Sentiments shift in oil markets as demand fears fade

Oil markets look increasingly bullish as analysts argue Omicron’s impact on global oil demand will be limited

Graph of the week

– Energy companies in the Persian Gulf borrowed 30.5 billion in 2021, according to Bloomberg, the highest level in at least 25 years as regional NOCs seek foreign investment to fund their ambitious plans.

– Qatar Energy was the leader among all NOCs, selling $ 12.5 billion in bonds in July 2021 (the largest offering in emerging markets last year) as part of funding for its capacity expansion of LNG.

– Dominating the borrowing lists of previous years, Saudi Aramco is only ranked third in 2021 behind QE and ADNOC, having “only” raised $ 6.5 billion, a third of what it did in 2020.

– The global energy transition softens the traditionally self-sufficient position of producers in the Middle East who sell and share more, while seeking to maximize the gains from their vast hydrocarbon reserves.

Market movers

– American oil major ExxonMobil (NYSE: XOM) declared it waits Fourth quarter 2021 profit increased $ 1.9 billion quarter-on-quarter, supported by a quarterly windfall of $ 1 billion resulting from a rebound in natural gas prices.

– American LNG developer NextDecade Corp (NASDAQ: NEXT) declared that a final investment decision on its planned $ 15.7 billion Rio Grande LNG project would be delayed again, for the second time already, as relatively low gas prices hamper the conclusion of long-term supply contracts. term.

– The Norwegian oil major Equinor (NYSE: EQNR) could see his production plans in dangerafter the European Court of Human Rights intervened to assess whether drilling in the Arctic seas could constitute a violation of fundamental freedoms.

Tuesday 04 January 2022

There has been a noticeable change in sentiment in the oil market, with a growing number of forecasts indicating that the destruction of demand from the Omicron variant will not be as bad as previous variants due to the lack of widespread bottlenecks. . Indeed, cases have increased in key areas, but governments are reluctant to repeat 2020/2021 policies again. Oil demand remained strong in December, evolving essentially at the same level as November levels, while global manufacturing activity strengthened globally amid easing bottlenecks in the economy. Supply Chain. So the bullish case for more OPEC + crude is by no means paradoxical, especially considering all of the supply disruptions in Libya and elsewhere. As a result, the Brent ICE traded above the $ 80 per barrel threshold this week, while the US benchmark WTI hovered around $ 77.5 per barrel.

OPEC + accepts another production increase in February. The group of oil producers comprising OPEC and non-member participants including Russia Okay to extend monthly supply increments of 400,000 bpd until February 2022, arguing that Omicron’s exaggerated fears will not have a significant impact on global demand in the future.

The new OPEC Secretary General promises to keep the OPEC + Pact alive. Kuwaiti oil industry veteran Haitham al-Ghais, the new OPEC Secretary General who will replace Nigerian Mohammad Barkindo from August 1, 2022, sworn to keep the expanded OPEC + alive beyond its supposed elimination at the end of 2022.

Libya falls further into the abyss of chaos. Libyan national oil company announcement that the country’s oil production would be cut by 200,000 bpd as a leaking pipeline will undergo maintenance work, essentially halving the North African country’s production to 700,000 bpd amid persistent blockades in its western regions.

EU accused of trying to bury New Year’s taxonomy project. Environmental groups have unleashed an avalanche of criticism over the ‘sustainable finance taxonomy‘from the European Commission stating that gas and nuclear are compatible with green goals, arguing that Brussels tried to bury it by delivering it on New Year’s Eve.

Russian gas always flows backwards. Gas flows through the Yamal-Europe pipeline have been reverse mode (i.e. move from Germany to Poland) for the 15th day in a row, dumbfounding market watchers Gazprom (MCX: GAZP) is apparently reluctant to increase gas exports by pipeline to Europe.

McDermott wins LNG expansion contract in Qatar. American engineering company McDermott (OTCMKTS: MCDIF) has been awarded a major construction contract (13 tops of wellhead platforms and surrounding infrastructure) for Qatar’s liquefaction facilities, which would see its production capacity increase to 126 million tonnes per year.

ADNOC will soon complete the storage of cave oil. The UAE’s national oil company ADNOC will soon commission a major expansion of its crude oil storage capacity at the country’s largest port, Fujairah, located in underground caverns with storage space totaling 42 million barrels of oil.

Despite internal struggles, Algeria wants to return to Libya. The Algerian national oil company Sonatrach announced that it Carry on temporarily suspended oil projects in Libya, although the latter has turned into a whirlwind of internal strife following the failed presidential elections.

Hot weather is helping the European gas market under pressure. Temperatures well above historic averages eased pressure on tight gas inventories in Europe and brought TTF gas spot prices below € 70 per MWh ($ 24 per mmBtu), to rebound today on the news of Russian supplies still tight.

The ban on Indonesian coal exports is shaking up the market. The Indonesian government, the world’s leading exporter of thermal coal, banned All coal exports fear that the Southeast Asian country could not meet its own demand for electricity, pushing up coal prices amid falling natural gas prices.

BP and ENI take center stage in the licensing cycle in Egypt. British energy company BP (NYSE: BP) and Italian oil major ENI (NYSE: E) were among the most active in most recent Egypt upstream license round, with a total of 8 blocks allocated against an investment commitment of $ 250 million.

Chinese malaise weakens prospects for iron ore. After quadrupling in 2019 and tripling in 2020, iron ore prices recorded their first annual decline in three years, drop 12% year-on-year on weaker Chinese demand than before, with Dalian iron ore futures currently trading around 680 yen per metric ton ($ 105 / mt).

Germany is only one step away from completely phasing out nuclear power. By disconnecting the nuclear reactors in Brokdorf, Grohnde and Gundremmingen on New Year’s Eve, Germany has only three power plants left Operating and will see a complete phase-out of nuclear power by the end of 2022, just as the EU has recognized nuclear as a sustainable source of energy.

By Tom Kool for Oil Octobers

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