Biden’s Bluff and Covid cases drive oil prices down
Oil prices continued to decline this week as rumors that President Biden would dip into U.S. oil reserves combined with a resurgence of covid cases in Europe created new bearish sentiment.
Resurgent COVID fears sparked by a new surge in European cases weighed on oil prices this week, pushing the benchmark Brent towards $ 78 a barrel, down nearly $ 3 a barrel on Friday alone . With Brent and WTI set for a fourth weekly drop, it looks like the Biden administration’s plan to push prices down has largely worked. So far there has been no joint action by the world’s largest importers of crude; the United States, China and India included, but the threat of them joining forces was strong enough to set the tone for trade in recent days. Downside risks to demand and potential releases from SPR also contributed to the flattening of steep downshifts, with 12-month spreads in Brent and WTI trading at their widest since 2013.
OPEC + remains too much in line with the objectives. According to internal data from the oil group, compliance with OPEC + production targets stood at 116%, even higher than last month, as participating members and non-OPEC countries underperformed their monthly target.
The United States calls on Japan, South Korea and China to operate their SPRs. The Biden administration has would have called on major Asian crude importers (Japan, South Korea, India and China) to consider releasing some of their strategic stocks with the aim of lowering prices by increasing the immediate availability of crude as OPEC + refuses to increase its production.
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The US Congress is considering the 1890 antitrust law against OPEC. A bipartisan group of politicians has been in talks to use the Sherman antitrust law of 1890 against OPEC, potentially allowing the US government to sue OPEC countries for manipulating energy prices, a move previously considered a lawless area due to opposition from the State Department.
Trafigura leaves the Indian refinery project. Trafigura trading company is while searching to sell its $ 3 billion 24.5% stake in Nayara Energy, a joint venture running India’s third-largest 400,000 bpd refinery to Vadinar and its port, apparently to a somewhat Italian holding company unknown called Genera Group.
Drilling in Suriname brings mixed results. The wild cat of Sapakara Sud-1 discovered some 325 to 375 million barrels of oil reserves in Suriname offshore Block 58 jointly owned by Apache (NYSE: APA) and TotalENERgies (NYSE: TTE), while the other drilled well – Bonboni-1 – found only sub-commercial deposits.
Asian LNG carriers’ freight rates are skyrocketing. The cost of chartering an LNG carrier from Australia to Japan climbed to $ 320,000 per day this week, double the level of two months ago as high demand limits carrier availability.
Brazil is not seeking to become a member of OPEC. Although President Jair Bolsonaro has said he will seek to have Brazil in OPEC, potentially becoming the country’s fourth-largest producer, the Latin American country’s energy minister has said he does was not planned to join the oil group at the moment.
ADNOC will award $ 20 billion in gas contracts. With the intention of allocating 20 billion dollars to natural gas projects intended to ensure the energy autonomy of the United Arab Emirates, ADNOC is expected to award gas contracts in the coming days, foremost among which is an engineering agreement for the Dalma offshore gas field which should be fully commissioned by 2025.
India expects coal consumption to increase. After being one of the main driving forces behind modifying the final text of COP26, Indian officials have said they expect coal consumption to continue. rising in absolute terms, but New Delhi will strive to reduce its rise in percentage terms, compared to 70% of power generation currently.
Natural gas prices rise in the United States thanks to near-record LNG exports. U.S. natural gas futures continued to climb this week as high LNG exports (averaging 11.1 billion cubic feet per foot in November so far) reduce domestic availability, despite the report from This week’s EIA showing somewhat unusual stock build-up.
BP is considering investing in renewable energy in India for growth. The venture capital division of the British oil major BP (BP: NYSE) could invest a third of its upcoming investments in India, as it sees great potential in India’s clean mobility and the charging infrastructure required for it.
Turkey wants even more volumes from Gazprom. Turkish authorities are in talks with Russian Gazprom to to augment gas imports via the Turkish Stream pipeline of 31.5 billion cubic meters per year, potentially securing the full capacity of the first channel for Turkish buyers, as prices indexed to oil make a comeback in European prices.
Chinese copper premiums reach their highest level in 7 years. With copper stocks in ShFE-registered warehouses dropping to their lowest since June 2009 and Chinese customs slowing import procedures due to a VAT administration issue, Chinese copper premiums have fallen. flew at 1,225 per tonne (just under $ 200 / mt).
Lithium Americas Land Millenial Deal for $ 400 million. based in Canada Lithium Americas (LAC.TOLAC) won the lithium battle focused on Argentina producer Millennial lithium (ML) for $ 400 million in stock and cash, overwhelming the world’s largest producer of electric vehicles, China’s CATL, which remains unable to get its hands on lithium-producing assets.
Bill Gates’ nuclear company chooses Wyoming coal site for nuclear reactor. TerraPower, the nuclear energy company founded by Bill Gates, selected Kemmerer, Wyoming, for the location of its first-ever $ 4 billion modular reactor with molten salt energy storage with a total capacity of 345 MW.
By Michael Kern for Oil Octobers
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