Oil prices rise as Omicron fears fade

Oil markets are starting to show signs of recovery following news that Omicron’s impact on demand may not be as large as originally thought.

Friday, December 10, 2021

Oil markets as a whole heaved a sigh of relief upon learning that the Omicron variant of COVID-19 may not be as powerful a demand disruptor as previously feared. With demand largely stagnant and global crude stocks still well below the 5-year average, Brent trading slightly above $ 75 per barrel and WTI at $ 72 per barrel appear to have found a temporary sweet spot. . Several downside risks remain to global demand, including weaker domestic air traffic activity in China, coupled with potential bankruptcies of real estate giants Evergrande and Kansa, which are still on the horizon. On the other hand, the surge in US inflation reinforces bullish sentiment, largely counteracting the phenomena mentioned above.

Saudi Aramco will deliver full volumes in January. Despite its ambitious global hike from $ 0.3 to $ 0.8 per barrel in official Asian selling prices for cargo loading in January 2022, the Saudi national oil company would deliver full volumes to futures customers, indicating that its strategy of pricing has worked well for Aramco. .

The Biden administration is not revising the oil export ban. Despite widespread speculation that the double whammy of low crude inventories and high export outflows could force the U.S. government to enact an oil export ban, the Biden administration said it was To not consider this option at the moment.

US strategic stocks at their lowest since 2003. While the next SPR release has yet to take shape (assumed to be January-April 2022), strategic U.S. crude inventories fell to 600 million barrels last week, their lowest since May 2003.

Royal Dutch Shell shareholders support the move to London. Shareholders of oil major Royal Dutch Shell (NYSE: RDS.A) have voted massively in favor of moving its head office to London, mainly for tax reasons more favorable to companies, while renaming itself “Shell”.

ICE will launch new Midland WTI futures in January. In an effort to establish a new benchmark for exporting light sugar to the United States and moving away from the Cushing link of WTI futures (while simultaneously avoiding the possibility of negative prices), the Intercontinental Exchange (ICE) is waiting for the Midland WTI futures to go live at the end of January 2022.

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Canadian oil production will peak in 2032. Canadian energy regulator predicts Canadian oil production will increase Peak seven years earlier than expected in 2032, reaching 5.8 million barrels per day, with the bulk of the additional 1 million barrels per day production coming from the Alberta oil sands.

ConocoPhillips leaves Indonesia amid a shift in focus. U.S. oil producer ConocoPhillips (NYSE: COP) is sale its Indonesian assets – stakes in two oil fields and seven gas companies, as well as pipelines – for 1.355 billion, at the same time doubling Australian LNG prospects and paying 1.6 billion for an additional 10% stake in APLNG.

GM secures the supply of rare earths. As U.S. automakers seek to reduce their reliance on China for rare earth magnets, General Motors (NYSE: GM) sign two separate agreements to source rare earth magnets for its electric vehicles from US-based manufacturers, including MP Material (NYSE: MP) which intends to build a neodymium-iron magnet facility- boron in Texas.

Soaring European carbon price on gas prices. Reference ETS carbon price in Europe hit a new record of € 90.75 per metric tonne of CO2 this week ($ 102 / mt) thanks to increased use of coal in Europe and TTF gas prices which are trading within inches of the 100 threshold € / Mwh ($ 32 / mmBtu).

South Korea’s purchase further improves Asian LNG. Despite falling LNG freight prices, active purchasing activity of South Korean energy companies GS (078930.KS) and KOGAS for cargo loading in January-February 2022 pushed spot higher Asian LNG prices, currently around $ 36 per mmBtu.

Chevron settles in Equatorial Guinea. After the $ 13 billion acquisition of Noble Energy last year, U.S. major Chevron (NYSE: CVX) has taken another step forward to to augment its foothold in Equatorial Guinea by unloading the EG09 offshore block, with the aim of exploiting the gas reserves of 1.5 TCf of the small African country.

The market wants to believe in the recovery of the price of iron ore. The spot price of iron ore delivered to China has seen a sharp increase of around 25% in the past three weeks, currently tendency at $ 110 per metric tonne, mostly based on Chinese customs data showing import volumes broken last month, at 105 million tonnes, the highest level since July 2020.

Guyana Mulling refinery built amid major interest. The government of Guyana is considering more than 10 proposals to build and operate an oil refinery in the country, currently a net importer of some 15,000 bpd of product, as ExxonMobil (NYSE: XOM) prepares to increase global production to 800,000 b / d by 2026.

US gas futures bounce back in cold weather. Bouncing back from its biggest daily decline in nearly three years, after losing 11% earlier this week, U.S. natural gas futures Pink at nearly $ 4 per mmBtu on Friday due to a larger-than-expected storage pullback and expectations of cooler weather in the second half of December.

PEMEX plans to reduce its exports in 2022 to meet national needs. Mexican national oil company PEMEX is reportedly Planning a drop in crude oil exports to bring more domestic production to its refineries – having operated its downstream assets at less than 50% of capacity this year, the Mexican NOC wants to increase its rounds from 200 to 300,000 bpd .

By Tom Kool for Oil Octobers

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