Once again, oil price watchers are eyeing Federal Reserve decisions rather than supply-demand balances, with the community eagerly awaiting Thursday’s inflation data to gauge the magnitude of upcoming rate hikes. The main bullish factor in recent weeks, China’s widely anticipated return to oil markets, has yet to boost oil prices as confidence in Chinese consumption growth remains weak.
chart of the week
When will China really come back?
– After three years of lockdown, China has opened its borders and officially pulled the plug on its zero-COVID policy to overcome sluggish growth and rising domestic discontent.
– At the same time, there is no guarantee that China will return to oil markets any time soon. Massive product export quotas issued for 2023 suggest Beijing expects domestic demand to be weaker for an extended period.
– With around 2 billion trips expected in the run-up to the Lunar New Year, when families reunite after three years apart, the current level of disruption from the coronavirus could be exacerbated.
– Meanwhile, China’s manufacturing activity declined to 47.0 in December, the lowest since February 2020, while service activity contracted for the fourth straight month to come in at 48.0 in December.
market mover
– Major in Energy in UK Shell (LON:SHEL) is said to have been in talks to sell its Norwegian oil and gas fields last year Port Energy (LON:HBR)however, the negotiations failed due to the volatility of gas prices.
– US oil company Phillips 66 (NYSE:PSX) announced that it has bought all of the publicly traded units of oil pipeline operator DCX Midstream for $3.8 billion, bringing its total ownership to 86.8%.
– Norway’s oil major Equinor (NYSE: EQNR) Reportedly intends to buy UK offshore production assets owned by Suncor (NYSE:SU) for a sum of $1.5 billion after eschewing CNOOC’s assets for sale.
Tuesday, January 10, 2023
Chinese import quotas ensure an upward trend. Chinese authorities issued their second batch of oil import quotas for 2023, increasing their volume by 20% year-on-year to 111.82 million tonnes in a thinly veiled attempt to boost refining operations and product exports amid slowing economic growth.
US gasoline prices rise again in 2023. US gasoline prices have risen for the second straight week, with the national average at $3.25 a gallon, due to ongoing disruptions at refineries caused by December’s bomb cyclone.
Protests in Brazil endanger refining. At least seven Petrobras-operated (NYSE: PBR) Refineries in Brazil have been disrupted by protests by supporters of former President Jair Bolsonaro, prompting incoming energy minister Alexandre Silveira to step up security measures.
Russian refinery sold in Italy. Russia’s largest private oil company Lukoil (MCX:LKOH) sold its Italian refinery in Sicily for an undisclosed fee to a group of investors backed by trading house Trafigura, with the Swiss trader handling crude oil supply and product issuance.
Who poisoned South Africa’s power mogul? South African law enforcement officials are investigating an attempt to cyanide poison the outgoing CEO of energy company Eskom Andre de Ruyter in what may be linked to his crackdown on corruption at the company.
US-Qatar Petchem relations are growing. After agreeing to build an $8.5 billion integrated polymers plant in Texas, Qatar’s energy company QatarEnergy and US-Petchem joint venture Chevron Phillips Chemical agreed to build a $6 billion petrochemical complex Dollar in Ras Laffan, Qatar, which is expected to start production in 2026.
Rosneft asks for space in China pipeline Russia’s oil giant Rosneft (MCX:ROSN) called on the government to be a potential gas supplier for the $50 billion annual capacity Power of Siberia-2 gas pipeline.
China Tests Australian Metals Resolution ON Consortium led by the Chinese lithium producer Tianqi Lithium (SHE:002466) made a $95 million bid for Australia Essential Metal (AUX:ESS)which represents the first major test of Canberra’s willingness to allow Chinese lithium investment into the country.
PEMEX does not add reserves. Mexico’s national oil company PEMEX failed to discover a single oil field in 2022, forcing the company’s management to downgrade future reserve replacement plans from 1.3 billion boe to 0.95 billion boe by 2027.
Shipwreck has little effect on Suez. Glory, a Marshall Islands-flagged tanker carrying Ukrainian corn to China, collapsed in the Suez Canal just a year after Ever Given blocked the passage for 6 days, but this time the breakdown stopped the transit for only several hours.
Belgium extends reactors by 10 years. Faced with high natural gas prices, Belgium has decided to extend the life of its two nuclear reactors by 10 years and reached an agreement with a French utility Engie (EPA:ENGI)so that after 40 years of operation they will not be decommissioned in 2025, but will be discontinued in 2036.
China wants more Turkmen gas. Ten years after signing a memorandum to build the fourth pipeline linking Turkmenistan’s vast Galkynysh field with Chinese buyers, the two countries are moving closer to a deal that would nearly double annual gas exports to 65 billion cubic meters per year.
Norway issues 47 new exploration permits. Norwegian authorities have awarded 47 exploration permits to 25 oil companies in their latest licensing round focused on mature areas with the country’s state oil champion Equinor (NYSE: EQNR) with a total of 26 licenses at the top.
By Tom Kool for Oilprice.com
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