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Brent crude fell below $85 a barrel on Tuesday as poor knowledge of China’s imports/exports weighed on oil markets.
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Chart of the week
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China has recently had the most important bearish point weighing on oil prices, with export and import data from July suggesting that the Asian country’s economy is struggling to overcome its post-COVID problems.
China’s goods exports last month posted the worst monthly drop since February 2020, down 14. 5% in dollar terms, as weak customer spending and investment expansion worsened the outlook.
China’s crude imports followed suit and fell 19% month-on-month to 10. 3 million b/d, the lowest daily rate since January, onshore crude inventories continued to rise.
China’s central bank pegged the yuan to the weakest point in about a month today, seeking to further stimulate exports through a devalued currency, but as demand in the United States also slows, such measures may not be enough.
Market Drivers
U. S. oil company ExxonMobil (NYSE:XOM) has filed an overhaul of its shale oil and fuel assets in Argentina, adding stakes in pipelines, showing its dissatisfaction with the slow progress of its Vaca Muerta projects.
U. S. refiner Phillips 66 (NYSE:PSX) is reportedly in talks with agricultural trader Archer-Daniels-Midland (NYSE:ADM) to identify a biofuels joint venture to produce sustainable aviation fuel.
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Tuesday 08 August 2023
Storm clouds are gathering in oil markets, with weaker-than-expected Chinese macroeconomic knowledge disappointing and a peak likely ending six consecutive weeks of gains in the value of Brent/WTI. The upward effect of Saudi Arabia’s prolonged production cuts and Russia’s export restrictions in September has evaporated, even as disruptions to U. S. refining operations have slowed. The U. S. could continue to cause cracks in commodities and help some of the lost value territory, as ICE Brent is back at $84 a barrel.
Saudi Aramco’s profit fell 40% year-on-year. Saudi Arabia’s national oil company, Saudi Aramco (TADAWUL:2222), reported a 38% year-over-year decline in net profit in the current quarter due to lower costs and reduced oil supply. compounded through a drop in margins for petchem, which raised just over $30 billion.
A Ukrainian drone hits a Russian oil tanker. The Russian-flagged Sig tanker passed through a Ukrainian maritime drone as it approached the Kerch Strait, and the missile hit the U. S. -authorized shipment. The U. S. military maintained great damage while Black Sea oil flows were part of the war.
Refinery outages are testing the U. S. fuel market. It comes days after a similar incident occurred in Baton Rouge, LA.
Kuwait is doubling its LNG consumption. According to Kpler data, Kuwait’s LNG imports hit a record high in July with 0. 9 million tonnes of LNG delivered to Al Zour in incredibly high temperatures, with market reports indicating KPC purchased six more LNG cargoes for September.
Just two days after the Iranian foreign minister’s visit to Islamabad, Pakistan suspended the finishing touches of the multibillion-dollar fuel pipeline between Iran and Pakistan, citing US sanctions as the main reason, while pledging to resume operations as soon as sanctions are lifted.
Environmentalists are suing Germany’s LNG terminal. A German environmental organisation has filed a complaint with the Federal Administrative Court against the operator of the FSRU regasification plant in Lubmin, claiming that Deutsche ReGas’ environmental authorisations had been well assessed.
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Poland pipeline leak contained. The shipment of pipelines along the pipeline network from northern Druzhba to Poland and Germany was halted after a leak in central Poland, but Russian oil materials in that direction are already under EU sanctions, minimizing the effect of the incident.
Norway needs to connect the LNG terminal to the grid. Due to several power outages in 2023 alone, the Norwegian government needs the Hammerfest LNG terminal to be connected to the governed national grid via hydroforce until 2030, saving 2% of the country’s annual emissions. .
China’s coal imports soar amid heat waves. Chinese coal consumers imported 39. 26 million tonnes in July, marking the consecutive month that inflows are well above the average of 37 million tonnes as heat forces electric turbines to run at full capacity.
Nigeria sends fighter jets to destroy illicit oil tankers. Nigerian security forces this week introduced airstrikes on vessels carrying stolen crude in the Niger Delta, just days after the army destroyed 36 illegal refining sites in the region as part of a broader crackdown.
Indifferent to falling profits, Glencore is watching.
Venezuela is biding its time, fixing infrastructure. Pedro Tellechea, chief executive of Venezuela’s national oil company PDVSA, said the company is running to repair leaks and involve spills around Lake Maracaibo, a key production hub, but has not yet begun dredging operations.
By Tom Kool for Oilprice. com
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