Oil Prices Charge Higher as Bullish Sentiment Builds - OIR 051021

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Tuesday, October 05, 2021  / 06:47 PM / by Tom Kool of Oilprice.com / Header Image Credit: iStock

 

We will take a quick look at some of the critical figures and data in the energy markets. 

We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

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Chart of the Week

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  • China is set for a tumultuous winter as a nationwide power crunch is eating into Chinese demand for commodities, compelling analysts to revisit their forecasts for its 2021 economic performance.
  • Two-thirds of the nationwide total, 19 provinces have introduced power rationing over September, mandating industry participants in refining and other segments to decrease production.
  • The ongoing global gas shortage, having already pushed spot Asian LNG prices to some 35 per mmBtu, and simultaneously surging coal prices, have been the prime suspects behind this, although the Communist Party's ban on electricity generators to increase bills for consumers also played a large part.
  • Chinese authorities seem to be open to relaxing safety rules in the country's manifold coal mines so as to alleviate the energy crunch before the official winter heating season starts 15 November.  


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Market Movers

  • French oil major TotalEnergies (NYSE:TTE) is seeking to sell a third of its 60% stake in Laggan Tormore, a major UK North Sea gas field, in a deal that is expected to generate $300 million.
  • Qatar Petroleum placed an order with Chinese shipyard Hudong-Zhonghua for four new LNG tankers to be built for $760 million, the first batch of shipbuilding orders for the upcoming North Field Expansion.
  • US investment firm Stonepeak stated it would purchase shipping company Teekay LNG (NYSE:TGP) in a deal worth $6.2 billion - Stonepeak offered an 8% premium over Teekay's shares in a sign it expects LNG shipping to remain profitable for a prolonged period. 

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Tuesday, October 05, 2021

The October OPEC+ Ministerial Meeting brought no surprising announcements as all participating states agreed that sticking to the pre-charted course would be in the collective interest of the group. As a consequence, crude prices rose to their highest in 3 years (with WTI moving in close to a 7-year peak) as the December ICE Brent contract was already trading above $82 per barrel. Whilst there remain downside risks that could throw cold water on the price rally, most notably China's power crunch that could bite into October refining rates, it will take several days if not weeks until the market starts noticing those signs. 

Saudi Aramco Maintains Ambitious Plans. Saudi Aramco (TADAWUL:2222)
expects to hit 13 million b/d production capacity by 2027, up 1mbpd from current levels of sustained output, largely by means of ramping up offshore production from the Marjan, Berri and Zuluf fields. 

Rosneft and Vitol Find One Another Again. Russia's national oil company Rosneft (MCX:ROSN) has
reportedly signed a new long-term supply deal with trading firm Vitol, stipulating supplies of 9 million tons per year, the first such deal since their 2013 contract. 

ExxonMobil Hopes to Stay Key Qatar LNG Partner. As Qatar Petroleum is getting closer to picking its partners in the 30 billion North Field Expansion development plan, US major ExxonMobil (NYSE:XOM) has been
expressing its certainty that it would land that deal. 

Mexico Wants Power Monopoly Revival. The government of Andres Manuel Lopez Obrador put forward a
constitutional change proposal that would return Mexico to market conditions before 2014, i.e. providing the state utility company CFE with a 54% market share and preferential treatment. 

Gazprom Starts Nord Stream 2 Tests. Russian gas giant Gazprom (MCX:GAZP) has started
filling up one of the Nord Stream 2 pipes for tests as Germany has reportedly asked the gas conduit's operator company to provide assurances that it would duly operate the pipeline, in a sign that the regulatory approval might not be that far away.  

Chevron Buys into Europe's Biofuel Market. Committed to ramp up its renewables-focused investments, US major Chevron (NYSE:CVX) has
bought the entire base oil business of Finnish refiner Neste Oil (HE:NESTE), taking over all current operations along with a Bahraini subsidiary without specifying the price. 

Canada Escalates Line 5 Dispute with US. Canada formally
invoked a 1977 pipelines treaty with the US to trigger political talks over the fate of Line 5, a 540kbpd crude pipeline operated by Enbridge (TSE:ENB) that runs from Wisconsin to Ontario, as the state of Michigan intends to shut down the pipeline over fears of potential leakage. 

Petrobras Pays Almost $1 Billion in US Fines. Brazil's national oil company Petrobras (NYSE:PBR) stated it had
paid $853 million to the US Department of Justice on the back of a protracted corruption probe started off by the Car Wash investigation, closing the probe for good.  

BHP to Supply Nickel to Toyota-Panasonic. Australian miner BHP (NYSE:BHP) will
supply nickel sulfate from Australia to a battery-producing joint venture of Japanese firms Toyota (TYO:7203) and Panasonic (TYO:6752), its second strategic deal following a similar nickel supply deal with Tesla signed this summer. 

Phillips 66 Plans to Rebuild Alliance Refinery. Following weeks of speculation about a potential sale or even closure of the Hurricane Ida-damaged Alliance Refinery in Louisiana, US refiner Phillips 66 (NYSE:PSX) has reportedly decided to repair and
restart the 255,000 bpd capacity refinery. 

European Coal Futures Skyrocket. Rotterdam coal futures, the European pricing benchmark, have risen to an all-time high this week as the 2022 API2 coal futures contract moved into $180 per metric ton as gas prices continue to increase. 

Petrofac Shares Bloom Following Bribery Ruling. Ironically enough, shares of UK-based oil services firm Petrofac (LON:PFC) surged this week following a London court ruling that
ordered it to pay a $95 million penalty for making payments to agents in Iraq, Saudi Arabia, and the UAE to land prospective deals. 

Libya Wants to Build New Refinery. Libya's unity government and the National Oil Corporation have come forward with a joint declaration of intent on
building a $600 million new refinery in Sebha, in the south of the country, reviving a project that was started in the 1980s only to come off the agenda afterward.



Credit:

The post Oil Prices Charge Higher as Bullish Sentiment Builds first appeared in Oilprice.com on October 05, 2021.  

 

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Related News - Previous Oilprice Intelligence Report 

1.       Oil Markets On Edge As OPEC plus Meeting Looms - OIR 011021

2.      Brent Temporarily Breaks the $80 Mark - OIR 280921

3.      Oil Prices Continue to Climb on Supply Disruptions - OIR 240921

4.      Oil Prices Under Pressure from China's Evergrande Crisis - OIR 210921

5.      Oil Ends Week on Bullish Note as Outages Persist - OIR 170921

6.      Oil Prices Climb as Another Storm Hits the Gulf Coast- OIR 140921

7.      Oil Prices Bounce Back as Bullish Sentiment Returns - OIR 100921

8.     Oil Prices Slide Despite Supply Disruption - OIR 070921

9.      Oil Remains Elevated After Hurricane Ida Hurts Supply - OIR 030921

10.  Hurricane Ida Hurts Oil Demand Ahead of OPECPlus Meeting - OIR 310821


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