Global oil markets post gains at $72+ on prolonged price rally

Advertisements

Oil prices are on track to post a second weekly gain as bullish sentiment builds and the prospect of a prolonged price rally becomes increasingly likely.

This is the second straight week-on-week gain with WTI rebounding above $70 per barrel and now trading closer to $72 per barrel, but the fact that the US Federal Reserve has at last initiated a new cycle of monetary easing should have prompted a stronger market response. With a weaker dollar and an improved macro risk outlook, next week could see further upside.

Crude oil inventories in the United States have dropped to their lowest level in a week, posting another week-on-week decline to 417.5 million barrels, with stocks particularly drained in the Midwest where they dipped to their lowest since December 2014, OilPrice.com reports.

Human remains were found in a burned-out car that struck a natural gas liquids pipeline operated by Energy Transfer (NYSE:ET), causing a blaze that still burns itself out and debilitating the operations of the 375,000 b/d Justice pipeline that feeds Mont Belvieu fractionators.

Chevron’s (NYSE:CVX) CEO Michael Wirth criticized the Biden administration for ‘attacks on the natural gas industry’, arguing that resources from the Permian Basin have played a key role in powering AI proliferation as the White House set up a task force to investigate whether data centres don’t undercut US climate goals.

The European Automobile Manufacturers’ Association (ACEA) has called for urgent government action to reverse this year’s trend of slumping EV sales as BEV sales in Germany and France have collapsed by 69% and 33%, respectively, as subsidies were cut.

Ukrainian media have reported that Kyiv has in principle agreed to transit Azerbaijani gas to Europe as a temporary measure after its 5-year transit contract with Russia runs out in December, with the derisking of European imports seeing TTF drop lower to €33 per MWh.

The US Justice Department filed a civil claim this week against two Singaporean companies that owned the Dali ship that toppled the Francis Scott Key Bridge in Baltimore this week, seeking $103 million in compensation for cleanup and repair costs.

Having already signed supply deals with Shell (NYSE:RDS.A) and ExxonMobil (NYSE:XOM), Turkey’s state energy firm BOTAS clinched a 10-year LNG term deal with France’s TotalEnergies (NYSE:TTE) starting from 2027, for up to 1.1 million metric tonnes annually.

Raising the risks of attacks on energy infrastructure in the country, particularly pipelines in faraway regions, Colombia’s government has called off peace talks with the leftist militia ELN after an attack on a military base next to the Venezuelan border killed two soldiers.

Indian refiners are jointly negotiating long-term deals for Russian crude supply next year as in 2024 only private refiners managed to land term contracts, prompting state-controlled refiners to lock in deals as Russia still accounts for 40-45% of India’s imports.

The Chinese government has issued a new batch of export quotas for clean products, adding 8 million tonnes of quotas for diesel, jet and gasoline, paving a way for an increase in Chinese Q4 exports to 950,000 b/d after averaging 850,000 b/d in January-August.

The giant 645,000 b/d Amuay refinery, Venezuela’s key downstream asset that accounts for almost half of the country’s total capacity, remains almost completely offline following a power outage that occurred on September 12, restricting product supply.

The US Federal Reserve’s 50 bps interest rate cut lifted copper prices to their highest level since mid-July, with the October Comex contract touching $9,640 per metric tonne as hopes for a soft landing improved the outlook for the transition metal.

The cost of insuring a tanker through the Red Sea has more than doubled over the past month as some underwriters are pausing insurance cover after the sinking of the Sounion vessel, with war risk premiums now quoted up to 2% of the vessel value.