Oil Prices Under Pressure Ahead of OPEC+ Meeting
Oil prices were once again under pressure early on Tuesday morning, with Brent falling below $71 and WTI trading at $67.57.
Oil markets will now look toward the OPEC+ meeting tomorrow for some support, as well as any developments in the Middle East following Israel’s ground invasion of Lebanon.
– Europe is preparing for a colder winter this year as meteorologists see an 80-85% probability of the La Niña phenomenon developing, bringing cooler weather to the Atlantic Coast as soon as October.
– According to forecasters, France, the United Kingdom, and Scandinavia will be the coldest parts of Europe this month, whilst the Eastern Mediterranean will continue to see extreme heat, above 90° F.
– European gas inventories are now 94% full, with Denmark being the only country with stocks below 70% fullness, whilst the UK might need to ramp up its purchases of US LNG as its inventory rate stands at 57%.
– The prospect of colder weather has started to push TTF futures higher, with the November contract currently trading at €38 per MWh ($13.5 per mmBtu), just as the Old Continent’s LNG imports dipped to their lowest this year, posting 6.4 million tonnes in September.
Market Movers
– Privately held US shale producer Validus agreed to purchase rival Citizen Energy in a deal worth more than $2 billion, including debt, marking yet another episode of consolidation in the US upstream sector.
– Renewable fuels refiner Vertex Energy (NASDAQ:VTNR) has filed for bankruptcy and is exploring a sale, driven under by a failed foray into biodiesel at its 75,000 b/d refinery in Mobile, Alabama.
– China’s Guangdong Energy Group is set to commission a new $1 billion LNG import terminal in Huizhou in Guangdong province, boasting a capacity of 4 mtpa, with ExxonMobil (NYSE:XOM) securing 20-year access.
Tuesday, October 01, 2024
OPEC+ is facing an uphill battle as its ministerial panel is set to meet on October 2 to discuss the current state of the oil markets. Brent futures edged lower to $71 per barrel on news of Libya’s eastern government potentially lifting the oil embargo, with fear of more crude supply overpowering positive stimulus developments from China.
US Oil Demand in the Summer Surprises to the Upside. According to EIA data, US oil demand rose in July to the highest seasonal level since 2019, rising 1.2% from June to a total of 20.48 million b/d, driven by a post-pandemic peak in jet fuel demand and seasonal highs in gasoline and diesel.
Mexico Ships Its First Ever Export LNG Cargo. US LNG developer New Fortress Energy (NASDAQ:NFE) has shipped the first-ever export of liquefied gas from Mexico from its 1.4 mtpa capacity Altamira plant, with the Energos Princess carrier sailing towards a yet unknown European destination.
Libya Agrees on New Terms for Central Banks. Libya’s eastern government based in Benghazi agreed earlier this week to approve the nomination of Naji Mohamed Issa Belqasem as governor of the central bank, potentially paving the way for the gradual lifting of the oil embargo that’s still in place.
Siemens Turn Too Competitive. The US Justice Department fined the American subsidiary of Germany’s industrial giant Siemens Energy $104 million over alleged misappropriation of confidential information from GE and Mitsubishi Heavy Industries to win a bidding process for a gas turbine plant in Virginia.
OPEC Members Vie for Disputed Islands. Two African OPEC members, Gabon and Equatorial Guinea, have started legal proceedings at the International Court of Justice over the maritime delimitation of two small islands in the Gulf of Guinea, Cocotier and Conga, believed to contain untapped oil reserves.
Iron Ore Spikes on Easier Chinese Homebuying. Iron ore futures rose more than 10% this week after Shanghai, Guangzhou, and Shenzhen loosened rules on home buying, including lower downpayment ratio and laxer mortgage refinancing rates, sending Singapore benchmark prices to $110 per metric tonne.
The Fight Is On for Citgo Assets. Amber Energy, an affiliate of private equity group Elliott Investment Management, has been selected as the top bidder in an auction for Venezuelan-held US refiner Citgo, with a bid of $7.286 billion, expecting to keep the brand and close the deal by mid-2025.
French Major Eyes Pioneering Suriname Project. France’s energy major TotalEnergies (NYSE:TTE) is set to kickstart Suriname’s first-ever offshore project, the $10 billion Gran Morgu development located in Block 58 some 140 km off the coast, tapping into some 700 million barrels of oil equivalent.
Japan Wants LNG Deals Destination-Free. Japan’s LNG importers have asked the Tokyo government to help negotiate better terms on long-term supply deals, potentially lifting strict destination clauses on Qatari exports as recent terms on the latter’s recent deals with Germany are believed to be more flexible.
Britain Becomes First G7 Nation to Fully Shed Coal. The country that industrialized coal, the United Kingdom shut down its last coal-powered thermal plant in Ratcliffe-on-Soar this week, becoming the first G7 country to fully shed coal energy and ending over 140 years of coal generation in the country.
Israel Attacks Yemen’s Key Port. Israel attacked oil storage units and energy infrastructure at the Red Sea ports of Hodeidah and Ras Isa in Yemen the day after Israel’s assassination of Hezbollah leader Hassan Nasrallah, raising the geopolitical risks of further escalation in the Middle East.
White House Ramps Up SPR Buying Before Election. The US Department of Energy bought 6 million barrels of oil for the Strategic Petroleum Reserve for delivery through May 2025, with more than half coming from ExxonMobil (NYSE:XOM) as well as smaller volumes coming from Shell and Macquarie.
Australia Cuts Met Coke Outlook for 2024-2025. Australia cut its projected metallurgical coal exports for 2024-2025 by 6% to 161 million tonnes, down 9 million tonnes from the previous forecast, prompting a rally in Australian coking coal prices as they gained $30 per metric tonne last week and rose above $230/mt.