Oil Prices Slide Despite Supply Disruption

Oil prices fell on Tuesday morning as fears grew that Asian demand would not recover as quickly as originally expected. Supply disruptions from Hurricane Ida were not significant enough to counter this bearish news.

– Europe is struggling to contain a double whammy of high natural gas and electricity prices, just as it had been bouncing back from a prolonged slump, Bloomberg reports. 

– The gas replenishment rate in Europe’s gas storage sites has continued to slow down, standing only 69% full (a 10-year low for this time of the year), pushing TTF forwards above Brent prices. 

– Amidst disappointing wind generation figures, some countries are increasing their coal purchases, which in turn maintains the upward pressure on carbon prices as they have breached another threshold this week, trading above €62 per metric ton of CO2 equivalent.

– Germany, France, and the United Kingdom all saw their year-ahead contracts for 2022 reach an all-time high on Monday, with all of them trending well above €90 per MWh (almost $110 per MWh).

Market Movers

– Italian oil firm ENI (NYSE:E) joined forces with UAE-based Mubadala Petroleum to cooperate in hydrogen and carbon capture projects across the world, fortifying its presence in the Emirates. 

– UK major BP (NYSE:BP) teamed up with investment firm Macquarie Group (ASX:MQG) for a potential green hydrogen hub, to be built at the former’s now-shut Kwinana Refinery.

– Canadian pipeline company Enbridge (TSE:ENB) will be buying Gulf Coast-focused logistics company Moda Midstream, giving it access to Moda’s Ingleside terminal and other conduits like the Cactus II pipeline.

Oil Prices Today, September 7th, 2021

Saudi Arabia’s drastic cuts to its October 2021 OSPs have sparked fears of a potential slower-than-anticipated demand recovery in Asia as OPEC+ continues to gradually bring part of its idled production back online. Whilst US outages are still hindering crude production in the Gulf of Mexico, the supply constraints appear to be insufficient to stop oil prices from sliding, albeit marginally. As of Tuesday, global benchmark Brent traded below $72 per barrel, whilst WTI was changing hands around $68.5 per barrel.

Chinese Crude Imports Up in August.

Chinese customs data shows that Chinese buyers have ramped up imports over the last month, bringing in 10.5 mbpd of crude, up 8% month-on-month. With teapot refiners still constrained by unavailable import quotas, state-owned companies did most of the buying.