Oil Steady Ahead of Fed Rate Hike Decision


Once again, oil watchers are looking not to the supply-demand balance, but to decisions by the US Federal Reserve, with the public eagerly awaiting Thursday’s inflation data to gauge the scale of upcoming interest rate hikes. The main bullish factor of the past weeks, namely China’s widely expected return to oil markets, is yet to boost oil prices as confidence in Chinese consumption growth remains weak.

Chart of the Week

When will China come back to reality?

– After a three-year shutdown, China has opened its borders and officially ended its zero-COVID policy to address sluggish growth and growing domestic discontent.

– At the same time, there is no guarantee that China’s return to oil markets will happen soon, with massive output export quotas for 2023 indicating that Beijing expects domestic demand to remain weaker for much longer.

– With nearly 2 billion trips expected in the run-up to the New Year as families reunite after three years of separation, the current level of disruption from the coronavirus could worsen.

– Meanwhile, China’s manufacturing activity fell to 47.0 in December, the lowest reading since February 2020, while services activity contracted for a fourth straight month to 48.0 in December.

Market bearers

– UK energy expert Shell (LON:SHEL) last year it is said to be in talks to sell oil and gas fields in Norway Harbor Energy (LON:HBR)however, negotiations failed due to fluctuating gas prices.

– US oil company Phillips 66 (NYSE:PSX) announced that it had purchased all outstanding shares of oil pipeline operator DCX Midstream for 3.8 billion, bringing its total ownership to 86.8%.

– Norway’s oil major Equinor (NYSE:EQNR) It is said that it intends to buy offshore production assets of Great Britain Suncor (NYSE:SU) $1.5 billion, avoiding CNOOC’s assets for sale.

Tuesday, January 10, 2023

Add Chinese Import Quotas Bull Push. Chinese authorities released a second batch of oil import quotas for 2023, increasing volumes by 20% year-on-year to 111.82 million tonnes in a subtle bid to boost refinery operations and product exports amid slowing economic growth.

Gasoline prices in the US will rise again in 2023. U.S. gasoline prices rose for a second week, with the national average at $3.25 a gallon amid ongoing refinery outages caused by December’s bomb cyclone.

Brazilian protests pose threat to oil refining. At least seven Petrobras– used (NYSE:PBR) Brazil’s oil refineries have been damaged by protests organized by supporters of former president Jair Bolsonaro, and new energy minister Alexandre Silveira has called for increased security measures.

Russian Refinery in Italy for Sale. Russia’s largest private oil company Lukoil (MCX:LKOH) It has sold an Italian refinery in Sicily for an undisclosed fee to a group of investors backed by trading house Trafigura, a Swiss trader involved in crude oil supply and production.

Who poisoned South Africa’s Power Mogul? South African law enforcement is investigating the attempted cyanide poisoning of Andre de Ruyter, the CEO of electricity company Eskom, potentially linked to his fight against corruption at the company.

US-Qatar Petchem relations are developing. After agreeing to build an $8.5 billion integrated polymer facility in Texas, Qatari energy firm QatarEnergy and US petchem joint venture Chevron Phillips Chemical to build a $6 billion petrochemical complex in Ras Laffan, Qatar, expected to start production in 2026 have agreed on.

Rosneft is demanding space in the Chinese pipeline. Russia’s oil giant Rosneft (MCX:ROSN) asked the government to consider the “Power of Siberia-2” gas pipeline with a capacity of 50 billion cubic meters per year, which is expected to be fully operational by 2030 in the Xinjiang region of China, as a potential gas supplier.

China tests Australian metals. A the consortium is led by a Chinese lithium producer Tianqi Lithium (SHE: 002466) He offered $95 million for Australia Essential Metal (AUX:ESS)It marked the first major test of Canberra’s willingness to allow Chinese lithium investment into the country.

PEMEX Can’t Add Any Reserves. Mexico’s national oil company PEMEX did not discover a single oil field in 2022, forcing the company’s management to reduce future reserve replacement plans from 1.3 billion barrels to 0.95 billion barrels by 2027.

The shipwreck has little effect on Suez. A Marshall Islands-flagged tanker carrying Ukrainian corn to China crashed in the Suez Canal just a year after the Ever Given closed the crossing for six days, but this time the accident only halted transit for a few hours.

Belgium has extended the life of its reactors by 10 years. Faced with high natural gas prices, Belgium has decided to extend the life of two nuclear reactors by 10 years and reached an agreement with a French utility company. Engie (EPA:ENGI)therefore, instead of decommissioning in 2025 after 40 years of operation, it will be decommissioned in 2036.

China wants more Turkmen gas. A decade after signing a memorandum to build a fourth pipeline connecting Turkmenistan’s super-giant Galkinish field with Chinese buyers, the two countries are nearing a deal that would almost double annual gas exports to 65 billion cubic meters a year.

Norway Awards 47 New Exploration Permits. Norwegian authorities have awarded 47 exploration permits to 25 oil companies in the latest licensing round targeting mature areas with the country’s state oil champion. Equinor (NYSE:EQNR) leading the pack with a total of 26 licenses.

By Tom Kool for Oilprice.com

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