Oil prices have rebounded following a massive drop following OPEC+’s last announcement, and the US Federal Reserve could push prices even higher with an optimistic message.
– Oil markets had been anxiously awaiting the start of the peak summer driving season, but so far gasoline demand has been mostly disappointing, with U.S. consumption down about 2% from last year.
– Asia is the first continent where refineries have cut prices due to gasoline weakness, as Singapore gasoline prices have dropped below $5 a barrel due to excess supplies of light distillates.
– While US gasoline cracks are notably higher than elsewhere, currently around $22 a barrel, higher US refinery utilization rates create a lot of downside for gasoline, especially when gasoline stocks are the highest since 2021 at this time of year.
– Pressure on gasoline could increase further as construction of two main refineries this year, Nigeria's Dangote and Mexico's Olmeca, has been delayed and will not start up until the summer.
Market Movers
– American Refiners Phillips 66 (NYSE:PSX) has agreed to sell its 25% stake in the Rockies Express pipeline for about $1.28 billion, including debt, to privately owned Tallgrass Energy, which owns the remaining 75%.
Commodity trading giant Trafigura has agreed to pay a $55 million fine to settle charges of fraud and manipulation from the US Commodity Futures Trading Commission that accused it of mispricing Mexican gasoline trading.
– French oil major TotalEnergies (NYSE:TTE) sold its Brunei upstream business to Malaysian exploration firm Hibiscus Petroleum for $260 million, and used the money for further drilling in Namibia.
Tuesday, June 18, 2024
Oil prices have slowly recouped all the losses after the OPEC+ meeting and ICE Brent has quietly come back to $84-85 a barrel, while fundamentals have not changed significantly. However, macroeconomics are starting to feel better and if comments from the US Fed this week give the market confidence that things will get better soon, oil may remain strong for a long time.
The performance of sugar refineries was again disappointing. Chinese refinery output fell 1.8% year-on-year to 14.25 million b/d in May, dragged down by maintenance overhauls and volatile refining margins, with throughput so far in 2024 remaining stable compared with a 2023 average of 14.48 million b/d.
Tensions are running high in West Africa. Niger has halted oil exports through a 1,240-mile pipeline that links to Benin's coast, with only one cargo loaded since it opened after Benin arrested five Nigerien citizens for entering the Seme loading terminal under false pretenses.
US states defy White House decommissioning rules. The states of Texas, Louisiana and Mississippi have sued the US government to block the Biden administration's proposed rules requiring it to provide about $7 billion in decommissioning funds to offshore producers without adequate reserves.
Russia again became Europe's largest gas supplier. Russia has overtaken the United States to become Europe's biggest supplier of natural gas despite restricting pipeline supplies, accounting for 14% of the continent's imports in May.
Serbia does a U-turn on lithium mine. Serbian President Aleksandar Vucic is set to approve the development of Europe's biggest lithium mine at the Jadar site in the west of the country, after it was rejected by Belgrade two years ago, according to media reports. Rio Tinto (ASX:RIO) Megaproject.
Saudi Arabia looking for mining deals in Chile. Saudi Arabia's Mining Minister Bandar Al-Khorayef is expected to visit Chile in July, as the Middle Eastern kingdom moves closer to deals to source lithium from abroad and enter Chile's mining sector.
Singapore offered concessions for oil refineries. As Singapore prepares to launch its carbon tax scheme, estimated to cost about $1 a barrel on crude, or a quarter of current refining margins, the city-state is offering refiners rebates of up to 76% in 2024-2025 to remain competitive.
Chinese solar producers are calling on the government to intervene. Chinese manufacturers of solar panels have demanded urgent government intervention from Beijing to halt the collapse in solar cell and module prices due to overcapacity, which have already fallen by 50% last year.
UAE eyes rapid development of LNG. Abu Dhabi's state-owned oil company ADNOC has taken a final investment decision on its 9.6mtpa liquefaction terminal at Ruwais, and has already signed three 15-year supply agreements with Germany's SEFE and EnBW, as well as China's ENN Natural Gas.
Argentina's upstream industry hit by strikes. Stirring Argentina's Vaca Muerta shale field, the Latin American country's oil union has called for a strike this week demanding higher pay, even as production in the country hits a multi-year high of 680,000 barrels per day.
Copper prices are continuously falling down. Metals markets were disappointed by a slowdown in industrial production growth in China, as evidenced by May data published this week, pushing copper prices on the LME to an eight-week low of $9,630 per metric ton.
ExxonMobil one step closer to exiting Nigeria. Nigerian upstream firm Seplat Energy has announced it has acquired one of the $1.28 billion. ExxonMobil (NYSE:XOM) State oil producer NNPC no longer has any control over the country’s shallow water assets, bringing the US giant’s exit even closer.
Shell bets big on LNG expansion. UK-based energy major Shell (LON:SHEL) agreed to buy Singaporean LNG firm Pavilion Energy from investment firm Temasek, acquiring its 6.5mtpa portfolio of long-term supply contracts and strengthening its position as the world's top gas trader.
By Michael Kern for Oilprice.com
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