) is seeking to recoup some of its investments into fracking projects in Colombia as the government of that Latin American country is expected to ban fracking soon.
– Surpassing analysts’ expectations, US refiner Marathon Petroleum (NYSE:MPC) pulled off a 71% quarter-on-quarter surge in refining margins to $26/bbl in Q1 2023 and boosted its share buyback plans by $5 billion.
Tuesday, May 02, 2023
The Q1 earnings reports of oil and gas companies have so far sent mixed signals to investors – US refiners have been enjoying particularly strong results while upstream-focused players tended to stagnate – however the market was evidently not ready for Chinese economic data to come in so low. China’s PMI decline from 51.9 in March to 49.2 in April has shaken the last bastion of the oil bulls, the prospect of Chinese demand lifting oil prices out of their current apathy, and set the pace for a sizable weekly loss.
Saudi Arabia Courts Chinese Investment. According to Bloomberg, Saudi national oil company Saudi Aramco (TADAWUL:2222) is in talks with Sinopec and TotalEnergies for a $10 billion that would seek to develop the unconventional gas resources of the Jafurah gas field.
LNG Prices Remain Stubbornly Low. Imports of LNG into key Asian consumption hubs have dropped to the lowest this year according to Kpler data, coming in at 20.9 million tonnes in April, as subdued buying from China and Japan lowered JKM LNG prices to $11.5 per mmBtu.
France Signs Up for UAE Gas. French oil major TotalEnergies (NYSE:TTE) agreed to purchase LNG from Emirati national oil company ADNOC worth $1.2 billion, without disclosing the volumes for the three-year contract, securing liquefied gas supplies for the upcoming winter.
California Bans Diesel-Powered Trucks. California’s energy regulator voted to approve new emission rules that would require all medium- and heavy-duty vehicles sold in the state to be zero-mission by 2036, expecting to see a $48 billion in trucking operating costs.
Japan Inks Deal on Calcasieu Pass LNG. US LNG exporter Venture Global LNG announced a deal to supply 1 million tonnes of liquefied gas per year to Japan’s JERA for a period of 20 years, only two months after it allocated 2 mtpa from the same CP2 project to China Gas Holdings.
Pool of Venezuelan Buyers in US Expands. US oil major Chevron (NYSE:CVX) has increased sales of its equity Venezuelan barrels to rival US refiners, recently delivering crude to PBF Energy (NYSE:PBF) and Marathon Petroleum (NYSE:MPC) alongside flows to its own Pascagoula refinery.
Mexico Penalizes Pemex Dissenters. According to Reuters, employees that rejected a plan presented by national oil company Pemex to develop the giant Quesqui field last year were forced out of national energy regulator CNH, leading to a November 24 approval by the same commission.