Brent Temporarily Breaks the $80 Mark - OIR 280921

Oil & Gas
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Tuesday, September 28, 2021 / 05:15 PM / by Tom Kool of / Header Image Credit: CNBC


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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  • Brent surged to its highest level in almost 3 years on Monday morning on the back of an industry-wide supply crunch.
  • One of the most noteworthy developments of the past several months has been inventory draws across all continents, the largest on record, spearheaded by China's five consecutive months of stock declines.
  • It remains to be seen how OPEC+ will react when it conducts its next meeting on the fourth of October, but internal documents have already highlighted that global oil demand might be boosted by 370kbpd if natural gas prices remain elevated.
  • The surge in crude prices came on the back of trading firms and investment banks, most notably Trafigura and Goldman Sachs, painting a rather bullish picture for oil prices, stating that the supply deficit is much larger than the market currently anticipates. 

Market Movers

  • Seeing its shares surge 6% over the past 5 trading sessions, Russia's gas giant Gazprom (MCX:GAZP) has seen gas supplies to Europe via the Yamal pipeline halve on Tuesday, a drop it considers temporary.
  • French major TotalEnergies (NYSE:TTE) announced it would buy back $1.5 billion of its shares in Q4 2021 and would use windfall profits from high oil prices to finance its pipeline of renewables projects, reaching 35 GW renewable capacity by 2025.
  • Canadian pipeline firm Enbridge (NYSE:ENB) clinched partnership deals with Royal Dutch Shell (NYSE:RDS.A) on prospective hydrogen production as well as Vanguard Renewables on utilizing renewable natural gas as it seeks to add substance to its net-zero by 2050 objectives. 

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Tuesday, September 28, 2021

For the first time since October 2018, Brent futures exceeded $80 per barrel, though it needs to be pointed out that it was only November ICE Brent that breached that psychological barrier as all subsequent months dipped deeper into backwardation. It wasn't long before Brent fell back to $79, however, with traders locking in gains. This week's surge in prices was largely driven by concerns of tight oil supply in the upcoming months, on the back of US Gulf of Mexico outages, Angola and Nigeria struggling to produce as much as they could, and a global inventory decline. Demand, on the other hand, is still looking robust. 

Goldman Sachs Launches Bullish Battlecry. US investment bank Goldman Sachs (NYSE:GS) indicated it
expects Brent crude prices to add another $10 per barrel over Q4 and trade around the 90 per barrel mark by year-end 2021, primarily led by the ongoing supply deficit. 

UK Gas Stations Slowly Run Dry. Showing one of the ugliest facets of post-Brexit Britain, an acute shortage of truck drivers
resulted in UK downstream firms rationing their fuel deliveries, in its turn triggering a wave of nationwide panic buying, despite assurances from the likes of BP (NYSE:BP) and Shell (NYSE:RDS.A) that the situation is under control.

ADNOC Halts Voluntary Export Cuts. Abu Dhabi's national oil company ADNOC informed all its term buyers that it would scrap its voluntary term
nomination cuts, already lowered to 5% for November-loading cargoes, meaning that it would provide full December allocations on all four of its main crude grades. 

PennEast Becomes Latest Pipeline to Run Aground. PennEast Pipeline, a proposed 1.1 Bcf per day capacity pipeline that would have run from the Marcellus/Utica shale gas play in Pennsylvania to New Jersey, has
joined the ranks of other scuttled projects amidst manifold regulatory challenges, further increasing the risk of Appalachian gas output remaining trapped. 

Al Gore Company Buys Out UK Power Supplier. Generation Investment Management, an investment management company co-founded by Al Gore,
agreed to take a stake of 13% in the UK's embattled power retailer Octopus Energy for $600 million in additional investment. 

China Releases Strategic Metal Stocks for the Fourth Time. Unable to contain runaway commodity prices, China's National Food and Strategic Reserves Administration will auction the
fourth batch of metal stocks this year - this time releasing 70,000mt of aluminum, 50,000mt of zinc, and 30,000mt of copper at an open-bidding event to be held 09 October.

Azeri Gas to Flow to Turkey Again. After a 6-month hiatus, the Shah Deniz consortium led by UK major BP (NYSE:BP) and Turkey's state-owned gas company BOTAS
agreed on an extension to the 20-year supply deal sending gas from Shah Deniz Phase One that expired this April, without specifying the details thereof. 

CNOOC Wants Mainland China Listing. Currently listed on the Hong Kong exchange, China's state-controlled offshore oil company CNOOC has
given up on hopes of seeing itself listed on the New York Stock Exchange after being blacklisted over alleged ties to the Chinese military and will seek a listing at one of mainland stock exchanges. 

Ecopetrol Bets on Carbon-Offset Crude. Colombia's national oil company Ecopetrol (NYSE:EC) believes demand for
carbon offset crudes will increase as refiners start checking the carbon impact of their imports, preparing for its first-ever carbon-compensated Castilla delivery that it believes would propel the firm to first-mover category. 

Saudi Aramco Teams up with Air Products for Hydrogen Supply. Saudi Aramco (TADAWUL:2222) and US industrial gas company Air Products (NYSE:APD) have
finalized an agreement that would see the two operate air separation, gasification, and power generation units for Aramco's 400kbpd Jazan Refinery. 

ExxonMobil Relocates Service Hub to Guyana. Vowing to get as much oil out of the ground as quickly as possible, the US major ExxonMobil (NYSE:XOM) has decided to
move its oil services hub from Trinidad and Tobago to Guyana, as it seeks to expedite the development of the three deepwater blocks it operates, aiming to spud 24 further wells by year-end 2025. 

Chevron Forced to Delay Tengiz Expansion. US oil major Chevron (NYSE:CVX)
one of its main future projects abroad, the 260kbpd Tengiz Future Growth Project, will be delayed by 3 to 7 months on the back of pandemic restrictions and COVID-19 flareups among workers, with its full commissioning expected by November 2023. 

India's BPCL to Invest $13 Billion into Diversification Drive. India's third-largest refiner and second-largest fuel retailer, the state-owned Bharat Petroleum (NSE:BPCL) will invest $13.6 billion over the next five years to diversify its assets, with at least one-third of that sum going into petrochemical upgrades.


The post Brent Temporarily Breaks The $80 Mark first appeared in on September 28, 2021. 

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Related News - Previous Oilprice Intelligence Report 

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

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

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

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

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

6.      Oil Prices Slide Despite Supply Disruption - OIR 070921

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

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

9.      Oil Stages Strong Recovery - OIR 270821

10.  Oil Rebounds on Mexico Production Outage - OIR 240821

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