Oil prices have been pushed lower by interest rate hikes from both the Bank of England and the ECB, but there are still plenty of bullish catalysts to watch out for. There’s likely to be plenty more volatility in oil markets to round out 2022.
Friday, December 16th, 2022
Oil prices have rebounded slightly from last week’s crash, but the downside pressures are still very much present. The interest rate hikes from both the Bank of England and the ECB on Thursday halted the upward momentum in oil prices that had been building. The ongoing halt in Keystone deliveries, however, should provide some hope to bulls as it has brought supply tightness to a continent that has had a relatively secure year so far. With uncertainty remaining over China’s post-Covid reopening, we might see more of the traditional 2022 volatility in the remaining weeks of this year.
Central Bank Hikes Scare Investors. Global stocks and bonds have dropped to a one-month low on Friday as the 0.5pp US Fed hike was followed through by central bank interest rate increases in the EU, UK, Switzerland, Mexico, Norway, and Taiwan (all in just one day), triggering a new whirlwind of bond/stock selling.
Dilbit Bad News for Keystone Cleanup. According to the US Environmental Protection Agency, the oil spilled from the ruptured Keystone pipeline operated by TC Energy (TSE:TRP) was diluted bitumen which tends to sink in water, complicating efforts to clean the impacted water bodies, especially with a cold snap coming up.
IEA Forecasts 2023 Oil Demand Growth. The International Energy Agency believes next year will witness further oil demand growth of 1.7 million b/d, driven mostly by China rebounding from this year’s contraction and adding 1 million b/d, taking it to a new all-time high of 101.6 million b/d.
Canada Sanctions Turbine Maintenance Again. According to Bloomberg reports, the Canadian government will revoke the waiver that exempted Nord Stream turbines from the country’s Russia sanctions, which will greatly complicate future maintenance of Siemens’ equipment there.
Egypt Discovers Huge Gas Field. Egypt’s petroleum minister Tarek El Molla announced that US oil major Chevron (NYSE:CVX) has discovered a large natural gas field in the Nargis offshore exploration block in the eastern Mediterranean, with reserves potentially up to 3.5 TCf.
There’s No Stopping Aramco’s Petchem Drive. Saudi Aramco (TADAWUL:2222) and French energy major TotalEnergies (NYSE:TTE) will join forces to build an $11 billion petrochemicals complex in Jubail, on Saudi Arabia’s eastern coast next to the SATORP refinery, with commercial operation targeted for 2027.
Norway Warns of Gas Price Cap Consequences. Norway’s state-controlled energy firm Equinor (NYSE:EQNR) has warned that the European Commission’s proposed gas price cap risks greatly reducing liquidity as trading will move away from exchanges into bilateral over-the-counter deals.
Egypt Moves All Its Gas to Exports. Egypt has maximized its intake of fuel oil in power stations across the country to move as much natural gas to its LNG export terminals as possible, buying most of the residue from Russia and bringing fuel oil’s share of power-generating inputs to 21-22%.
Russia Cozies Up to Venezuela. Just as US oil major Chevron is readying to ramp up production at its Venezuelan JVs, Russia’s deputy PM Alexander Novak traveled to the Latin American country this week, stating Moscow is interested in increasing oil output as part of the country’s debt repayment.
Gates-Backed Reactor Runs into Fuel Delays. A $4 billion nuclear energy project launched by the Bill Gates-backed TerraPower will be delayed by at least two years into 2028 as Russia is the only country globally that is currently producing and selling the fuel required, high-assay low enriched uranium (HALEU).
EU Agrees on 9th Russia Sanctions Package. The last EU summit of 2022 saw Brussels agreeing to provide 18 billion euros to Ukraine, slap sanctions on investment into Russian mining, and create a framework covenant for the gas price cap, expected to be finalized early next week.
India’s Megarefinery Project Falls Apart. Struggling to overcome challenges in acquiring land, India is considering building several smaller refineries across the country instead of a single massive 1.2 million b/d downstream asset that would be co-owned by Saudi Aramco and ADNOC, with each boasting 25% ownership.
Europe’s Largest Oilfield Launches Second Phase. Norway’s Equinor (NYSE:EQNR) has started production from the second phase of the Johan Sverdrup oil field, Europe’s largest producing asset which will see its total production increase to 720,000 b/d, some 6% of oil demand in Europe.
Earthquake Risk Caps Texas Drilling. A mid-November magnitude 5.4 earthquake compelled Texas and Oklahoma authorities to limit how much wastewater can be injected into wells, particularly deep ones, by some 60-70%, which will inevitably hinder production growth coming from the US shale patch.