OIL INTELLIGENCE REPORT

 Brent climbed back above $80 on Tuesday as storms disrupted oil and product exports from Russia’s Novorossiysk port, but it is U.S. inventories and the upcoming OPEC+ meeting that will drive oil price movements this week.

Chart of the Week



- This year’s Thanksgiving has recorded the busiest air traffic day ever according to the US Transportation Security Administration, with more than 2.9 million people traveling through the country’s airports.

- Returning jet fuel demand has been a hallmark of this year’s crude oil demand, with India recently reporting the highest kerosene consumption figures since March 2020 at 177,000 b/d.

- Jet fuel has been the most sizable product category to grow this year, adding more than 900,000 b/d year-on-year to hit the highest post-pandemic annual reading of 6.2 million b/d, largely boosted by higher Asian aviation activity.

- Consequently, jet fuel prices in Asia rose to their highest since early 2019 against peer product diesel, with swaps trading at a premium of 85 cents per barrel, despite arbitrage being narrowly open to both Europe and the US.

Market Movers

- Brazil’s national oil firm Petrobras (NYSE:PBR) has presented its 2024-2028 strategic plan, pledging to invest $102 billion over that period and expand into the renewable and fertilizer markets.

- UK energy major BP (NYSE:BP) has received government approval to enter Japan’s electricity market with its BPEJ subsidiary, eyeing renewable energy and power market investments.

- Canada’s leading oil producer Suncor Energy (TSE:SU) has restarted production at its Atlantic coast Terra Nova oil field after completing a life extension project until at least 2031.

Tuesday, November 28, 2023

The postponement of last week's OPEC+ meeting put downward pressure on oil prices, but storms blocking Russian export terminals have added some pricing upside as Kazakhstan’s oil producers are considering production cuts to avoid storage tanks overfilling. With ICE Brent now back above $80 per barrel, US inventory data and the OPEC+ meeting will shape price developments in the second half of this week. 

OPEC Clashes with the IEA. OPEC Secretary General Haitham al Ghais accused the International Energy Agency of vilifying the oil and gas industry, adding that the IEA plays down issues such as energy security and affordability, calling for a “dangerous” phase-down in energy investment.  

Tanker Distress Now Moves to the Gulf of Aden. The US military prevented a commercial vessel in the Gulf of Aden from being seized by armed individuals, with the Central Park chemical tanker being most probably targeted due to it being managed by a company owned by Israel’s Ofer family. 

China Set for Peak Power Demand. According to China’s National Energy Administration, the Asian country will see both electricity and gas consumption peak in the winter of 2023/2024, with the former soaring 12% year-on-year to 140 million KW yet shortages should be largely avoided.

Alberta to Defy Federal Government’s Policy. The premier of Alberta province in Canada Danielle Smith pledging to shield provincial power companies from Ottawa’s federal clean electricity regulations that aim to reach a net-zero emissions power grid by 2035, defending gas-burning plants.

Chinese Major Expands into India’s Underbelly. The government of Sri Lanka is expected to approve a bid from China’s oil major Sinopec (SHA:600028) to build a $4.5 billion refinery, outbidding commodity trader Vitol for the deal, expanding its Belt and Road Initiative to a long-time India ally.

Eyeing Higher Output, Libya Seeks More Investment. Libya’s state oil company NOC stated it needs an annual budget of $17 billion to increase national output from the current 1.2 million b/d to 2 million b/d over the next three years, saying replacing old pipelines would require the most funding.  

Storms Disrupt Russia’s Crude Exports. Oil and product exports from Russia’s Novorossiysk port located on the country’s Black Sea coast have been halted for days due to severe storms, most probably forcing exporters to move sizable parts of this month’s loading schedule to December. 

Hefty Fine Adds Salt to Uniper’s Wounds. One of Europe’s most battered companies, Germany’s utility giant Uniper said it’s compelled to pay €550 million ($600 million) to Italy’s ENI (BIT:ENI) after an arbitration court ruling that found the firm’s retroactive pricing to be unjustified.

Chinese Solar Giant Warns of Consolidation. Gao Jifan, the head of China’s Trina Solar, has warned that extremely low solar panel prices have left the entire supply chain bereft of profit and that further capacity expansion from solar majors will start a wave of consolidation as early as 2024. 

Intervention Fears Push Iron Ore Prices Lower. China’s state economic planner NDRC announced its intent to “deepen its understanding of how iron ore prices are compiled”, sending iron ore prices down to $133 per metric tonne and cutting short the longest streak of weekly gains since January.

India Steps Up Purchases of Russian Coal. India is ramping up imports of Russian coking coal as deliveries from Australia have been hindered by maintenance outages and high prices, surging as high as $350 per metric tonne, making use of new payment mechanisms between the two nations.

France Starts Selling Green Nuclear Bond. France’s utility giant EDF started selling its first green €500 million bond maturing in 2027 that could be used to finance nuclear energy projects, with the French company specifically targeting nuclear reactor upgrades within its own fleet. 

Markets Start to Lose Faith in Oil. Net positions in the WTI futures contract have shrunk for the seventh consecutive week, bringing the total of net long positions to the lowest reading since June at 104 million barrels’ equivalent and reflecting a general decline in bullish sentiment