Oil Price tumbles As Dollar, Crude Inventories Climb

Advertisements

The gap seems to be widening between WTI and other global crude benchmarks as climbing crude inventories and another SPR release are pushing the U.S. benchmark lower.

This week’s release of strong economic data in the U.S. and evidence of a tight labor market has added some macro pressure to oil prices as well, adding to concerns that the Federal Reserve’s hikes might continue for longer. As a result of these bearish developments, WTI moved back below $76 on Friday morning.

Analysts estimate China’s crude imports will rise by 0.5-1.0 million b/d this year to as high as 11.8 million b/d, a new all-time high, reversing the year-on-year decline in 2022 and firing up domestic refining that has suffered throughout the zero-Covid years.

With the European Union ramping up pressure to ban all fossil fuel car sales by 2035, Italy has stepped up its opposition to the Brussels-proposed deadline, saying a rapid switch would be “suicide” and a “gift” to the Chinese automotive industry.

Energy sector companies have warned of multi-billion dollar expenses if the White House expects the EPA’s proposed regulation to slash smog and soot pollution from electricity generation, with Kinder Morgan (NYSE:KMI) alone claiming it would need to retrofit about 950 pipeline engines at a cost of $4.1 billion.

Fourteen years after the discovery of the 290 MMbbls Vito field in deepwater Gulf of Mexico, its operator Shell (LON:SHEL) started commercial production this week with a view of bringing production to its peak of 100,000 b/d in a couple of years.

Several months after passing its Energy Security Act to place the Russian-operated Schwedt refinery under government trusteeship, Germany is now looking to change the bill to allow a quick sale without a prior nationalization.

As US jet fuel inventories remain depressed at an almost 40-year low of 36.5 million barrels, soaring passenger aviation activity is pushing up costs for airlines as the average price of kerosene shot up to $3.37 per gallon last year, almost double the pre-pandemic norm.

Buoyed by the success of the prolific Stabroek Block, the Guyanese government is now looking to monetize its vast forests covering 90% of its territory, having already concluded a $750 million multi-year carbon credit deal with US oil firm Hess Corp (NYSE:HES).

Norway’s government is reportedly planning to tax electricity exports as pressure is mounting on Oslo to lower power prices to help ease the cost of living, after a big scare in 2022 when low levels of water reservoirs hamstrung generation.

US shale oil producer Devon Energy (NYSE:DVN) will remember February 15 as Black Wednesday after its shares plummeted 10.5% in just one day, having missed Wall Street Q4 profit estimates with adjusted earnings coming in at $1.66 per share.

After the swift ramp-up of Chevron’s operations in Venezuela, Italy’s ENI (BIT:ENI) and Spain’s Repsol (BME:REP) are pressing Venezuelan authorities to provide them with greater control of their operations in the country.

China’s state-controlled oil majors PetroChina and Sinopec are back to buying discounted Russian barrels after the December 5 oil price cap prompted a multi-month hiatus, with several tankers laden with Urals already on their way.

Building on its projects in the UK and US, oil major BP (NYSE:BP) bought a 55% stake in the 6 GW South Korean portfolio of a Norwegian wind project developer Deep Wind, with all four projects reportedly meeting BP’s internal rate of returns of 6-8%.

The Chinese government will assess the latest battery supply deal between Ford Motor (NYSE:F) and China’s CATL (SHE:300750), aiming to build a $3.5 billion EV battery plant in Michigan, to ensure that critical technology is not shared with the US carmaker.

As the UN is expected to approve deep-sea mining in international waters soon, Greenpeace published a peer-reviewed study arguing that subsea mining could interfere with whales’ ability to communicate and navigate the ocean depths.