Oil

Bearish Sentiment Spikes As Fed Reignites Recession Fears

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Oil prices are on course for their largest weekly decline since January after the head of the Federal Reserve reignited recession fears.

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The prospect of higher and potentially even faster U.S. interest rate hikes has scared oil markets, triggering concerns that the oil demand impact might be even worse than initially assumed and leading to the most marked weekly loss since January. With no compelling bullish story looming in the next couple of weeks, bearish sentiment looks set to build in oil markets.

US President Joe Biden is expected to propose a budget that would scrap oil and gas subsidies worth tens of billions of dollars, including drilling incentives, but there’s little chance of it going through a divided Congress.

Well productivity data across the US shale patch is showing increasing signs of reaching maturity. Higher upstream expenses have led to flat production and most producers have less than ten years’ worth of drilling left untapped.

Nationwide protests across France have disrupted oil and gas operations in the country, with TotalEnergies’ (NYSE:TTE) Feyzin refinery halting production, all four LNG terminals remaining blocked, and at least 7% of petrol stations running out of stock of at least one product.

A group of bipartisan US senators has reintroduced the NOPEC bill on the Congress’ Judiciary Committee more than 22 years after its initial introduction, potentially allowing US authorities to file lawsuits against OPEC+ national oil companies for price collusion.

US oil major ExxonMobil (NYSE:XOM) might be in for another Guyana-like success story as it is nearing a deal with the government of Bangladesh to secure exploration rights over all 15 deepwater blocks in the Bay of Bengal under a new production-sharing contract model.

After a dramatic flare-up in indigenous riots led local groups to destroy most of the infrastructure at Emerald Energy’s Capella oil field, the parent company Sinochem (SHA:600500) informed the national hydrocarbon agency ANH that it would be leaving the country.

Canada’s natural resources minister stated they will not force Chinese state-owned companies to divest stakes in three of its top mining companies such as Teck Resources (TSE:TECK) or First Quantum (TSE:FM), wary of creating policy uncertainty.

After the administration of the Tuscan port of Piombino in Italy filed a lawsuit against project operator Snam (BIT:SRG) citing safety concerns, the country’s administrative court postponed the decision until July while works on the terminal continue as planned.

France’s nuclear operator EDF is in hot water again after the country’s nuclear safety watchdog found new cracks at the Penly 1 in its latest stress corrosion tests, despite five months of repairs at the site, jeopardizing the return of idled nuclear capacity.

The US pipeline regulator mandated that TC Energy’s (TSE:TRP) 622,000 b/d Keystone oil pipeline should be operating at a maximum pressure of 72%. The company CEO Francois Poirier said it will be able to meet all 594,000 b/d of its contractual commitments.

Despite the partial restart of Freeport LNG’s repaired units, industry regulators from the FERC and PHMSA sent another list of requests to the operating company, asking it to address operator fatigue and the training status of new hires.

After a five-month hiatus, Warren Buffett’s Berkshire Hathaway (NYSE:BRK) has resumed its purchases of Occidental Petroleum (NYSE:OXY), buying another 5.8 million shares for $355 million and taking its overall stake in the company to 22.2%.

The Middle Eastern island kingdom of Bahrain is seeking to cut domestic gas production amidst its decarbonization drive that relies heavily on new solar plants and simultaneously wants to build an LNG terminal to export liquefied natural gas to international markets.

Buoyed by higher-than-expected harvests in Australia and Kazakhstan, the US Department of Agriculture has hiked its global wheat production forecasts by 5 million mt to a total of 788.94 million mt as wheat futures have fallen to the lowest in 18 months.

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