News update26 Oct 2022 09:02
Tuesday, October 25, 2022
The weakening of the U.S. dollar helped oil prices this week, keeping WTI front-month prices at $86 per barrel despite the avalanche of bad macroeconomic news. With business activity contracting in the U.S., the UK and the euro zone (in the latter it was the worst industrial performance report in the entire post-pandemic period), the oil market bulls are still facing an uphill battle, indicating that the lack of supply in the short term will gain the upper hand over demand concerns in the longer term. So far it has been a draw.
Saudi Arabia Warns Against Using Emergency Stocks. Saudi Arabia’s energy minister Prince Abdulaziz bin Salman has warned against using SPR inventories as a mechanism to manipulate markets, saying losing stocks may be “painful” in the months to come.
Free Cash Flow of U.S. Oil Surges. According to Deloitte, the free cash flow of U.S. oil producers is set to increase by 68% this year to $1.4 trillion amidst surging prices of oil and products – quite the contrast with crude production in the country, which is set to increase only by 4.5% year-on-year.
White House Won’t Appeal Oil Spill Tax Decision. After a Texas District Court found that the recently Senate-enacted federal 9¢/barrel oil spill cleanup tax ran afoul of the export clause in the US Constitution, the Biden administration announced it would not appeal the ruling despite its objections.
Investor Pessimism Gains the Upper Hand. Hedge funds and other managers have suddenly reversed course and sold the equivalent of 50 million barrels in main oil futures in the week to October 18, leaving diesel as the only contract set to spike amidst a worsening demand outlook.
Chinese Refining Rebounds At Last. In a sign that the easing of lockdowns does in fact make a difference, China’s crude refinery throughput recorded its first year-on-year increase in 2022 and hit a nine-month high in September, coming in at 13.82 million b/d, up 10% from August figures.
U.S. Producers Dismiss Biden’s SPR Pledge. Top officials from U.S. shale companies have questioned the Biden Administration’s vow to start refilling the Strategic Petroleum Reserve when oil prices hit $67-72 per barrel, saying we are unlikely to see oil prices going that low anytime soon.
Nord Stream Blast Leaves Insurance Perplexed. With evidence piling up that the Nord Stream 1 leaks were caused by powerful blasts; underwriters of the $7.6 billion pipeline system are readying for a massive damage claim with all of Europe’s leading reinsurance companies reportedly having exposure.
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