Oil Rebounds on Mexico Production Outage - OIR 240821


Tuesday, August 24,  2021 / 8:48 PM / by Tom Kool of Oilprice.com / Header Image Credit: Sputnik News


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

Indian Crude Imports Drop to 1-Year Low in July

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  • Indian demand seems to have bottomed out in July, hitting a 1-year low in crude oil imports at 3.4 million b/d.
  • The weak readings come from a double whammy of refinery maintenance in at least six major refineries across the country and still-high product stocks that were slow to clear during the April-May lockdowns.
  • With the monsoon season largely over and refineries coming back from seasonal maintenance, forthcoming months should see tangible improvements, boosted by a narrowing Brent-Dubai EFS (ie more arbitrage barrels coming in).
  • August imports so far seem to be indicating a gradual rebound in Indian demand, with arrivals between August 01-23 averaging 3.8 million b/d, up by 400,000 b/d month-on-month.

Market Movers

  • S&P warned that it might downgrade the credit rating of Australian energy/mining firm BHP (NYSE:BHP) after it sold its oil business to Woodside in a nil-premium merger. The potential downgrade to BBB+ would see BHP's rating drop to its lowest level since it was first rated in 1995.
  • Brazil's NOC Petrobras (NYSE:PBR) launched operations at its 180 kbpd Carioca FPSO in the Sepia field, some 200km off the coast in water depth of 2200 meters. Petrobras' stocks failed to react so far.
  • Royal Dutch Shell (NYSE:RDS.A) lost its OML 11 block in Nigeria after a court decision ruled the Anglo-Dutch major wasn't entitled to renew it, coming only several weeks after Shell paid a $111 million fine for a decades-old oil spill. Shell's leaving Nigeria seems imminent now. 

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Tuesday, August 24, 2021

Crude prices recovered somewhat from last week's freefall, boosted by improving signals coming out of East Asia (China reporting no locally transmitted infections) as well as the Ku-Maloob-Zaap platform seeing a major supply disruption in offshore Mexico. ICE Brent quotes swung back above the $70 per barrel mark, whilst WTI futures trended around $67.5 per barrel, further extending the widening Brent-WTI spread.

Hedge Funds Keep on Selling Crude. Hedge funds and money managers have sold petroleum for the seventh time in nine weeks, Reuters 
reports, as demand concerns have bitten into the summer season's bullish sentiment. The sales were equivalent to 40 MMbbls in the six most important futures in the week to 17 August.

Ku-Maloob-Zaap Fire Debilitates Mexico Offshore Output. A fire on a PEMEX-operated offshore oil platform connected to the Ku-Maloob-Zaap complex (40% of Mexico's crude output) 
killed at least 5 people, forcing the Mexican NOC to decrease output as the platform ran out of natural gas for reinjection. 

Guyana to Pick Crude Marketer from 15 Companies. Fifteen 
companies have bid to become Guyana's crude oil marketer, with China's Sinochem (SH:600500) bidding the lowest price at $0.02 per barrel. The lowest bid might not guarantee the deal as Guyana was seeking for an experienced trading company with solid monthly crude marketing volumes. 

ExxonMobil Negotiates PNG Deal Again. The government of Papua New Guinea 
relaunched talks with US major ExxonMobil (NYSE:XOM) on the P'nyang gas project following a 2-year hiatus. The negotiations were broken off after the two sides failed to agree if P'nyang should be channeled into a separate train of PNG LNG. 

Baltic Freight Index Rises to Highest Since 2010. The Baltic Exchange's sea freight Baltic Index 
continues to soar, now standing at 4,147 points, with capesize rates increasing for 11 straight sessions already. Shipping constraints in China coupled with robust commodity demand remain the main drivers of the ongoing freight rate surge. 

GM Recalls Every Chevy Bolt EV. General Motors (NYSE:GM) indefinitely halt the sales of all Chevy Bolt EVs and 
recalled all models produced in 2019-2022 due to fire risks from the car's high-voltage battery pack, dealing a $1 trillion blow to the US carmaker. 

Panama Canal Maintenance to Sap Transit Capacity. The Panama Canal will go into scheduled 
maintenance between 29 August – 10 September, pushing up freight prices in the Western Hemisphere and severely impacting the transiting capacity for non-booked ships which will be forced to wait 14-15 days to pass. 

Chinese Merger to Create Third-Largest Steelmaker. The long-mooted 
merger of Chinese steelmakers Ansteel Group and Ben Gang has started last week, propelling the new firm to become the third globally after Baowu Group and ArcelorMittal (AMS:MT) amid a wide-ranging consolidation drive within China's bloated steel sector. 

Gazprom Ups 2021 Price Forecast. Russian gas giant Gazprom (MCX:GAZP) has 
revised its 2021 average European sales price for the third time this year already, hiking it to $270 per Mcm, sending its stock to an all-time high.

Afghanistan Runs Risk of Product Dearth. Following the Taliban's takeover of Afghanistan, product exports to Afghanistan (which doesn't have a conventional refinery) stopped altogether. Before August most of the 20-25kbpd of products supplied to the country was railed in from the Turkmenbashi Refinery in Turkmenistan, currently only Iran supplies fuel across the border. 

Chinese Coking Coal Futures Soar. Coke and coking coal futures on the Dalian Commodity Exchange surged this week amidst rumours of an impending two-week suspension in coal imports from Mongolia, with the latter trading at an all-time high of 3050 yuan per tonne ($470 per tonne). 

BP Drills First Exploration Well in Azerbaijan's SWAP Block. Operating the Shallow Water Absheron Peninsula (SWAP) block offshore Azerbaijan, UK-based major BP (NYSE:BP) 
 the first wildcat in the acreage at the North Khali area in water depths of some 40 meters. 

Gold Steady Above the $1,800/oz Mark. Following a surge late last week, gold prices remained above the $1,800 per ounce threshold, back to where they were a month ago, as investors continue to speculate whether the US Federal Reserve would delay tapering or not. 



The post Oil Rebounds on Mexico Production Outage first appeared in Oilprice.com on August 24, 2021. 

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Related News - Previous Oilprice Intelligence Report 

1.       The Oil Price Collapse Continues - OIR 200821

2.      The Calm Before the Storm for Oil Markets? - OIR 170821

3.      Oil Prices Resilient Despite Demand Doubts - OIR 130821

4.      Oil Prices Bounce Back As Demand Recovers - OIR 100821

5.      Caution Overtakes Oil Markets as COVID Cases Climb - OIR 060821

6.      Will Biden's Infrastructure Plan Threaten the US Oil Industry? - OIR 030821

7.      Oil Bulls Remain Confident Despite COVID Concerns - OIR 300721

8.     Why The U.S. Wants China to Stop Importing Iranian Crude - OIR 270721

9.      Oil Prices Recover From A Very Manic Monday - OIR 230721

10.  A Terrible Time for OPECplus to Resolve Its Differences - OIR 200721

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