Oil

Inflation Fears Keep Oil Prices Suppressed

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The week started on an upbeat note with strong U.S. gasoline demand and improving Chinese consumption setting the stage for another weekly gain, however, Tuesday’s U.S. inflation data nipped that optimism in the bud. PPI rose 0.5% last month, well above the market’s consensus expectation of 0.3%, indicating that inflation will remain a policy conundrum for much longer. Should April CPI data also come in higher than expected, Brent should drop to the low-80s.

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Marred by accusations of systemic overproduction, Iraq has claimed it had made enough voluntary production cuts and would not agree to any additional OPEC+ curbs, with the ambiguous statement heating up the preparation for the OPEC+ June 1 meeting, OilPrice.com reports.

The US Treasury Department extended a waiver allowing certain transactions with Venezuela’s national oil firm PDVSA for oil service companies, however still prohibiting any drilling, processing, purchasing, transporting or shipping operations.

Hedge funds and other money managers have increased their short positions in Nymex WTI futures and options by 16%, marking the fourth straight weekly decline and reducing the net length held in the benchmark contract to 117,651 contracts, the lowest since February.

Attorney generals from 27 Republican-held US states and industry trade groups have sued the US Environmental Protection Agency, seeking to block the Biden administration’s mandate for gas and coal-fuelled power plants to reduce their greenhouse gas emissions by 90% by 2032.

Canadian authorities issued an evacuation alert for Fort McMurray in Alberta, home to almost 1.5 million b/d of oil sands production, citing “extreme” wildfire danger there with PM Justin Trudeau warning of a another “catastrophic” forest fire season.

According to the FT, South Korea’s KEPCO (KRX:015760) held negotiations with the British government to build a nuclear power station at the coastal area of Wylfa in Wales, four years after Japan’s Hitachi scrapped its initial plans to build a plant there.

Total aluminium stock held in LME warehouses almost doubled in just one day last week, jumping to 903,850 metric tons after 425,575 mt were deposited in Port Klang, Malaysia, suggesting that rent share deals for Russian-made metal remain lucrative.

The world’s second largest mining company Rio Tinto (ASX:RIO) is reportedly considering a bid for AngloAmerican just as BHP saw its first offer rejected by the London-based company, joined by global commodity trader Glencore that’s also mulling a potential move.

A year after QatarEnergy farmed into ExxonMobil’s (NYSE:XOM) Canadian offshore acreage, the Qatari NOC has agreed to acquire a 40% participating interest in the US major’s two exploration blocks offshore Egypt, the Cairo and Masry concessions.

Leaving its forecasts unchanged for 2024 and 2025, OPEC reiterated its extremely bullish outlook for 2024 crude demand, expecting it to rise by 2.25 million b/d, almost double the IEA’s forecast of 1.2 million b/d and the EIA’s call of 0.92 million b/d.

US President Joe Biden signed a ban on imports of Russian enriched uranium into law this week, currently accounting for some 24% of all uranium used in US nuclear plants, with a 90-day grace period and the possibility to apply for waivers until 2027.

A group of leading US biofuels producers, including Cargill, Bunge and Archer-Daniels-Midland (NYSE:ADM) has called on the Biden administration to lift import levies on Chinese used cooking oil, arguing it is undercutting US crops used for biofuels.

Indonesia seeks to boost exploration in its offshore waters by offering five blocks in this year’s first lease sale, part of its 10-auction licensing spree in 2024, seeking to tap into new reserves as out of its 128 hydrocarbon basins, 68 remain entirely unexplored.

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