Oil markets cool before Christmas

Oil markets have been relatively quiet this week, with subdued trading in both Europe and the Americas ahead of Christmas.

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– For the first time since World War II, the United States could become a net exporter of crude oil next year, as rising domestic production pushes even more oil toward the country’s terminals.

– In 2015, US net imports held at an average rate of 7 million b/d. In November, that figure dropped to just over 1 million b/d amid rising exports.

– The US Energy Information Administration expects US crude production to hit 11.7 million b/d in 2022 and add another 600,000 b/d next year to hit an all-time high of 12.3 million b/d.

– US crude exports have averaged 3.4 million b/d this year, reaching their annual peak in November, with nearly 60% of all shipments passing through Corpus Christi, TX.

Market Drivers

– Canadian pipeline operator TC Energy (TSE:TRP) sent a restart plan for the 622,000 b/d Keystone pipeline to US regulator PHMSA, with initial rumors indicating that a full restart could take several months.

– The Spanish oil company Repsol (MBE:REP) agreed will buy the renewable energy company Asterion Energies for 600 million dollars, expanding its portfolio with 4.9 GW of solar energy and 2.8 GW of wind generation projects.

– Gold miner based in Canada Barrick Gold (New York Stock Exchange: GOLD) has finally been cleared by Pakistan’s top court to go ahead with the $7bn Reko Diq copper-gold mine, one of the largest undeveloped open pit deposits.

Tuesday, December 20, 2022

Following last week’s price rally that pushed ICE Brent back above the $80 per barrel threshold, there has been relatively little movement. Trading activity in the Atlantic basin is muted as both Europe and the Americas gear up for the festive season, while market signals from Asia remain unclear as China is reportedly struggling to contain the Covid outbreaks after the relaxation of its restrictions. Without a direct indication on US trading actions, the pre-Christmas trading sessions could remain relatively quiet.

EU green light gas price limit. After months of negotiations, EU energy ministers agreed that a gas price cap will be activated if spot TTF prices exceed €180/MWh for three consecutive days, preventing LNG from being traded at a price higher than €35/MWh against the reference level.

The largest German gas buyer bailed out. In an extraordinary meeting called for Monday, the shareholders of the German utility company Uniper (ETR:UN01) approved a state bailout that has so far cost Berlin $53 billion and will see it own just under 99% of the company.

Africa resists the Biodiversity Pact. a UN summit agreed in 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 ignored.

France faces more nuclear delays. French nuclear operator EDF (EPA:EDF) delayed the restart of several of its nuclear reactors. The reactors in question, Penly and Golfech, have been halted due to stress corrosion and will now not be restarted until June 2023, affecting already stressed winter power supply prospects.

Australia wants wind power. Australian government Opened built its first site for offshore wind farms on the south coast of Gippsland, paving the way for the $6bn Star of the South project, estimated to have a production capacity of 2.2GW.

Cold Snap makes it difficult to produce Bakken. A cold snap hitting the US Midwest that has pushed temperatures into negative territory has reduced production in the Bakken basin of North Dakota in 200-250,000 b/d or 20% of the total production of the work.

Demand for LNG tankers reaches a record level. The global order book for new LNG tankers has reached 170 carriers, an increase of 95% year-on-year, with the LPG market vastly outpacing the broader shipping market.

Earthquake bodes badly for the Texas Shale. A magnitude 5.4 earthquake shaken Permian Basin late last week, primarily affecting Midland producers who may now have to reduce wastewater disposal rates in the wider area.

US lends SPR to Texas refineries. The US Department of Energy will lend 1.8 million barrels of crude from its strategic reserves to ExxonMobil (NYSE:XOM) Y Phillips66 (NYSE:PSX)seeking to mitigate the impact of the shutdown of the Keystone pipeline.

Seniors fight for the Brazilian Pre-Salt. A consortium made up of TotalEnergies (NYSE:TTE), Petronas and QatarEnergy won the rights to the Agua Marinha marine pre-salt block in the Campos basin, with state-owned NOC Petrobras working out your preferred choice to join the pack.

Gasoline prices in the US are falling again. Thanks to lower absolute prices, higher-than-usual refinery utilization rates, and gradually declining demand, US gasoline prices are on the rise. lower than a year ago ($3.14/USG) and could fall below $3/USG by Christmas, the lowest since May 2021.

Russia prepares response to oil price ceiling. Two weeks into the existence of the oil price cap, Russian authorities have said they are close to formalizing Moscow’s countermeasures, most likely by banning sales of crude or products to members of the Price Cap Coalition.

Saudi Arabia talks about the downward integration of China. In agreeing to build a new 320,000 b/d refinery in Gulei, Fujian, senior officials from Saudi Aramco (TADAWUL:2222) said China and Saudi Arabia should strive to develop an integrated downstream sector, cementing Riyadh’s place as the key supplier to the Asian powerhouse.

By Michael Kern for Oilprice.com

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