Brent slips below $80 as bearish sentiment continues to dominate oil markets

Oil prices continued to fall on Tuesday morning, ignoring rising geopolitical risk in the Middle East and the potential for a supply disruption in Venezuela. Concerns about global demand continue to fuel bearish sentiment in oil markets.

– Q2 quarterly earnings season continued this week with most oil companies reporting their performance results, with TotalEnergies and BP giving us a clear direction as to where oil firms are headed.

– Total’s net income beat market expectations of $4.95 billion to $4.7 billion, with the French major dragged down by a 36% year-on-year decline in refining and product revenue chemical.

– BP, long the least palatable of the oil giants, posted a net profit of $2.8 billion in the second quarter and beat analysts’ expectations by about $200 million, despite a hefty write-down of 1 .5 billion due to the closure of parts of the Gelsenkirchen refinery in Germany next year. .

– Weaker downstream performance will be the main drag for the US majors as well, with Chevron and ExxonMobil reporting results on Friday (August 2) and oil companies collectively expecting a 6-7% decline of quarterly net profit. quarter.

Market movers

– US shale producers Vital Energy (NYSE:VTLE) and North Oil & Gas (NYSE:NOG) agreed to jointly acquire the Permian assets of PE-owned Point Energy Partners for $1.1 billion, with Vital taking 80% and Northern buying the remaining 20%.

– The Chinese refining giant Sinochem (SHA:600500) It is reportedly in talks with Brazilian independent producer Prio to sell a minority stake in offshore field giant Peregrino, after paying $3bn for a 40% stake in 2011.

– Italy’s oil major ENI (BIT:ENI) has signed a temporary exclusivity agreement with global investment firm KKR to sell a 20% to 25% stake in its biofuel and mobility unit Enilive for up to $13.5 billion.

Tuesday, July 30, 2024

For the first time since the post-OPEC+ meeting sell-off, ICE Brent futures fell below $80 a barrel on disappointing global demand as July imports from China are set to hit their lowest level in two years. The decline may be somewhat exaggerated given geopolitical risk on the upside, with Israel-Lebanon igniting over the weekend and Venezuela’s hotly contested election raising the risk of operations in the Latin American nation.

With no mandate for change, OPEC+ meets again. OPEC+ oil ministers will hold an online meeting of the joint ministerial monitoring committee (JMMC) on August 1 to review the effects of decisions taken two months ago, but the market is not expecting changes, just internal discussions.

The Labor government is increasing the UK’s exceptional tax. The new Labor government confirmed this week that it will increase the rate of tax on exceptional profits by 3% to 38% and raise general taxation to 78%, while extending the measure (called the Energy Profits Levy) by another year until 31 March 2030.

Uranium prices rise to 16-year highs. Long-term uranium prices have hit 16-year highs, trading as high as $79 a pound lately, as demand for the radioactive fuel rises amid new power generation developments expected to double global consumption until 2050.

King Coal defies calls for global decline. The International Energy Agency sees global coal consumption remaining flat in 2024, rising marginally to 8.74 billion tonnes, pushing back its forecast for peak coal until 2025, when it sees a slight decline, citing declining Chinese coal appetite.

Saudi influence extends to LME deposits. Attesting to Saudi Arabia’s growing influence in the mining industry, the London Metal Exchange (LME) has approved the Red Sea port of Jeddah as a delivery point for exchange-traded copper and zinc.

Iran seizes another oil tanker for smuggling. Iranian authorities have seized the Togolese-flagged Pearl G tanker for allegedly carrying 700,000 barrels of contraband crude oil, with tracking data showing the vessel has spent the last few months sailing between Sharjah in the United Arab Emirates and the Iraqi coast.

The French major has given up on South Africa. France’s energy major TotalEnergies (NYSE:TTE) has divested its stake in Blocks 11B and 12B offshore South Africa despite discovering two huge gas fields, citing a challenging environment to monetize the Luiperd and Brulpadda discoveries.

US resumes SPR purchases as WTI falls. The US Department of Energy purchased 4.65 million barrels of crude oil for the Strategic Petroleum Reserve’s Bayou Choctaw site at an average price of $76.92 per barrel, with ExxonMobil (NYSE:XOM) offering the most and being awarded 3.9 million barrels.

Iraq increases oil export capacity. As OPEC+’s biggest overproducers in recent years, Iraq has nevertheless continued to build out its crude oil infrastructure, adding two pumping units near the Zubair oil field and adding 300,000 b/d export capacity to around 3.5 million b /day.

Texas oil regulator opens well in case of earthquakes. Following last week’s powerful earthquakes in the Permian, with the largest measuring 5.1 on the Richter scale, the Railroad Commission of Texas has opened an investigation into the disposal wells in the Camp Springs production area.

The White House has no plans to tighten up on Venezuela. Protests erupted in Venezuela after Nicolas Maduro won a third six-year term in a hotly contested vote, although the Biden administration said it was not considering retroactively canceling existing sanctions relief.

Glencore Mulls coal division, announcement soon. The mining giant Glencore (LON:GLEN) kept its 2024 production guidance unchanged to reflect the acquisition of Teck’s coking coal business, but said it would reveal its decision on a potential coal spin-off when it presents its first-half financial results next week.

US Natgas prices continue to decline. U.S. Henry Hub natural gas futures fell below $2 per mmBtu this week, the lowest since early May, losing more than 55% of their value in less than a month as gas production surged and August promising milder weather compared to July.

By Michael Kern for Oilprice.com

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