Oil Markets Bounce Back After Monday's Decline

Oil prices have bounced back after Monday’s $3 per barrel decline, but markets remain on edge ahead of the latest Fed meeting.

Another week, another tough Monday for oil markets. Whilst oil prices recovered on Tuesday after the steep $3 per barrel decline the day before, weak Chinese data and the prospect of another surprise from the U.S. Federal Reserve are keeping oil markets on edge.

According to media reports, Saudi Arabia’s national oil company has assured its Asian term buyers that they would get full crude volumes they had asked for in July, despite committing to a 1 million b/d production cut.

The US Department of Defense said it awarded supply deals for 3.1 million barrels of oil going to the Strategic Petroleum Reserve in August, adding that it is seeking firm bids for another 3 million barrels to the same SPR site in Big Hill, TX for September delivery.

Walking back pledges to reduce oil production by 1-2% per year, Shell’s (LON:SHEL) top management now seeks to keep crude output steady until at least 2030 as the energy giant faces weak returns on renewable investments and booming oil and gas profits.

More than 900 workers on Norwegian offshore drilling platforms will go on strike from June 29 unless protracted salary talks result in a deal, impacting the operations of service companies such as Seadrill (NYSE:SDRL) or Odfjell (LON:0J77).

Brushing aside weak Chinese macroeconomic data and flattening backwardation, OPEC has maintained its outlook for demand growth this year at 2.35 million b/d, equivalent to a 2.5% uptick year-on-year.

Pakistan’s Prime Minister Shehbaz Sharif said the first-ever cargo of Russian oil under a new deal between Islamabad and Moscow had just arrived at the country’s main oil port of Karachi, hinting that the payment will be carried out in Chinese yuan.

Nigeria’s downstream oil regulator NMDPRA alleged US oil major ExxonMobil (NYSE:XOM) was involved in the illegal lifting of butane from the Bonny River offshore terminal, accusing it of economic sabotage and of stealing the country’s resources.

Following Glencore’s (LON:GLEN) unsuccessful takeover of Canadian miner Teck Resources (NYSE:TECK), the Swiss trading conglomerate has reportedly approached the firm about purchasing its coal assets only.

Having received a sanctions clearance from the United States, the government of Iraq has agreed to pay its $2.76 billion debt to Iran for imports of natural gas and electricity, to be carried out soon via the Commercial Bank of Iraq.

Two European energy companies, Italy’s Edison (BIT:EDN) and Spain’s Repsol (BME:REP) sued the US LNG developer Venture Global LNG for failing to start commercial deliveries to term buyers, despite 128 spot-traded cargoes going to Europe over the last 12 months.

According to the Wall Street Journal, UK energy holding Shell (LON:SHEL) is carrying out a comprehensive review of its chemicals business after its 2022 performance ended with a $1.4 billion loss whilst other divisions have ramped up their profitability.

The EIA expects US shale oil production to hit an all-time high in July, hitting 9.38 million barrels per day, but month-on-month increases are narrowing down as next month’s figure would be only 0.1% higher than this month.

Chinese iron ore futures fell to $107 per metric tonne this week after Goldman Sachs (NYSE:GS) warned China’s property market weakness will be a persistent problem for Beijing, expecting the recovery to be “L-shaped” rather than immediate.

OIlPrice.com