Bearish Sentiment Dominates Global Oil Markets

Advertisements

Bearish sentiment continued to dominate oil markets this week despite steep gasoline and diesel draws in the U.S.

Steep gasoline and diesel inventory draws in the United States have helped offset the overwhelmingly bearish sentiment in the oil market, although it wasn’t enough to halt the decline in oil prices. With China posting its seventh successive month of refinery run declines and Jerome Powell cooling down expectations on U.S. interest rate cuts, Brent below $72 per barrel feels justified.

China’s refinery throughput in October fell by 4.6% year-over-year to 14.02 million b/d, the seventh consecutive month of year-over-year declines, with independent teapot refiners in Shandong province bearing the brunt of that pain as their utilization rates plunged to 58%, almost 20 percentage points lower than they were a year ago.

OPEC has trimmed its global demand growth forecasts for 2024 and 2025 for a fourth month in a row, mostly through lowering China’s consumption upside to 450,000 b/d from 580,000 b/d from last month’s monthly oil report, expecting 2024 demand growth to come in at 1.82 million b/d.

Venture Global LNG plans to raise around $3 billion from its initial public offering that could happen as soon as this year, with the Virginia-based firm working with Goldman Sachs and JPMorgan Chase on the listing, potentially one of the biggest IPO’s of either 2024 or 2025.

Despite there being no EU-wide ban on Russian LNG, Germany has refused to allow a Russian LNG shipment at its Brunsbuettel terminal in northern Germany, saying the country does not import Russian gas as a matter of principle without specifying who was the buyer.

The International Energy Agency believes that global oil supply would exceed demand by a whopping 1 million b/d in 2025, equal to almost 1% of total production worldwide, driven by the U.S., Guyana and Canada, keeping its demand projection for next year unchanged at 990,000 b/d.

In one of its last policy moves, the Biden administration has finalized a methane fee for oil and gas producers, starting at $900 per metric tonne of methane emitted and increasing to $1,500 per metric tonne in 2026, as mandated by the 2022 Inflation Reduction Act.

Equinor’s state oil firm Equinor (NYSE:EQNR) and energy major Shell (LON:SHEL) urged the Edinburgh court to uphold their Rosebank and Jackdaw projects, respectively, as they are both fighting a legal challenge from environmental campaigners Greenpeace that claim the two projects were greenlightes unlawfully.

Europe’s benchmark TTF natural gas futures jumped to their highest level in 2024 so far, hitting €45 per MWh this week (the equivalent of $15 per mmBtu), after Austria’s energy company OMV announced it would enforce the arbitrage award of $240 million against Russia’s Gazprom and not pay for delivered gas volumes.

US oil major ExxonMobil (NYSE:XOM) started drilling its Arcturus-1 exploration well in Angola’s untapped Namibe basin in late July with the drill ship Valaris DS-9 coming off location in late October, however it is still yet to announce anything, fueling speculation that it might’ve opened a new frontier play.

US ethanol production rose to an all-time high in the week ended 8 November, reaching 1.11 million b/d and marking a 6.3% year-over-year increase, as the current oversupply boosted U.S. inventories that jumped to 22 million barrels, with a particularly robust jump in U.S. Gulf stocks.

Europe’s leading oil companies TotalEnergies (NYSE:TTE), Shell (LON:SHEL), BP (NYSE:BP) and Equinor (NYSE:EQNR) have committed to a joint $500 million fund to improve universal energy access in sub-Saharan Africa and Southeast Asia over the coming years, as part of their COP29 climate pledges.

China finance Ministry announced in a surprise move that it would scrap or reduce export tax rebates for a wide range of commodities, cancelling the rebate altogether for aluminum and copper products whilst oil products would see a cut from 13% to 9%.

The military junta in Mali has detained the chief executive and two other employees of Australian mining firm Resolute Mining (ASX:RSG), demanding $160 million from the company for their release as they insist the miner did not pay its share of back taxes at its Syama gold mine in the country.