Bearish Sentiment Strengthens Once Again in Oil Markets |

A combination of rising Covid infections in China, uncertainty over the G7 oil price ceiling and a rise in oil inventories in the United States has driven oil prices lower this week. As oil prices climbed early Friday morning, the rise in bearish sentiment is palpable.









Friday, November 25, 2022

With the oil price cap set to come into effect in just 10 days, oil markets are desperate for clarification on the actual details of the price cap. The European Union met to agree on a common oil price cap, but the talks broke down as members failed to agree on the best price. Media reports suggest that the oil price cap level proposed by the G7 would be in the range of 65-70 per barrel, significantly higher than initially expected. Coupled with the COVID slump in China and stockpiling in the US, this news pushed oil prices lower during the week.

China’s openness no longer seems real. Daily Covid-19 cases in China hit a record high this week, topping 31,000, with Henan and Guangdong returning to lockdown mode while residents of Beijing were under the toughest restrictions since the start of the pandemic. pandemic.

Proposal to cap Lambast gas prices in EU countries. The EU’s recently announced proposal to cap gas prices at €275 per MWh has been heavily criticized by member states, with some annoyance at the lack of clarity while Germany and the Netherlands say any ceiling would displace supply elsewhere.

Biden plans to increase heating oil stocks. The Biden administration is considering increased fuel oil purchases in the northeast heating oil reserve because the current stockpile of 1 million barrels of diesel (worth 10 days’ supply) is not enough to ease the compression of the middle distillate.

Lula’s new era means more asset sales for Petrobras. Brazilian President-elect Lula da Silva’s transition team has called on the outgoing Bolsonaro administration to halt all ongoing asset sales of the national oil company Petrobras (NYSE:PBR) while committing to a non-interventionist policy.

Chevron for more action in Venezuela. American oil major Chevron (NYSE: CVX) could be allowed to dramatically increase oil production in Venezuela if Nicolas Maduro’s government resumes Mexico-brokered negotiations with the opposition.

Iran’s nuclear program draws international anger. Following an IAEA report which revealed that Iran was enriching uranium up to 60% at its Fordow site, Germany, France and the United Kingdom condemned the actions of Tehran as a challenge to the non-proliferation system, reducing the chances of an Iranian deal at any time. soon even lower.

The plant fire stokes fears over the supply of frac sand. A fire at the Superior Silica Sands plant, which produces frac sand to be pumped into shale wells while drilling, jeopardizes supply of Eagle Ford’s key basin component, frac sand prices having already tripled in 2022 so far.

Nigeria estimates the damage caused by the oil theft at $2 billion. An investigation by the Nigerian Senate has revealed that the African country lost more than $2 billion to oil theft in January-August 2022 and that only 66% of the country’s oil production was safe, with even projects major as Shell (LON:SHEL) Forks sensitive to attacks.

The Chinese majors are accelerating American divestment. According to the media, the Chinese offshore oil major CNOOC (HKG:0883) accelerates the sale of its American assets, with the British oil producer Port Energy (LON:HBR) It is rumored to be in talks for its interests in two Gulf of Mexico fields, Appomattox and Stampede.

Germany joins the Windfall Tax Club. Joining the ranks of the UK or Italy, Germany is set to introduce a windfall tax of 33% on oil, gas and coal companies in case their current profits exceed 20% or more. their average number from 2018-2021.

An Italian city launches a challenge against the LNG terminal. The Italian city of Piombino has taken the country’s government to court over a proposed 5 billion m3 LNG terminal in the Tuscan port, saying work on the project should only begin when security guarantees are provided. local fishermen and businessmen.

A new drilling frontier is opening up in Africa. Buoyed by the success of its discovery of Venus in Namibia, the French oil major TotalEneries (NYSE: TTE) plans to launch a drilling campaign on the west coast of South Africa next to the Namibian offshore block containing the discovery of the supergiant.

Ghana wants to pay for oil with gold. The Ghanaian government is seeking to formalize a new policy that would allow the use of gold rather than US dollars to buy petroleum products, as the African country’s international reserves have shrunk to just $6.6 billion, down one-third year-on-year.

A power outage shuts down Ukraine’s largest steel mill. Amid ongoing Russian missile strikes on power generation infrastructure, recurrent blackouts have halted production at Ukraine’s largest steel mill operated by ArcelorMittal (AMS:MT) in Kryvyi Rih, with an insufficient current power supply to sustain production even at 20% capacity.

By Tom Kool for

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