OIL and Energy Insider
December 01, 2023
Oil Markets Confused and Underwhelmed
by OPEC+ Cuts
Oil markets were left both confused and underwhelmed by the OPEC+
decision to cut 2.2 million bpd in the first quarter of 2024, with oil
prices falling toward a weekly loss.
Friday, December 1st, 2023
Oil markets welcomed the new OPEC+ deal that pledged 2.2 million b/d
in voluntary cuts for the first quarter of 2024 in a very lukewarm
manner, with Brent erasing all its earlier gains and dropping back to
$81 per barrel. With even the most seasoned industry watchers starting
to lose track of which country will be cutting what amount against
which reference level, the production target confusion was aggravated
by the fact that markets expected deeper cuts, going over and above
what Saudi Arabia or Russia have already curbed from their output.
OPEC+ Cuts Production Further. Members of
the OPEC+ oil group agreed to
voluntary production cuts totalling 2.2 million b/d for Q1 2024 as the
group’s de facto leader Saudi Arabia rolled over its current voluntary
cut of 1 million b/d and Russia widened its pledge to 500,000 b/d.
Brazil to Become Member of OPEC+ Family. South
America’s largest oil producer Brazil is set to officially become a
member of OPEC+ from January 2024 even though it would not join the
oil group’s ongoing round of production cuts, seeing output soar to
all-time highs in recent months.
Gold to Hit All-Time Highs Soon. With market
sentiment shifting back to a US hard
landing in Q1 2024, prices of gold have been moving closer
to their record high recorded in August 2020 at $2,063 per metric
tonne and rallied more than 11% since October.
LME Reinvigorated by End of Nickel Trading Scandal. The
London Metal Exchange won a legal case against hedge
funds Elliott Associates and Jane Street Global Trading that demanded
$472 million in compensation for canceled nickel trades worth billions
of dollars, allowing LME to recoup some reputation.
Oxy Might Be the Next M&A Champion. US oil
major Occidental Petroleum (NYSE:OXY) is closing in
on a deal with shale Permian company CrownRock with a bid of more than
$10 billion, potentially outbidding ConocoPhillips and taking over
some 86,000 net acres of shale patches in the Midland.
Activist Investors Go After Phillips 66. Only
2 years after its spat with ExxonMobil, activist investor Elliott
Investment took a $1 billion stake in US refiner Phillips
66 (NYSE: PSX) and is now demanding that
the downstream firm revamp its board due to weaker performance that
kept market share subdued.
Norwegian Major to Quit Nigeria. Norway’s
state-owned oil company Equinor (NYSE:EQNR) had agreed to
sell its onshore Nigerian business, including the almost
condensate-like Agbami field, to a local upstream firm Chappal
Energies, ending 30 years of Norwegian presence in the African
country.
India Demands Generators to Maximize Coal. India’s
government is prompting power generators across the country to add
some 17 GW of coal-fuelled capacity to avert electricity outages amidst
soaring demand for power, up 10% year-on-year, also unfreezing 38
idled coal plant projects.
Iran Sets Ambitious 2024-2025 Targets. Iran’s
government is set to base its
2024-2025 budget on an oil price of $71 per barrel as well as crude
and condensate exports of 1.35 million b/d, a notable downgrade
compared to last year’s $85 per barrel breakeven cost.
Referendum Raises the Specter of a Venezuela-Guyana War. Venezuela
will carry out a referendum on
its territorial dispute with Guyana over the contested oil-rich
Essequibo territory on December 3, leading to a notable uptick in
military activities in the wider region.
TMX Sorts Out Tolling Issues. Canada’s
energy regulator CER approved preliminary
interim tolls for the Trans Mountain Pipeline system, clearing the
largest obstacle to commissioning now as shippers would need to commit
to a $11.46 per barrel toll, to be signed under a 15-year pipeline
deal.
Lithium Prices Might Still Fall Lower. Analysts
are predicting even
further pricing downside to lithium carbonate prices as surging supply
has been outpacing the rise in demand, with a Reuters survey
indicating the trough might be as low ¥80,000 per metric tonne
($11,300/mt) next year.
European Windfall Taxes Hurt Refiners. Poland’s
national oil company PKN Orlen (WSE:PKN) saw
its shares plunge some
10% this week after the newly elected government introduced a windfall
tax on revenues from natural gas production, expecting a revenue loss
of $1.5-1.6 billion.
Thanks for reading and we’ll see you next week.
Michael Kern,
Oilprice.com
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
509 995 1879
Cell, Pacific Time Zone.
General office:
509-254
6854
4501 East Trent
Ave.
Spokane, WA 99212
|