Oil Prices Subdued But Bearish Catalysts Loom

Oil markets have been relatively subdued this week, with the prospect of Kurdish oil flows restarting adding some downward pressure to prices.

Oil prices have been trending sideways this week amidst subdued trading activity, with ICE Brent hovering around $84 per barrel. With both Iraq and Turkey striking a more conciliatory tone as they discuss the resumption of Kurdish crude flows, the short-term outlook is geared towards a slight downside. By early September, however, markets will be on edge to see if Saudi Arabia decides to extend its 1 million b/d production cut into October.

For the first time on record, US energy companies last year paid out more of their earnings to shareholders than they invested into E&P, Ernst & Young reported, with spending on dividends and share buybacks by the top 50 US oil firms hitting $58.8 billion.

Iraq’s oil minister Hayan Abdel-Ghani traveled to Turkey’s Ankara this week, seeking to resume oil exports through the Ceyhan oil terminal as the 450,000 b/d crude flows have been shuttered since late March after an ICC arbitration ruling.

A referendum held this weekend in Ecuador saw almost 60% of the population vote to ban oil drilling in the Yasuni Amazon reserve, a decision lauded by Indigenous groups and environmentalists, prompting Petroecuador to shut some 50,000 b/d of output by end-2024.

US midstream operator Energy Transfer (NYSE:ET) filed for a new and expedited export license for its proposed Lake Charles LNG liquefaction terminal in Louisiana, several months after the DoE refused an extension of its 2025 deadline due to delays.

Prospect of LNG Strike Rattles Australia. With LNG platforms workers at Woodside Energy’s (ASX:WDS) NW Shelf platform expected to start striking from September 2, gas markets are bracing for the supply impact of industrial action, with TTF rising to a two-month high of €40 per MWh.

Electricity prices in Texas have soared above $5,000 per MWh in intra-day trading last week as weak wind generation put the market premium on gas burn, with further peak load spikes expected this week as ERCOT power demand is set to break records this week.

Saudi Arabia’s 2.6 GW Al Shuaibah solar plant, the largest renewable energy project in the country led by oil giant Saudi Aramco (TADAWUL:2222), has secured $2.2 billion in financing and is moving ahead with a launch planned for 2025.

Having amassed a fair share of flexible-destination US and term Qatari LNG deals amounting to some 40 million tons LNG per year, Chinese gas buyers ENN Natural Gas and CNOOC (HKG:0883) are already expanding their trading desks in London and Singapore.

As open interest in lead futures at the Shanghai Futures Exchange doubled since June to 172,231 lots and the number of positions for physical delivery in September surpassed actual ShFE stocks, lead is up for a sizable price rally in the upcoming weeks.

Merely days after UK-based energy major Shell (LON:SHEL) resumed loading operations at its Forcados export terminal in Nigeria, a reported leak might jeopardize oil transportation via its 180,000 b/d Trans Niger pipeline.

Several rare earth refining firms supplying magnets to electronics and EVs are set to open factories in Vietnam amidst an industry-wide push to diversify away from China, including Star Group Industrial and China’s Baotou.

Norway’s national oil company Equinor (NYSE:EQNR) is reportedly considering the sale of its assets in Azerbaijan, including a 7.3% stake in the ACG fields as well as associated infrastructure, four years after US major Chevron (NYSE:CVX) quit the country altogether.

A key policy measure suggested by the US Environmental Protection Agency, a tightening of air quality standards for ozone (impacting both power plants and vehicles), is likely to be delayed until the 2024 presidential election.

-OilPrice.com