Bullish Catalysts Fail To Spark An Oil Price Rally

Oil prices have been reluctant to climb higher this week despite multiple bullish catalysts. It seems that traders are increasingly unwilling to risk their profits in an extremely unpredictable market

On paper, this week has provided ample reasons for an uptick – the easing of Chinese coronavirus restrictions, a US oil spill halting pipeline deliveries from Canada, and a massive queue of tankers that cannot pass the Turkish Straits. However, it seems nothing can bring oil prices back onto a growth trajectory this month. After all, whoever has made their profits over the course of 2022, risking them in such an unpredictable market would be quite unnecessary, which means $75-78 per barrel Brent might be here for longer than expected.

A protracted row between Turkish authorities and maritime insurance providers has overshadowed the launch of the Russian oil price cap this week, with almost two dozen tankers held up on a southbound voyage out of the Black Sea, not having the required P&I insurance documents.

The two largest US oil firms ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) have both raised their 2023 project investment budget – Exxon’s is up to $23-25 billion ($22 billion this year) whilst Chevron increased it to $17 billion (from $15 billion this year).

According to media reports, Saudi Arabia intends to allocate more than a third of its current oil output, approximately 4 million b/d, towards petrochemicals by 2030 as it seeks to maximize value from its vast oil resources.

Nigeria’s state-owned oil company NNPC stated the country’s oil production hit 1.59 million b/d this week, a huge improvement compared to the roughly 1 million b/d in September-October as many projects in force majeure reportedly come back.

The UK government approved its first deep coal mine in decades this week to produce coking coal for its steel industry, with the Woodhouse Colliery expected to be in operation for 50 years and export up to 80% of its production within 5 years of commissioning.

Oil majors Shell (LON:SHEL) and ExxonMobil (NYSE:XOM) will be delayed in selling their upstream JV in California to German asset manager IKAV for $4 billion on the back of slower US approvals as the Committee on Foreign Investment is still to greenlight the deal.

The three floating LNG terminals that Germany planned to commission this winter to ensure a secure supply of gas have been delayed due to inclement weather, with the 4.5 Lubmin FSRU now set for an end-December start even though it should be running already.

European energy giants Equinor (NYSE:EQNR), RWE (FRA:RWE), and Engie (EPA:ENGI) have established a firm foothold in the United States’ first-ever Pacific Coast offshore wind auction that drew $757 million in bids for five lease area off California’s coast.

Canada’s TC Energy (TSE:TRP) halted transportation via its 622,000 b/d Keystone pipeline that ships Canadian crude from Alberta into the US Midwest and Gulf Coast after an oil spill into a Nebraska creek, a stop that is expected to widen Canadian differentials.

Despite freezing temperatures, thousands of protesters have been storming the Mongolian parliament after a huge discrepancy between the country’s export data and China’s import readings uncovered a vast coal theft scheme by the state-owned coal company.

The US Energy Information Administration expects power utilities in the country to triple their battery storage capacity to 30 GW by the end of 2025, with more than three-quarters of new additions expected in Texas and California.

Six EU countries, most notably Germany and the Netherlands, have warned other members that they cannot accept the gas price cap any lower than the €275/MWh proposed by the European Commission and that attempts to cap it at €220/MWh would only lead to gas shortage.

Chinese President Xi Jinping visited Saudi Arabia this week, heralding a new era in Sino-Arabic relations as the two sides signed deals worth $30 billion, covering green energy, cloud services, transport, and construction as well as a 5G coverage deal for Huawei Technologies.

French energy company TotalEnergies (NYSE:TTE) has decided to write down its 19.4% stake in Russian LNG producer Novatek worth $3.7 billion and withdraw its representatives from the company’s board, marking the end of its gradual Russia exit.