Graph of the week
– Oil prices saw their biggest daily loss in 18 months on Friday, with WTI dropping $ 10.2 a barrel to $ 70 as Omicron fears rippled markets.
– The January 2022 WTI contract recorded the highest number of traded volumes since April 2020, well above 800,000, as the fall in oil prices broke through key technical levels and triggered algorithmic trading.
– The rapid increase in cases of Omicron across the world and the lack of information regarding its health impacts have triggered a series of travel restrictions, with some countries (notably Japan and Israel) already closing their borders completely.
– The announcement of a potential OPEC + policy overhaul that would see the oil group halt supply increases provided some support for oil prices, although WTI fell to the 66 mark on Tuesday morning $.
– American oil major ExxonMobil (NYSE : XOM) is in talks with Nigerian energy company Seplat to sell its shallow-water oil fields in Nigeria, as it seeks to divest assets in Europe and Africa to fund its shale expansion in the United States.
– BP (NYSE : BP) announced plans to build a green hydrogen production plant in the north-east of England, with the 60 MW HyGreen Teesside project located alongside a blue hydrogen project, aiming to provide 30% of UK hydrogen production by 2030.
– Italian energy major ENI (NYSE: E) said it was ready to invest more in nuclear fusion, especially in the Commonwealth Fusion System project led by scientists from MIT, of which it remains the largest shareholder.
Tuesday, November 30, 2021
The Black Friday price collapse rocked the oil market, destroying the bullish sentiment that had built up throughout the month. As prices partially recovered on Monday, they plunged again on Tuesday morning as uncertainty intensified. Concerns about the rapid spread of the Omicron variant have heightened fears of demand destruction. Everyone is now focused on the next OPEC + meeting, as the potential loss of 2-3 million bpd in global demand could convince the cartel to stop its 400,000 bpd of production additions monthly.
Related: Could the World Run on Nitrogen?
Saudi Arabia ignores Omicron’s fears. While other countries in the Middle East were reluctant to assess the prospects for additional supplies from OPEC +, Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Energy Minister Alexander Novak, were inclined to keep the oil group on its pre-established course.
Demand for jet fuel is about to suffer. Demand for jet fuel, by far the most lagging behind in terms of post-pandemic recovery, is now under great pressure as Omicron fears continue to trigger border closures. Originally, the fourth quarter was expected to be strong, but these new developments could ruin that.
The IEA is fighting against fossil fuel producers. Fossil energy producers are apparently to blame for the high prices of natural gas and electricity in Europe, according to International Energy Agency director Fatih Birol. The comment was in response to strong criticism that clean energy initiatives received when prices soared.
Russia’s latest LNG project secures funding. Arctic LNG-2, the next Russian LNG megaproject developed by Novatek (MCX:NVTK), secured $ 10.7 billion in project finance from Chinese, Japanese and Russian banks, thus attracting no European bank interest.
The White House is looking to revamp the royalty rate in the United States. In a recently released plan for the future development of oil and gas projects on federal lands, the Biden administration advocates an increase in royalty rates, currently around 12.5% on onshore leases and from 12.5% to 18%. , 75% on offshore leases.
Coal prices collapse following news of further Chinese intervention. China’s thermal coal futures traded on the Zhengzhou Stock Exchange fell 6% on Monday after the country’s economic planner NDRC signaled willingness to “improve coal pricing mechanisms,” suggesting that more government interventions could be underway.
Iran wants to increase its production capacity to 4 million bpd. As Vienna talks on Iran’s nuclear program restart this week after a five-month hiatus, Iran’s national oil company NIOC is set to return to production capacity of 4 million barrels per day by March 2022.
Canada vetoed the award of the Enbridge pipeline. Canada’s energy regulator has rejected Enbridge (TSE:ENB) are considering selling all of the pipeline space on its 3MB / d trunk system on long-term contracts, arguing that the proposed allocation would overly favor those with contracts.
Related: Green FinTech Is A New Trend Investors Can’t Ignore
Saudi Arabia is spending the money on shale gas. Saudi Aramco (TADAWUL:2222)this week began work on the country’s largest non-oil gas field, Jafurah, with development costs estimated at $ 24 billion, with the goal of producing 2 BCf per day of natural gas and some 400 MCf per day of associated ethane by 2030.
Russia wants to extend its strategic partnership with China to green energy. Having dedicated oil and gas pipelines to supplying Chinese consumption centers, the main Russian energy officials are now calling for the strategic partnership to be extended to renewable energies, most likely in the form of wind projects.
Lundin Energy is considering a sale or merger. Lundin Energy from Sweden (STO: LUNE), whose scope of activity has grown considerably thanks to its participation in the giant Johan Sverdrup field, is considering strategic alternatives which could include an outright merger or sale.
Shell is planning the return of Libya. UK-based energy major Shell (NYSE : RDS.A) plans to return to Libya after leaving in 2012, eyeing oil and gas projects in the Sirte and Ghadames basins, as well as solar power plants there.
Indonesia is offering 8 new oil and gas blocks in a new round. The licensing cycle since the start of the pandemic, Indonesia is now offering 8 new oil and gas blocks located across the archipelago for licensing deals, indicating that the blocks had a total capacity of 500 MMbbls of oil and 22 TCf gas.
By Tom Kool for Oil Octobers
More reads on Oil Octobers: