Oil

Bullish Sentiment Brings $90 Oil Within Reach

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In what feels like an increasingly bullish oil market, $90 Brent is now a real possibility. While demand uncertainty persists, geopolitical risk, a weakening U.S. dollar, and OPEC+ supply cuts have moved prices higher.

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Brent prices continue to hover around $87 per barrel, with the recent rally consolidated by Russia doubling down on its OPEC+ production cuts, the US dollar continuing to weaken, and any semblance of an Israel-Palestine truce being off the cards right now. With Brent futures seeing signs of a stellar golden cross pattern developing, it might only take one bullish piece of news for $90 per barrel to happen, OilPrice.com reports.

One year since the shutdown of Kurdish oil flows through the Kirkuk-Ceyhan pipeline, Iraq is yet to find common ground with oil companies operating in the separatist region, with Baghdad seeking to revise production terms and rights.

The Biden administration has shifted from its usual 3 million barrel per month solicitations and announced two additional purchases of strategic crude stocks, aiming for 4.75 million barrels in August and 4.5 million barrels in September.

Libya’s government watchdog has temporarily suspended oil minister Mohamed Aoun, representing the Tripoli-based Government of National Unity, for alleged legal violations, several months after he called for the removal of NOC head Bengdara.

The war between Sudan’s army and the Rapid Support Forces paramilitary has forced Khartoum to declare a force majeure on pipeline deliveries to Port Sudan, blocking some 150,000 b/d of oil production from South Sudan.

According to ExxonMobil, costs are the main obstacle to ramping up production of sustainable aviation fuel (SAF) as biofuel from used cooking oil or agricultural waste is 5 times more expensive than kerosene, limiting its investment appeal.

With US natural gas prices down 34% so far in 2024, the number of active gas rigs operating across the United States dropped to 112 as per Baker Hughes, the lowest number since January 2022 as Haynesville drillers keep on curbing activity.

Despite a damning report from the UNEP calling for immediate readjustments at Pemex’s Zaap-C offshore platform, satellite imagery shows it is still flaring 300 MCf per day of methane, with media reports indicating the Mexican oil firm is aware of what it would take to mitigate that but does nothing.

Shanghai Futures Exchange-managed copper stocks have soared to more than 285,000 metric tonnes, the strongest inventory build-up since the COVID-ridden year of 2020 and a sevenfold increase since the beginning of this year, capping the price rally.

According to the FT, the Biden administration is urging Ukraine to halt drone strikes on Russian energy infrastructure, on the heels of several refinery attacks in March, warning that they risk retaliation and ratcheting up global energy prices.

US oil major ExxonMobil (NYSE:XOM) has been reticent about the size of its Guyanese discoveries, although project partner CNOOC in its 2023 results presentation said their recent Lancetfish discovery holds 730 million barrels.

US investment bank Goldman Sachs believes commodities may return 15% over 2024 as central banks start cutting interest rates, emphasizing that gains wouldn’t be universal and that copper, aluminum, gold, and oil products will lead the way.

The Russian government greenlighted selling Shell’s (LON:SHEL) 27.5% stake in the Sakhalin-2 offshore project to state-controlled Gazprom for $1.03 billion instead of private LNG-focused producer Novatek, raising the former’s shareholding to 77.5%.

The 5th US Circuit Court of Appeals has approved a request from oilfield services firm Liberty Energy to halt enforcement of the climate disclosure mandate encompassing GHG emissions and risks, agreeing that the SEC overstepped its remit with the rule.

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