Oil Stages Strong Recovery - OIR 270821

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Saturday, August 28  2021   /06:20 AM / by Michael Kern of Oilprice.com / Header Image Credit: Oilprice.com


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A weaker U.S. dollar, a more optimistic demand outlook in China and supply outages in the Gulf of Mexico were the catalysts that drove crude prices higher this week.

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Friday, August 27th, 2021

With fundamentals largely remaining the same as they were last week, oil prices nevertheless are poised to post sizable gains, with global benchmark Brent trading above $72 per barrel and WTI climbing to just south of $69 per barrel. The blaze at the Ku-Maloob-Zaap offshore platform in Mexico started it off, taking some 400,000 b/d of crude out of the market for the time being, and the forced evacuation of staff from production platforms in the Gulf of Mexico ahead of Tropical Storm Ida finished off the supply disruption, overpowering COVID concerns and the weakness of the physical market.

Congo Seeks to Review Chinese Metal Deals. The government of the Democratic Republic of Congo (DRC) is reviewing its 6 billion infrastructure-for-metals deals, based on concerns that they are not "sufficiently benefiting Congo" as China controls 70% of DRC's mining sector.

Phillips 66 Puts Louisiana Refinery for Sale. US refiner Phillips 66 (NYSE:PSX) announced it would market its 255kbpd Alliance refinery in Louisiana, citing the "evolving energy landscape" as the primary trigger for such a decision. The 50-year old plant produces gasoline and diesel for the domestic market.

PDVSA Offers 20 Million Barrels to Markets in September. Venezuela's state oil company PDVSA is offering international buyers 20 MMbbls of heavy crude for September lifting, with prices ranging from $35 to $41 per barrel, S&P Platts reports. Venezuela is seeking to ramp up exports as July outflows totaled 520kbpd.

India to Boost LNG Import Potential. India will see the commissioning of a 5mtpa LNG import terminal next year in the western state of Gujarat, with private investor Swan Energy (NS:SWAN) intent on completing it by next March. State companies IOC, Bharat Petroleum and ONGC have all leased 1mtpa per year of Swan's capacities.

CNPC Announces Large Shale Find. China's state-owned oil firm CNPC reported the discovery of a major shale oilfield in the immediate vicinity of the Daqing oil field (the largest-ever field in China), with expected reserves of up to 1.27 billion tons. It remains to be seen if CNPC would be able to manage the complex geology of the given acreage, let alone the waxiness.

EU Rules to Apply to Nord Stream 2. The Dusseldorf Regional Court in Germany ruled that EU gas unbundling rules (i.e. pipeline owners should be different from suppliers) should apply to the almost-complete Nord Stream 2 pipeline, meaning Gazprom (MCX:GAZP) will have to auction its volumes.

BP Spins Off Rumaila into Separate Entity. UK-based major BP (NYSE:BP) finalized the spinning off of its Iraqi subsidiary that operates Rumaila, one of the world's largest oil fields, into a joint venture with PetroChina called Basra Energy Company, as it seeks to decrease its carbon footprint across the entire spectrum of its activities.  

Rosneft Wants to Export Pipeline Gas. The Russian state oil company Rosneft (MCX:ROSN) has asked Russian President Putin to grant them access to pipeline gas exports, to export 10 bcm per year via an agent agreement with Gazprom.
China Wants More Pipeline Gas. China's CNPC (SHA:601857) will drill three new "complex" production wells at the supergiant Galkynysh gas field in Turkmenistan, in a deal that would see it receiving produced gas as a means of payment for its drilling. Amidst soaring LNG prices, China has been ramping up its (cheaper) pipeline gas imports.

Europe's Largest Lithium Project Sparks Anger. The 2.4 billion Jadar project of Anglo-Australian miner Rio Tinto (NYSE:RIO) sparked controversy in Serbia, as locals fear possible environmental damage from the mine, assumed to become Europe's largest once it reaches its peak production capacity of 58,000 tonnes of battery-grade lithium carbonate.

Asian Coal Might Decouple from Gas Prices. Whilst gas prices fell off after soaring over the summer, coal prices might remain elevated in the upcoming weeks, especially in Asia where Indonesia's decision to ban several large producers from exporting (for failing to meet domestic demand on a preferential basis) will add further tightness to seaborne supplies. 

Equinor Wants to Leave Mexican Offshore. Norwegian oil major Equinor (NYSE:EQNR) is intent on quitting Mexico's upstream sector as part of its 2050 ambition of becoming net-zero by 2050, however was thus far unable to find suitable buyers for its assets - self-operated Block 01 and Block 03 in the Salina Basin.

China Promotes its Own Sodium-Ion Technology. After CATL (SHE:300750), China's largest battery manufacturer, unveiled its new sodium-ion batteries last month, the country's government has set sights on the promotion of the new technology within its 14th five-year economic plan as it seeks to diversify away from traditional battery metals like cobalt or lithium.

South Africa Wants More Nuclear Energy. South Africa's energy regulator supported a government plan to build more nuclear reactors in the country as Pretoria moves away from coal-powered electricity generation (still some 80% of total production). Previous attempts to move into nuclear were marred by corruption scandals.

Santos Sued over its Net Zero Objectives. An Australian environmental group is suing the country's second-largest gas producer Santos (ASX:STO), arguing its 2040 net-zero was "deceptive". This marks the first-ever case to challenge the validity of one's emissions objectives.


The post Oil Stages Strong Recovery first appeared in Oilprice.com on August 27, 2021.  

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

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

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

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