Oil prices have risen sharply over the past three weeks as geopolitical tensions have increased, but worrying economic data from the US could send prices back down.
Friday June 28, 2024
All eyes are on US inflation data as crude oil prices have maintained their hot streak and are expected to end this week with a third weekly gain. Rising geopolitical tensions around Israel and Lebanon have overshadowed weakening US economic data in May, with each day this week up day-on-day and Brent expected to end the week at $87 a barrel.
Calcasieu Pass 2 got the green light. The U.S. Federal Energy Regulatory Commission voted 2-1 to authorize construction and operation of the 20-million-ton-per-year Calcasieu Pass 2 liquefaction plant in Louisiana, paving the way for operator Venture Global to become the second-largest U.S. to become an LNG exporter.
Not every merger or acquisition can impress oil investors. After Eagle Ford, it focused on an upstream business SM Energy (NYSE:SM) bought private equity-backed XCL Resources’ shale assets in Utah’s Uinta region for about $2 billion, sending shares plummeting as much as 10% during Thursday’s trading session.
Hedge funds are making a U-turn in oil futures. Hedge funds and other asset managers have increased their exposure to Brent futures and options, buying the equivalent of 69 million barrels in the week ending June 18. This is the fourth fastest week-on-week increase since 2013.
Nigeria’s refined dreams are being destroyed by fire. Nigeria’s 650,000 barrel-per-day Dangote refinery caught fire this week, sending plumes of dark smoke across the Lekki port from the wastewater treatment plant, while deliveries of gasoline from the refinery have been delayed until at least July.
Norway will launch seabed mining in 2025. Norway’s government said it would open large parts of the Arctic in the first licensing round for seabed mining, which will take place in the first half of 2025, offering 386 blocks over an area of 280,000 km2, as two companies have already have applied for permits.
Dallas Fed sees little improvement in US upstream. The Federal Reserve Bank of Dallas’ quarterly survey shows oil and gas activity in Texas, Louisiana and New Mexico increased only modestly in the second quarter, with most upstream executives surveyed expecting a sideways trend going forward.
Russia Eyes pipeline gas supplies to Iran. Russian natural gas giant Gazprom has signed a memorandum of understanding with Iran’s national gas company NIGC to supply pipeline gas to Iran, despite Tehran having the world’s largest gas reserves after Russia.
European airlines start charging for clean fuel. Europe’s largest aviation group Lufthansa (FRA:LHA) will introduce a surcharge of up to $77 per flight from early 2025 to cover the rising costs of alternative fuels, coinciding with the EU’s requirement to use at least 2% SAF from next year.
Investment attractiveness of Alaska offshore areas is declining. The Italian oil giant ENI (BIT:ENI) has agreed to sell its upstream oil business in Alaska to US producer Hilcorp for an undisclosed amount. This increases the latter’s production to 135,000 boe/d, two months after the Biden administration restricted drilling in Alaska.
Argentina still needs to find offshore oil. The Norwegian state oil company Equinor (NYSE:EQNR) revealed that the first offshore drilling in Argentina’s territorial waters, the Argerich-1 exploration drilling, produced no obvious signs of hydrocarbon deposits.
Saudi Aramco looking for more LNG. Saudi Arabia’s national oil company has signed a non-binding agreement with a US energy developer Sempra (NYSE:SRE) to supply 5 million tonnes of LNG per year over 20 years and is preparing for a 25% equity investment in phase 2 of the Port Arthur LNG project.
TMX is in urgent need of spot shippers. The recently launched TMX pipeline in Canada could take years to become profitable as the operator needs full utilisation of the spot toll, equivalent to 20% of nameplate capacity, to turn equity positive by 2026; in the worst case, this could take eight to nine years.
Trafigura seeks displacement in Glencore in Congo. Global trading giant Trafigura has signed a supply agreement with the Kipushi zinc mine in DR Congo, operated by Ivanhoe Mines (TSE:IVN)strengthening its position in zinc concentrates after rival Glencore refused to extend its exclusive purchasing rights.
By Michael Kern for Oilprice.com
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