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UK inflation has eased to 2% - increasing the prospect of an interest rate cut this summer.

News

UK inflation has eased to 2% - increasing the prospect of an interest rate cut this summer.

Https://www.livecharts.co.uk/MarketCharts/brent.php

85.33 $

Https://www.livecharts.co.uk/MarketCharts/brent.php

Chinese Refinery Runs Disappoint Again. Chinese refinery output slid 1.8% year-over-year in May to 14.25 million b/d, driven lower by maintenance overhauls and shaky refining margins, with throughput in 2024 to date staying flat compared to the 2023 average of 14.48 million b/d.

Tensions Fly High in West Africa. Niger has shut off oil exports via the 1,240-mile pipeline connecting it to Benin’s coast, having loaded only one cargo since its launch, after Benin arrested five Niger nationals for allegedly entering the Seme loading terminal under false pretenses.

US States Defy White House’s Decommissioning Rules. The states of Texas, Louisiana, and Mississippi sued the US government to block the Biden administration’s proposed rules that require offshore producers without sufficient reserves to provide some $7 billion in decommissioning funds.

Russia Becomes Europe’s Largest Gas Supplier Again. Overtaking the United States, Russia has become the largest supplier of natural gas to Europe despite having curbed pipeline deliveries to a trickle, accounting for 14% of the continent’s imports in May.

Serbia Makes U-Turn on Lithium Mine. According to media reports, Serbian President Aleksandar Vucic is readying to approve the development of Europe’s largest lithium mine at the Jadar site in the west of the country, two years after Belgrade called off Rio Tinto’s (ASX:RIO) megaproject.

Saudi Arabia Hunts for Mining Deals in Chile. Saudi Arabia’s mining minister Bandar al-Khorayef is expected to travel to Chile in July, as the Middle Eastern kingdom is nearing deals to source lithium abroad and potentially enter Chile’s mining sector.

Singapore Offers Rebates for Oil Refiners. As Singapore is preparing to launch its carbon tax scheme, with costs estimated at around $1 per barrel of crude or a quarter of current refining margins, the city-state is offering refiners rebates of up to 76% in 2024-2025 to remain competitive.

Chinese Solar Producers Beg for Government Intervention. Chinese manufacturers of solar panels have asked Beijing for immediate government intervention to halt a plunge in prices of solar cells and modules amidst rampant overcapacity, having already plunged 50% last year.

UAE Eyes Rapid LNG Growth. Abu Dhabi’s state oil firm ADNOC has taken a final investment decision on its 9.6 mtpa liquefaction terminal in Ruwais, having already signed three 15-year term supply deals with Germany’s SEFE and EnBW as well as China’s ENN Natural Gas.

Strikes Rattle Argentina’s Upstream Industry. Sending shockwaves across Argentina’s prolific Vaca Muerta shale play, the Latin American country’s oil union has called for strikes this week to demand higher salaries just as production in the country rose to multi-year highs of 680,000 b/d.

- Oil markets were eagerly anticipating the start of peak driving season in the summer, but gasoline demand so far has been mostly disappointing, with US consumption some 2% lower year-over-year.

- Asia has been the first continent where gasoline weakness led to refinery run cuts, as a glut of light distillate supply has pushed Singapore gasoline cracks below the $5 per barrel mark.

- While US gasoline cracks are notably higher than elsewhere, currently around $22 per barrel, the high US refinery utilization rates create a lot of downside for gasoline, especially as gasoline stocks are the highest since 2021 for this time of the year.

- The pressure on gasoline might increase further down the line as this year’s two main refinery newbuilds, Nigeria’s Dangote and Mexico’s Olmeca, are both delayed and will not start up in time for the summer season.

Market Movers

- US refiner Phillips 66 (NYSE:PSX) agreed to sell its 25% stake in the Rockies Express Pipeline for some $1.28 billion including debt to privately owned Tallgrass Energy which owns the remaining 75% stake.

- Commodity trading giant Trafigura has agreed to pay a $55 million fine to settle charges of fraud and manipulation from the US Commodity Futures Trading Commission, having traded misappropriated Mexican gasoline.

- French oil major TotalEnergies (NYSE:TTE) sold its Brunei upstream business to Malaysian exploration firm Hibiscus Petroleum for $260 million, using those funds for further Namibia drilling.

Tuesday, June 18, 2024

Oil prices have gradually recouped all their losses following the OPEC+ meeting and ICE Brent has silently moved back to $84-85 per barrel, without there being any notable change in fundamentals. Macroeconomics are starting to feel better, however, and should the U.S. Fed comments this week persuade the market that things will get better soon, the strength in oil could be maintained for longer.

Https://www.livecharts.co.uk/MarketCharts/brent.php

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Https://www.livecharts.co.uk/MarketCharts/brent.php

Just gone positive

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Https://www.bbc.co.uk/news/videos/cerrk983xego

Hi Mark all good .

