Long-Overdue Bullish Week for Global Oil Markets

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Oil prices are on course for their first weekly increase in eight weeks, a shift in sentiment that was driven in large part by the Federal Reserve pledging to cut interest rates next year, OilPrice.com reports.

As the price of Brent rose toward $77 per barrel, the oil markets are on course for the first week-on-week increase in eight weeks. Despite continuous attacks on tankers in the Red Sea, it was the United States that provided most of the bullish sentiment. First, the Federal Reserve’s pledge to start cutting interest rates next year buoyed the markets in general before a larger-than-expected US inventory draw pushed oil even higher. So for now, seeing Brent slide down to the low 70s is off the table, but for how long?

Publishing the December monthly oil report this week, OPEC reiterated its optimism for 2024 oil demand growth of 2.46 million b/d and blamed the recent drop in oil prices on exaggerated demand concerns impacting market sentiment.

A product tanker carrying jet fuel from India was attacked whilst transiting the Red Sea, however managed to avoid being boarded thanks to military assistance, only two days after Houthi rebels claimed responsibility for an attack on a Norwegian tanker.

The future of the 4.2 TCf Dragon offshore gas field, to be fed into Atlantic LNG, might have run into an impasse after talks between Venezuela’s oil authorities and presumed project operator Shell (LON:SHEL) failed to agree on future LNG prices.

The average cost of producing solar panels in China has dropped by 42% this year to a mere 15 cents per watt, more than half the cost for US producers, creating a huge price advantage for Chinese solar manufacturers that can outbid the Western market.

The Australian arm of Greenpeace is suing Australia’s oil major Woodside (ASX:WDS), claiming the company has mispresented its greenhouse gas emissions and couldn’t have cut its GHG pollution amidst an 11% increase in hydrocarbon output.

Norway’s national oil firm Equinor (NYSE:EQNR) will take over Shell’s 30% stake and operatorship in the Scandinavian country’s largest untapped offshore gas discovery Linnorm, located in the Norwegian Sea and containing some 30 Bcm of recoverable gas.

France’s second-largest bank Credit Agricole (XXX:CAGR) announced that it would stop financing new fossil fuel projects and publish its oil industry exposure as part of its new climate goals, joining French banking peer Banque Postale in doing so.

Brazil’s oil regulator offered more than 600 exploration blocks in its latest offshore auction, however managed to assign only 192 out of them, with drilling newcomer Elysian winning a whopping 122 and Petrobras (NYSE:PBR) taking 29 blocks.

The Biden administration has finalized a comprehensive decommissioning plan to remove all decades-old oil and gas platforms off the coast of California, as 8 out of the 23 platforms no longer and the remaining 15 produce a mere 7,000 b/d.

Chinese imports of fuel oil as a refinery feedstock have doubled this year to 478,000 b/d, however might decline into 2024 as Beijing has curbed tax rebates for such cargoes, heretofore completely exempted from paying consumption tax.

A pipeline leak in the BP-operated (NYSE:BP) Olympic Pipeline has led to an oil spill of some 25,000 gallons of gasoline near Mount Vernon in Washington state, with the UK-based major restarting the pipeline upon regulatory approval on Thursday.

The government of Bangladesh will ease restrictions on refinery ownership and allow private companies to build refineries as long as their capacity exceeds 30,000 b/d and they agree to sell 60% of their output domestically for the first 3 years of operation.

US oil major Chevron (NYSE:CVX) and the Venezuelan national oil firm PDVSA have asked for a 15-year sanctions waiver extension for the Petroboscan and Petroindependiente crude upgraders, citing the need to invest in plant maintenance.