Oil markets on tenterhooks ahead of Fed meeting

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Oil costs recovered from Monday’s $3 a barrel drop, but markets remain jittery ahead of the Fed’s latest meeting. Premium newsletter. com offers everything from geopolitical research to business research, all for less than a cup of coffee a week.

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Chart of the week

Industrial fuel demand in Europe probably won’t return

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Even though herbal fuel costs in Europe have fallen by around 60% compared to June 2022 figures, with one-month FTT futures soaring around €30 per MWh, the continent’s commercial fuel demand remains weak.

– Total fuel intake in Germany, Italy, France, Spain, the Netherlands and the United Kingdom decreased by 9. 7% year-on-year, highlighting Europe’s growing difficulties in putting its industry back on the growth path.

– The Eurozone production PMI last month reached the weakest reading since the early COVID months of 2020, at just 44. 8, marking the weakest moment after a year of trade contraction.

– The destruction of demand in Germany is through the largest of all major European countries, down 15% year-on-year, with primary energy consumers such as steelmakers and chemical companies still reluctant to completely repair production.

Market Drivers

Brazilian petrochemical manufacturer Braskem (NYSE:BAK) soared this week after chlorine maker Unipar (BVMF:UNIP6) made an offer to buy a majority stake in the company at a 43% premium to the market price.

U. S. oil company Chevron (NYSE:CVX) allocated more than $500 million to expand its Trapial block in the western province of Neuquén in the Vaca Muerta area, doubling shale investments globally.

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June 13, 2023

Another week, a complicated Monday for oil markets. While oil costs recovered on Tuesday after the sharp $3 per barrel drop the previous day, weak Chinese knowledge and the U. S. Federal Reserve’s astonishment outlook have slowed down. The U. S. economy keeps oil markets nervous.

Saudi Aramco allocates full volumes despite the reduction. According to news reports, Saudi Arabia’s national oil company is confident its Asian futures buyers will get the full volume of crude they ordered in July, despite its commitment to cut production to 1 million barrels consistent with the day.

The United States announces a momentary acquisition of SPR. The U. S. Department of Defense The U. S. Department of Health said it reached origin deals for 3. 1 million barrels of oil destined for the Strategic Petroleum Reserve in August, adding that it is seeking donations from the company for another 3 million barrels at the same SPR site in Big Hill, TX for delivery in September. Related: Oil soars nearly 4% ahead of Fed interest rate decision

Shell is rethinking its strategy. Reversing its pledges to cut oil production by 1% to 2% a year, Shell’s (LON:SHEL) most sensible grip now is to keep crude production solid until at least 2030, as the energy giant grapples with low returns on renewable investments and booming oil and fuel profits.

Norwegian oil on strike alert. More than 900 on Norwegian offshore drilling rigs will go on strike from June 29 unless lengthy wage negotiations lead to a deal, affecting the operations of service corporations such as Seadrill (NYSE: SDRL) or Odfjell (LON: 0J77).

OPEC maintains its forecast call for 2023. Dismissing China’s weak macroeconomic knowledge and flattening of the exchange rate, OPEC maintained its outlook for call for expansion this year at 2. 35 million b/d, a build-up of 2. 5% year-on-year.

Pakistan buys the first Russian shipment. Pakistani Prime Minister Shehbaz Sharif said the first shipment of Russian oil, a new deal between Islamabad and Moscow, had just arrived at the country’s main oil port, Karachi, and hinted that the payment would be made in Chinese yuan.

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Glencore-Teck Saga takes a new turn. Following the failure of Glencore’s (LON:GLEN) acquisition of Canadian miner Teck Resources (NYSE:TECK), the Swiss trading conglomerate approached the company to buy its coal assets.

Iraq will pay its Iranian fuel debt. After receiving sanctions authorization from the United States, the Iraqi government agreed to pay its $2. 76 billion debt to Iran for imports of herbal fuel and electricity, which will soon be carried out through the Commercial Bank of Iraq.

Calcasieu Pass LNG sees arbitration. Two European utilities, Italy’s Edison (BIT:EDN) and Spain’s Repsol (BME:REP) have sued U. S. LNG developer Venture Global LNG for failing to initiate advertising deliveries to prospective buyers, even though 128 cargoes exchanged money to Europe in the 12-month period.

Chemicals are no longer a coveted business. According to the Wall Street Journal, British company Shell (LON:SHEL) is conducting a comprehensive review of its chemical business after its 2022 functionality ended with a $1. 4 billion loss, while other divisions boosted profitability. .

The expansion of U. S. crude sourcesUU. se is slowing down. The EIA expects U. S. shale oil production to decline. The U. S. rate hit a record in July, reaching 9. 38 million barrels consistently with the day, however, month-consistent increases are narrowing, as next month’s figure would be just 0. 1% higher than this month’s.

Iron ore loses strength because of Goldman’s warning. Chinese iron ore futures fell to $107 a metric ton this week after Goldman Sachs (NYSE:GS) warned that weakness in China’s real estate market would be a lingering challenge for Beijing, expecting the recovery to be “L” rather than immediate.

By Tom Kool for Oilprice. com

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