While there has been no official confirmation from the Houthis, the private security firm said the ship was “aligned with the Houthi target profile”, an apparent reference to a connection to Israel or its allies.

Since November last year, the U.S. Maritime Administration reports that the Houthis have launched some 50 attacks on vessels in the maritime area, with three sailors killed so far, one vessel seized, and one sunk. The U.S. has responded with an airstrike campaign against Houthi positions in Yemen, which the Houthis claim have killed at least 16 people. Washington was forced to relocate weapons to Qatar, diverting them from its base in the UAE, which had demanded that the U.S. seek permission before firing missiles at the Houthis from Emirati territory.

In March, the Houthis threatened that they would expand operations beyond the Red Sea, targeting Israel-linked ships traversing the Indian Ocean en route to the Cape of Good Hope. This is the longer, more expensive route being used by vessels attempting to avoid the dangers of the Red Sea.

The Gulf of Aden feeds into the Arabian Sea, through which vessels pass as they take the long way around the Horn of Africa.

ALEX KIMANI

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.

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By Alex Kimani - Jun 12, 2024, 7:00 PM CDT

StanChart has forecast 1.68 mb/d growth in 2024 and 1.41 mb/d in 2025.

StanChart has reiterated its previous assessment that not only can the markets absorb the extra barrels by OPEC+ producers but that a deficit is likely to appear in the latter part of the current year and carry over to 2025.

Following the post-OPEC+ meeting selloff, Standard Chartered pointed out that there’s no justification for selling at a pace that even surpasses during the pandemic

The big oil price selloff in the wake of OPEC+'s decision to unwind 2.2M bbl/day in voluntary production cuts later this year has been corrected. The announcement led to front-month Brent falling to a four-month low below $77 per barrel (bbl), good for a hefty $8/bbl decline from the previous week’s high and over $15/bbl lower from April’s YTD high. Thankfully, oil prices have largely managed to pare back the losses with Brent for July delivery changing hands at $82.61 per barrel in Wednesday’s session while the corresponding WTI contract was trading at $78.57.

Commodity analysts at Standard Chartered pointed out that the price undershooting was the consequence of a combination of several factors including extreme macroeconomic pessimism, speculative shorts and over-enthusiastic algorithmic trading that crowded out more fundamentally-based traders. Consequently, oil futures markets flipped to a net short position in Brent, compared with a net long position at the end of the previous week. StanChart has reiterated its previous assessment that not only can the markets absorb the extra barrels by OPEC+ producers but that a deficit is likely to appear in the latter part of the current year and carry over to 2025. The analysts have predicted a particularly large 1.9 million barrels per day (mb/d) deficit in Q3-2024.

On the demand side, StanChart has forecast 1.68 mb/d growth in 2024 and 1.41 mb/d in 2025. StanChart’s latest demand growth prediction is 0.3 mb/d higher in absolute terms and 0.14 mb/d higher in growth terms than its start-of-year expectations. The commodity experts have come up with a supply model split between Declaration of Cooperation (DoC) signatory nations (OPEC+) and non-DoC producers, with DoC crude oil output further split between OPEC and non-OPEC signatories. They have used highly cautious assumptions about compliance improvements for the three main countries that have recently produced above targets, and assumed they will only converge gradually onto their respective targets. According to the analysts, DoC output is forecast to be slightly lower in Q4-2024 than in Q2-2024, even under a near-worst-case scenario of a very slow return to compliance and limited output compensation by the three countries concerned. StanChart has predicted that the scale and duration of the projected deficits suggest that market sentiment is likely to improve in the coming months.

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The world faces a “staggering” surplus of oil equating to millions of barrels a day by the end of the decade, as oil companies increase production, undermining the ability of Opec+ to manage crude prices, the International Energy Agency has warned.

While demand is forecast to peak before 2030, continued investment by oil producers, led by the US, would by then result in more than 8mn b/d of spare capacity, the IEA wrote in its annual report on the industry released on Wednesday.

This “massive cushion” of extra oil could “upend” the efforts of Opec+ to manage the market and usher in an era of lower prices, the IEA said, adding that the level of spare capacity would be unprecedented outside the coronavirus pandemic. 

“It is not the first time the oil markets would see an oversupply, but one important outcome would be downward pressure on the prices,” said Fatih Birol, the agency’s director.

He added the combination of slowing demand and rising supply “could have substantial implications” for oil companies. “It is time for many producers to look at their business plans, in my view.”

The Paris-based body, founded in the aftermath of the 1970s Arab oil embargoes to advise on energy security, said last year that the world was at “the beginning of the end” of the fossil fuel era. It has said demand for oil, natural gas and coal will all start to fall before the end of the decade amid the mass rollout of renewable energy and electric vehicles.