China Sets Tone In Oil Markets At Year's End

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Commodity trading in the festive week between Christmas and New Year has always been very light, however be it for oil markets or for metals at large, China continues to set the tone for overall sentiment.

Soaring coronavirus cases (assumed but unreported) as well as the U.S.’ gradual recovery from the past week’s polar freeze have been marginally weighing on prices, bringing WTI below $80 per barrel again.

As swathes of gas-producing basins have cut production by as much as 30% during the severe cold, prime amongst them the Appalachian Basin, it seems the rebound to pre-freeze levels will take several weeks if not months as U.S. production seasonally dips in the new year.

Russia’s President Vladimir Putin signed a decree this week that bans the supply of oil and products for nations that abide by the oil price cap, with the measure applying to all stages of supply up to the end buyer and coming to effect 1 February 2023.

Refiners in the U.S. Gulf Coast are seeking to resume operation at a dozen facilities that halted operations due to the recent freeze, a total of 3.6 million b/d in operable capacity, with Port Arthur and Deer Park taking at least one-two weeks before a full return.

U.S. oil major ExxonMobil (NYSE:XOM) is suing the European Union as it contests the bloc’s windfall tax on oil companies, arguing that Brussels is exceeding its legal authority in doing so and claiming that the levy will be discouraging further investments.

U.S. LNG firm Excelerate Energy (NYSE:EE) has delivered Finland’s first-ever floating storage and regasification unit, the 5 bcm per year capacity Exemplar, to the port of Inkoo, one of the 19 new FSRU projects that will be commissioned in Europe over the next years.

After Trinidad and Tobago’s deep-water licensing round held this year received only four bids (out of the 17 available blocks) by a consortium of BP (NYSE:BP) and Shell (LON:SHEL), the islands’ government is preparing to reject them as they failed to meet minimum requirements.

In line with President Biden’s IRA bill, the US government will be introducing tax credits for delivery firms and other companies to switch to electric trucks from January 1, with the range of tax credits set between $7,500 and $40,000.

According to media rumours, this weekend will witness the first delivery of Chevron-upgraded (NYSE:CVX) Venezuelan crude towards a US refinery after the recent White House waiver, a tanker loaded with asphalt-like Boscan crude.

The consortium of Shell (LON:SHEL), EDP Renewables and Engie have asked U.S. regulators for a delay in planning the 804 MW Mayflower Wind farm south of Martha’s Vineyard, saying spiking interest rates present significant challenges to power purchase agreements.

Somalia dismissed an “illegal claim” by Genel Energy (LON:GENL) to oil exploration rights in the breakaway region of Somaliland after the UK-based oil firm announced its geotechnical survey for its licensed acreage is over, raising the stakes for East Africa exploration.

LNG. U.S. LNG developer NextDecade (NASDAQ:NEXT) said it will increase the volume of liquefied gas provided under a term agreement with China’s ENN Natural Gas (SHA:600803) from 0.5mtpa to 2mtpa, to be sourced from the upcoming RGLNG project.

Despite building a new gas pipeline that is set to be commissioned mid-2023, the rapid production growth seen in Argentina’s Vaca Muerta shale play has seen offtake of gas output hit its limit of 2 Bcf per day, highlighting the need for new pipeline capacity.

Chile’s SQM (NYSE:SQM), the second-largest lithium producer globally, averted a strike at various producing units across the country after two months of arduous negotiations, however its stock continues to decline after a 11% slide over the past 5 trading sessions.

Seeing coal consumption increase by 10% year-on-year so far to almost 1.2 billion tonnes, India’s demand for the fossil fuel is expected to rise for the next ten years until it peaks at some point between 2030-2035, according to the Ministry of Coal and Mines.