Traders look for bullish signs ahead of crucial Fed meeting

Increased U.S. oil and gas consolidation activity this year has been followed by record profits and intensifying competition for limited untapped resources. If you want to know how to get the most out of this US oil and gas M&A, our service Global energy alert members receive institutional updates on oil and gas stocks. Claim your 30-day risk-free trial today.

Texas is bracing for the largest increase in electricity demand this year

– Texas is poised to face its biggest power generation crisis this week as temperatures reach 105-110°F and will most likely push electricity consumption to the highest level on record.
– The previous record for Texas power consumption was set a year ago at 85.5 GW, however, with Dallas expected to hit 110°F in the first half of this week, ERCOT expects the new historical maximum to be set at 86. -87 GW.
– Electricity prices rose in unison with temperatures, with day-ahead quotes for Tuesday topping $500 per MWh, the highest hourly price in two weeks.
– Despite the heat, natural gas prices at the Waha hub have so far remained negative ($-1 per mmBtu on Monday), indicating that more solar generation during the day and battery coverage in the evening will be enough to cover heat.

Market movers

– Texas-based private equity firm Quantum Capital will acquire some Caerus Oil and Gas assets in Colorado’s Piceance Basin and Utah’s Uinta for $1.8 billion as M&A activity moves in the Rocky Mountains.
– Major upstream APA (NASDAQ:APA) is considering selling about $1 billion worth of oil and gas assets in the Permian Basin in Texas and New Mexico as it seeks to pay off some of the debt it incurred through its acquisition of Callon Petroleum.
– Norway’s state oil company Equinor (NYSE:EQNR) has shut down its Gullfaks C offshore platform in the North Sea Continental Shelf after a well control problem prompted the evacuation of staff.

Tuesday, August 20, 2024

Hit by weak economic data from China, oil prices have struggled to approach the $80 a barrel mark, with ICE Brent now trading at $78 a barrel. With speculative positions skewed bearish, the market will look to Fed minutes and Jerome Powell’s Jackson Hole speech for bullish cues. Seeing as Libya’s supply disruption dissipates, there aren’t that many currently.

M&A activity is increasing in the US amid industry consolidation. According to Ernst & Young, a total of $49.2 billion was spent on mergers and acquisitions in 2023, up 57 percent from the previous year, with only the $59.5 billion Exxon-Pioneer deal set to surpass the total last year and the $53 billion Chevron-Hess deal. it closes next year.

Related:

Canada’s rail strike roils oil industry. As Canadian rail workers prepare for a national strike on August 22, rail movements of undiluted bitumen in Alberta could be put at risk, however, for crude, the impact should be relatively minor as TMX could accommodate about 200,000 b/day more oil.

Guyana goes beyond partnership with Exxon. In Guyana’s first round of competitive bidding, the South American country finalized production sharing contracts for eight offshore blocks, with contracts signed with TotalEnergies, QatarEnergy, Petronas, Hess, CNOOC and ExxonMobil.

French Major Eyes Kuwaiti Solar Expansion. French oil major TotalEnergies (NYSE:TTE) is to sign a deal with Kuwait to build a 1,100MW solar PV plant in a consortium with regional firms Acwa Power and Masdar, as Kuwait seeks to bring generation from renewable sources to 15% by 2030.

Gold prices hit another record high. Gold prices rose above $2,500 an ounce for the first time in history, and even though bullion has fallen marginally since then, the triple whammy of recession fears, geopolitical tensions and lingering demand will push gold even higher.

Algeria rescues Lebanon after total failure. After Lebanon’s only remaining operational power plant ran out of fuel on August 17, causing a nationwide blackout, Algeria promised to step in and deliver fuel to the cash-strapped eastern Mediterranean country.

Venezuela’s oil spill comes at the worst possible time. An oil slick of about 90 square miles has formed in Venezuela’s Gulf of Triste, located near the 146,000 b/d El Palito refinery, worsening oil contamination in the country that has seen 86 oil spills since in 2022 as well as in 2023.

West Africa tries to calm oil tensions. Niger will resume oil exports through neighboring Benin after the 1,200-mile pipeline linking the two countries was shut down in June amid military tensions, blocking CNPC’s increase in output from the Agadem oil field.

China keeps nuclear building frenzy alive. The Chinese government has approved five new nuclear power projects with a combined design capacity of 2,866 MW, adding a boost to the country’s current 56 operating reactors as Beijing prioritizes emission-free power generation.

Libya resumes Sharara production to fuel the refinery. In a sign that Libya’s supply disruptions could soon ease, the country’s national oil company said output from the 300,000 b/d Sharara field (stuck for two weeks) rose to about 85,000 b/d to keep the refinery running at the Zawia refinery.

Copper rebounds on improving Chinese consumption. The benchmark three-month copper contract rebounded to $9,110 a metric ton this week after Chinese copper exports fell 40% from June to 140,940 tonnes, indicating that demand conditions are improving in China.

Senegal seeks to revise oil contracts. Senegal’s new president Diomaye Faye has set up a commission of legal and fiscal experts to review the country’s oil and gas contracts to “rebalance” them in the national interest, just as the 100,000 bpd Sangomar project began producing in the month June.

Mexico exempts Pemex from paying the tax. The Mexican government gave state oil company Pemex a tax break for the fourth time this year, paying no profit-sharing taxes or production taxes in July and saving more than $6 billion in tax payments in 2024 to date .

By Tom Kool for Oilprice.com

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