Saturday, July 17, 2021
/06:00 AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
Uncertainty appears to have overtaken oil markets once again
as the UAE and Saudi Arabia agree upon a production agreement but details
regarding other OPEC+ members remain unclear.
Friday, July 16th, 2021
The baseline amendment agreement between Saudi
Arabia and the UAE foreshadowed a familiar path forward for the oil markets, at
the same time the lack of detail on how exactly major OPEC+ producers would
bring back production maintains a hefty level of uncertainty. Meanwhile, weak
demand numbers from the US have cast doubts upon the health of gasoline demand
amidst peak driving season.
To See A Full Crude Demand Rebound. OPEC foresees a
return to pre-pandemic demand levels in 2022, with the annual average reaching
99.86mbpd next year on the back of improved containment of COVID-19, 3.4%
Electricity Needs Keep Fossil Fuel Demand Alive. Global
electricity demand is growing faster than aggregate renewables capacity,
meaning that more fossil fuels will be required to meet the increasing needs,
warns the International Energy Agency (IEA). The IEA sees 2021 power
consumption rising by 5% year-on-year, followed by another 4% increment in
Steel Output Slows Down (Temporarily). Chinese steel
output dropped almost 6% in
June, to 93.9 million tons, down from an all-time high recorded in May. In
large part, the decrease in activity is owing to Chinese authorities ramping up
environmental controls ahead of the CCP's centenary.
Relieved On Fed Assurances. Gold rose to a 1-month
high, moving above $1,825 per ounce, as the US federal reserve chair Jerome
Powell played down concerns of monetary tapering, stating that the "US market is still ways off" where the Fed would like to see it.
Tries To Lure Upstream Investors. India curbed the
number of regulatory approvals required to launch an exploration project, to 18
from 37 previously, in a bid to breathe life into the country's upstream
sector. Facing structural decline, India produces some 770kbpd of crude and is
80% reliant on imports.
Petroleum Bill Gets Stuck Again. More than 10 years in
the making, Nigeria's Petroleum Bill failed to see a final approval from the
Lower House of Parliament as MPs started arguing over funds designated to
oil-producing communities in the regions. There is no clear timeline for future
Bitcoin Crackdown Good For Environment. Rystad
Energy stated that China's
crackdown on Bitcoin, having previously mined some 65% of the world's total
digital currency whilst mostly running on coal-generated electricity, will ease
the pressure on electricity grids. Most of the cryptocurrency was mined in
remote provinces such as Xinjiang, Nei Mongol, and partially Sichuan, using up
more than 1% of China's total electricity demand.
Bans New Deals With Trafigura. According to Reuters, Mexican national oil
company PEMEX temporarily nixed all new dealings with Swiss international trader
Trafigura as several countries in Latin America launch investigations into
bribes of public officials. Valid contracts, including the one seeing Trafigura
supply LNG cargoes, remain in effect.
Heavily Impacted By Rioting In South Africa. Widespread
unrest across South Africaâ€™s KwaZulu-Natal and Gauteng provinces forced the
country's refiner Sasol (NYSE:SSL) to shut its
110kbpd Natref refinery, whilst steelmaker Arcelor Mittal (NYSE:MT) declared
force majeure as it remains unable to fulfill its obligations amidst disrupted
Reiterates Prime Condition for Venezuela Sanction Removal. Following
the authorization of LPG sales to Venezuela, exempting cooking gas from the
stringent sanctions regime that Washington has created to pressurize President
NicolÃ¡s Maduro, the U.S. State Department foresees no sanctions-related change
until Venezuela holds free and fair elections.
Mulls Extending Nuclear Plants Beyond 60 Years. Wary
of public outcry on any new nuclear plant projects, Japanese authorities are
currently considering the possibility of extending the maximum service period
of currently operating units beyond 60 years. The government intends to submit
a draft bill allowing such extensions next year.
To Switch To Dual-Fueled LNG Ships. Volkswagen
(OTCMKTS: VWAGY) vowed to use dual-fuel
engines that can run on LNG to reduce its carbon footprint on cargo movements
between regions. Four new LNG vessels would replace current diesel-fuelled ones
by 2023, with the possibility of retrofitting them further with battery
Invests In Monster Drilling Contracts. The national
oil company of the UAE, ADNOC, is backing up its OPEC+ oil ambition with an
almost 0.8 billion set of drilling-related contracts signed this week
with Schlumberger (NYSE:SLB), Halliburton
(NYSE:HAL), and its own drilling unit. Seeking to boost
spare production capacity to 5mbpd by 2030, these contracts will expand the
output potential of the Upper Zakum crude stream.
Sets Cobalt Price For Artisanal Miners. Congo's
national cobalt company EGC set up a price floor of $30 000 per metric ton for
the cobalt miners find as both the government and international investor seek
to push out unregulated middlemen. EGC signed a 5-year supply deal with Trafigura for a total of 45 000 metric tons.
To Ban ICE Vehicles By 2035. The European Commission
proposed banning the sales of new diesel and gasoline cars from 2035 onwards,
with the aim of seeing "nearly" all vehicles on European roads becoming
zero-emission cars by 2050.
The post Uncertainty Has Overtaken Oil Markets Once Again first appeared in Oilprice.com on July 16, 2021.
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