Oil range bound as markets wait for major catalysts
The first week of May could have brought us a much-awaited paradigm shift, however, the markets still appraise the impact of China’s COVID lockdowns amidst the mass-testing taking place in Beijing and the probability of a comprehensive European embargo on Russian oil. With no clear way out for either of those, Brent futures remained range bound, closing Tuesday around $106 per barrel.
Germany Drops Opposition to Russian Oil Embargo. Top officials from the German government confirmed that Berlin would be ready to back an immediate European Union ban on Russian oil imports, although yesterday’s EU summit failed to overcome the bloc-wide disagreements on the embargo.
Libya Blockade Squeezes Inventories. Libya’s NOC has warned the country’s warring two governments that the risks of storing some of Libyan grades have long-term consequences – the likes of Bu Attifel require continuous heating, otherwise they solidify in tanks and pipelines because of their high wax content.
Rocket Attacks Rock Kurdish Refining. In a missile attack that was claimed by nobody, a string of rockets targeted two refineries in the Kurdish capital city of Erbil, damaging oil storage capacities at the premises, only two months after Iran’s IRGC carried out a missile strike in the area.
U.S. Gulf of Mexico to See Burst of New Activity. The upcoming months will see the commissioning of BP’s (NYSE:BP) Argos and Shell’s (NYSE:SHEL) Vito floating production rigs, coming on the back of Murphy Oil’s recently started King Quay rig, adding some 280,000 b/d of new output capacity.
Shale Pioneers Stick With Payouts. Shale drillers Diamondback Energy (NASDAQ:FANG) and Devon Energy (NYSE:DVN) have boosted their dividend payments whilst keeping production essentially flat, with the former going as far as to quintuple its quarterly payout, despite pressure coming from the Biden administration to ramp up production.
Unprecedented Heat Sends India’s Power Demand Soaring. Seeing the hottest spring months in decades, India’s power demand rose to its highest on record last month at 135 billion KWh, concurrently triggering widespread power cuts across the country as supply fell short of demand by 2.4 billion units.
Russia Wants to Build Latest African Gas Pipe Deal. Nigeria’s petroleum minister Timipre Sylva stated that Russia has expressed interest in investing in the long-mulled Nigeria-Morocco gas pipeline that has been discussed since 2016, without specifying if the route will be offshore or onshore.
South African Coal Miners Struggling with Logistics. Mining companies in South Africa have resorted to trucking coal to ports amidst widespread disruptions across the country’s railway network – with Newcastle coal trading at $320 per metric ton the cost is palatable, despite rail being four times cheaper.
U.S. Gas Futures Rise Again Amidst LNG Pull. U.S. natural gas prices have been on the rise again, with the front-month June ‘22 delivery contract edging above $8 per mmBtu amidst an ever-increasing export pull on domestic gas production, with output marginally dropping to 92-93 bcfd.
PEMEX Surprises with Q1 Profit. Mexico’s national oil company PEMEX reported $6.17 billion in Q1 2022 net profit, reversing a $2 billion loss in the year-ago period, as growing output and higher crude prices have allowed it to lower total financial debt to $108 billion from $109 billion.
UK Government Asks Oil Industry to Reinvest. The UK business minister Kwasi Kwarteng has written to companies active in the UK North Sea to set out a clear plan to reinvest their profits into the North Sea, with increasing swaths of the opposition advocating a windfall tax on oil and gas producers.
Mauritania Attracts Investors for Offshore Licensing. Wielding several world-class offshore gas discoveries like BP’s (NYSE:BP) 13 TCf Bir-Allah, Mauritania has opened bids for 28 new offshore blocks surrounding the existing acreage, also seeking to lure in investments for green hydrogen for low-cost reliable power supply.
Ukraine Confronts Storage Tightness. According to media reports, Ukraine is set to face a significant shortage of storage facilities as grain and oilseeds stocks already reached an all-time high of 21 million tons amidst limited export opportunities, weighing on agriculture prices across the globe.
-OilPrice.com