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Tuesday, 2nd January, 2024 |
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Dear
Member
,
Crude erased gains in the morning of the first trading session of 2024 despite mostly bullish news.
- The Chinese economy has been sending mixed signals to the oil markets
as Caixin manufacturing PMI indicated a strong recovery in industrial
sentiment with the index rising to 50.8 in December, the strongest since
August.
- The problem with that is that Beijing’s official data paint the exact
opposite, dropping to the weakest level since June at 49.0, suggesting
SMEs are feeling better about the economy than state-surveyed industry
majors.
- Following months of quota-capped trading, Chinese refiners are now
allowed to go big with their crude purchases after the Chinese Ministry
of Commerce allocated 1.34 billion barrels of 2024 import allowances.
- With Shandong utilization rates back above 70% and state-owned
refiners Sinopec and PetroChina ramping up output before the lunar New
Year holiday, Chinese crude imports are expected to increase to 12
million b/d, for the first time since August.
Market Movers
- The $8.3 billion takeover of US utility firm PNM Resources (NYSE:PNM) by its Spanish peer Iberdrola (BME:IBE) fell through after the latter couldn’t get all necessary regulatory approvals before December 31.
- Chinese private refiner Rongsheng and Saudi Aramco (TADAWUL:2222) are in talks
to buy 50% stakes in each other’s refining units, the Saudi-run SASREF
and the Rongsheng-operated Ningbo Zhongjin Petrochemical company.
- US oil major ExxonMobil (NYSE:XOM) has formally exited
the West Qurna-1 oil field in Iraq and transferred its 22.7% stake to
BOC and Pertamina, as well as handing over operatorship to China’s
state-owned oil firm PetroChina.
Tuesday, 2nd January 2024,
The first US-Yemen naval clash in the Red Sea, followed by the arrival
of an Iranian warship into the Bab-el-Mandeb strait, has prompted an
increase in geopolitical risks again, lifting Brent back to the $79 per
barrel mark. China issuing its crude import quotas for 2024, coupled
with product export allowances, will reinvigorate Chinese buying in the
markets, so for the first time in several weeks, the immediate outlook
seems more bullish than bearish.
US Oil Output Starts to Decline. According
to EIA figures, US crude oil production fell to 13.248 million b/d in
October, the first monthly decline since April even if the
month-on-month change was a mere 4,000 b/d, with all tight oil plays
posting increases expect North Dakota.
Maersk Halts Red Sea Transit, Again. The world’s second-largest container line Moller-Maersk (CPH:MAERSK)
halted transit through the Red Sea less than a week after it had
decided to resume navigation, with its Maersk Hangzhou tanker coming
under attack by Houthi militias.
Nigeria Sets the Deal for Dangote Supply. Nigerian oil producers will be required
to supply 483,000 b/d of crude to local refineries in the first six
months of 2024, of which 325,000 b/d should be allocated to the largest
refinery project currently built, the Dangote refinery.
ADNOC Eyes First LNG Supply Deal. ADNOC, the
national oil firm of UAE, and China’s utility major ENN (SHA:600803) are
close to signing a preliminary deal for the supply of 1 million tonnes
LNG per year for 15 years, the first deal from ADNOC’s Ruwais LNG project, expected to be launched in 2028.
Record BYD Sales Create China’s EV Champion. Chinese EV carmaker BYD (HKG:1211) sold 526,109 fully electric vehicles in Q4 2023, aided
by aggressive year-end discounting, suggesting Tesla would need record
quarterly sales if it wants to remain the world’s largest electric
automaker.
Indigenous Blockades Hamper Ecuador Production.
Following several days of force majeure at Ecuador’s Ishpingo oil
field, Ecuadorian authorities have reached an agreement with Indigenous
communities that blocked the site since last week, restarting some 20,000 b/d of production.
Mexico Orders Pemex to Take Over Hydrogen Plant. Mexico’s government has mandated
that the national oil company Pemex take temporary control over Air
Liquide’s hydrogen plant located within the confines of the Tula
refinery, calling stable hydrogen supply a “matter of public interest”.
Libya’s Growth Marred by Discord. Various Libyan top officials have called for the halt of negotiations over the transfer of the Ghadames NC-07 block from state-owned Agoco to an international consortium led by Italy’s ENI (BIT:ENI), saying the 40% share of production to be given to the consortium is too high.
China Coal Demand to Peak in 2025. China’s state-owned energy company Sinopec expects
the country’s coal consumption to peak around 2025 at 4.37 billion
metric tonnes, with oil hitting a plateau in 2026-2030 at 16 million b/d
and natural gas reaching a climax only by 2040.
Nickel is the Worst-Performing Metal of 2023. Nickel became
the worst-performing industrial metal of 2023, posting a 45%
year-on-year decline, its largest since the financial collapse of 2008,
as new supply from Indonesia and weaker Chinese demand growth halted the
price growth of 2019-2022.
Norway Starts to Pull Investments Away from Middle East. In an unexpected move, Norway’s largest pension fund KLP, overseeing $70 billion in investment, blacklisted Saudi Aramco and other Middle Eastern companies, citing an “unacceptable” risk of contributing to human rights abuses.
Russian Pipeline Gas Exports to Europe Collapse. Exports of Russian pipeline gas to Europe plunged
by a further 56% year-on-year in 2023, coming in at a mere 28.3 billion
cubic metres as Gazprom’s options were narrowed down to TurkStream and
one remaining pipeline via Ukraine.
Dry Well Saps Moroccan Hopes of Oil Bonanza. Morocco,
a country that has no production of hydrocarbons at this point, has
been pinning its hopes on ENI’s much-hyped Cinnamon prospect in the
country’s territorial waters, however the release of the rig suggests
the wildcat was dry.
Tom Kool
Editor, Oilprice.com
P.S. Whether you are new to the oil and gas industry or an energy market veteran, you will regret not signing up for Global Energy Alert. Oilprice.com's premium newsletter provides everything from geopolitical analysis to trading analysis, and all for less than a cup of coffee per week. |
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