Oil majors are rounding up the 2022 financial year with outstanding profit numbers, a development that faces strong backlash from the Biden Administration.
Chart of the Week
China’s Generous Export Quotas Might End Soon
– Absent a strong domestic rebound in oil consumption, Beijing has provided oil refiners with massive import quotas and huge product export quotas to stimulate China’s industrial activity.
– Despite some promising signs, Chinese oil imports are set for a 1.5 million b/d decline month-on-month, plunging back to lockdown-era seaborne arrivals of 9.5 million b/d, according to Kpler.
– Amidst improving flights figures and higher mobility, domestic Chinese consumption might very well rebound soon, prompting Beijing to do another U-turn and limit product exports to avoid fuel inflation.
– S&P Platts expects Chinese gasoline, diesel and jet demand to increase year-on-year by 7%, 4% and 38%, respectively, making it more unlikely that the current export-focused policy will be maintained in H2.
– A group of Greenpeace activists boarded Shell’s (LON:SHEL) White Marlin FPSO north of the Canary Islands en route to the Penguins field in the UK North Sea, with the intention of “occupying the FPSO”.
– French oil major TotalEnergies bought an additional 6.65% stake in Alberta’s 195,000 b/d Fort Hills oil sands project from Teck Resources for $235 million, bringing its total share to 31.23%.
– US oil firm ExxonMobil (NYSE:XOM) wants to start up its first-ever large-scale hydrogen plant, to be built in Baytown, TX, in 2027 or 2028, with a FID expected to materialize next year.
Tuesday, January 31, 2023
While interest rates and Chinese demand are still big on the oil agenda, bumper profits reported by oil majors across the spectrum have been causing ripples in the markets, especially after Exxon reported a whopping $56 billion profit for the entire year of 2022. US refiners such as Marathon and Philips66 both saw their profits rise by 50-60% compared to last year, and back then we thought 2021 was as profitable as good years can get.
OPEC+ Keeps Its Stoic Calm Ahead of February Meeting. The Joint Ministerial Monitoring Committee of OPEC+ will meet on February 01, with sources indicating the panel will recommend keeping the oil group’s current production targets amidst very little noteworthy developments.
White House Does It Again. Just as oil firms started reporting their Q4 earnings, the Biden administration launched another tirade against US oil companies, accusing them of “plowing windfall profits into the pockets of executives and shareholders” instead of increasing production.
Russia Bans Exporters from Complying with price Caps. The Russian government banned domestic oil exporters from adhering to oil price caps, allowing customs to prevent goods from leaving Russia if there is a price cap link and obliges them to report any attempts to impose caps.
New Bill Limits Rights to Tap into SPR. The House of Representatives passed a bill that limits the ability of the US energy secretary to use the country’s strategic oil reserve without increasing the amount of public lands available for oil drilling, however, President Biden vowed to veto it.
Related: Texas Oil And Gas Industry Braces For Severe Winter Weather
Chevron Sees First Results in Venezuela. Since last November when the US major Chevron (NYSE:CVX) was cleared by the White House to resume operations in Venezuelan JVs, the company’s production in the country almost doubled to 90,000 b/d currently.
Weak Demand Cools Down Asian Coal Markets. Asian coal prices have been plummeting recently, with Australia’s Newcastle 5500 kcal/kg benchmark falling below $130 per metric tonne, the lowest in a year, as buying activity in the continent’s two largest importers, China and India, continues to weaken.
Libyan Chaos Mars Deal of the Decade. Less than a day after Libya’s National Oil Corporation signed an $8 billion offshore gas deal with ENI (BIT:ENI), the country’s oil ministry rejected the deal, saying it was concluded without approval as the Italian company’s proceeds rate were hiked to 37% from a previously agreed 30%.
Iraqi Militias Declare War on Pipeline. Despite federal Iraqi authorities working for years to launch a 1 million b/d pipeline that would move crude from Basrah to Jordan’s Red Sea port of Aqaba, Iraqi Shia militia have pledged to derail the project whatever the means.
Texas to Prepare Another Cold Spell. The Railroad Commission of Texas issued a notice to oil and gas pipeline operators to secure equipment and facilities as snowstorms and icy drizzles are expected to spread across the Permian Basin this week, increasing the risk of freeze-offs and blackouts.
China Starts Buying Australian Coal Again. As we have predicted several weeks ago, the first week of February will see the arrival of at least two cargoes of Australian coal to China, the first deliveries since an unofficial ban on imports was implemented by Beijing in October 2020.
Japan and Netherlands Join anti-China Chip Coalition. According to Bloomberg reports, Japan and the Netherlands will soon officially confirm their joining the US’ exports restrictions of semiconductor manufacturing equipment to China, in a bid to slow Beijing’s technological advances.
Norway’s Seabed Isn’t Just for Oil. Norwegian scientists have found substantial reserves of metals like copper and zinc as well as rare earth minerals along the country’s continental shelf, prompting Oslo to consider opening its offshore zones to deep-sea mining despite environmental concerns.
Oil is Back in Vogue Again. Portfolio investors and money managers have purchased the equivalent of 70 million barrels in key oil futures and options contracts, marking the second straight week with a huge influx of interest, with the ICE Brent contract seeing most of the increases (+40 million bbls last week).