Oil Markets Cool Down Ahead Of Christmas

Following last week’s price rebound that saw ICE Brent break back above the $80 per barrel threshold, there has been relatively little movement. Trading activity across the Atlantic Basin is muted as both Europe and the Americas get ready for the festive season, whilst market signals from Asia remain unclear as China is reportedly struggling to contain outbreaks of Covid following the easing of its restrictions. With no straightforward indication on US commercial stocks either, pre-Christmas trading sessions might remain relatively tame.

Following months of negotiations, the EU’s energy ministers agreed that a gas price cap will be triggered if TTF spot prices exceed €180 per MWh for three consecutive days, preventing any LNG trades at a price higher than €35/MWh vs the reference level.

At an extraordinary meeting called for Monday, shareholders in German utility firm Uniper (ETR:UN01) approved a state bailout that has so far cost Berlin $53 billion and will see it owning just below 99% of the company.

A UN summit agreed on a landmark deal to protect 30% of the world’s land and seas by 2030, but the Kunming-Montreal Global Biodiversity Framework risks being derailed by African nations whose objections to the deal were disregarded.

French nuclear operator EDF (EPA:EDF) delayed the restart of several of its nuclear reactors. The reactors in question, Penly and Golfech, were halted due to stress corrosion and will now not restart until June 2023, denting the already-stressed winter power supply outlook.

The government of Australia opened up its first zone for offshore wind farms off the southern Gippsland coast, paving the way for the $6 billion Star of the South project, estimated to have a production capacity of 2.2 GW.

A cold snap sweeping across the US Midwest, sending temperatures into negative territory, has cut production in North Dakota’s Bakken basin by 200-250,000 b/d or 20% of the play’s total output.

The global order book for new LNG tankers has reached 170 carriers, a 95% increase year-on-year, with the liquefied gas market widely outperforming the wider shipping market.

A 5.4-magnitude earthquake rattled the Permian Basin late last week, impacting primarily Midland producers who now might have to curb wastewater disposal rates in the wider area.

The US Energy Department will loan out 1.8 million barrels of crude from its strategic reserves to ExxonMobil (NYSE:XOM) and Phillips66 (NYSE:PSX), seeking to mitigate the impact of the Keystone pipeline halt.

A consortium comprising TotalEnergies (NYSE:TTE), Petronas, and QatarEnergy won the rights to the offshore pre-salt Agua Marinha block in the Campos Basin, with state NOC Petrobras exercising its preferential option to join the pack.

Thanks to lower outright prices, higher-than-usual refinery utilization rates and gradually easing demand, US gasoline prices are now lower than a year ago ($3.14/USG) and might fall below $3/USG by Christmas, the lowest since May 2021.

Two weeks into the existence of the oil price cap, Russia’s authorities have claimed they are close to formalizing Moscow’s countermeasures, most probably banning sales of crude or product to the members of the Price Cap Coalition.

Agreeing to build a new 320,000 b/d refinery in Gulei, Fujian, top officials from Saudi Aramco (TADAWUL:2222) said China and Saudi Arabia should strive to develop an integrated downstream sector, cementing Riyadh’s spot as the key supplier to the Asian powerhouse.