Bearish sentiment has taken over the oil markets

Bearish sentiment gripped oil markets, with oil prices barely reacting to OPEC+’s decision to delay its plan to increase production.

Friday, September 6, 2024

Usually, high-impact OPEC+ decisions trigger a noticeable reaction in oil markets, but not this time. Sentiment has worsened so much that the oil group’s decision to delay the return of cut barrels to 2023 barely resonated, reinforcing fears that balances will swing sharply toward oversupply next year. With ICE Brent futures hovering around $73 a barrel, oil prices are set to close this week at their lowest level since June 2023.

OPEC+ postpones production increase by two months. Citing worse-than-expected economic data from China and the United States, eight OPEC+ members that were due to reverse their voluntary production cuts of 2.2 million b/d agreed to delay their production increase by two months.

Kazakhstan requires manufacturers to defy compliance. According to Reuters, Kazakhstan’s Energy Ministry has asked shareholders of the supergiant Kashagan field to delay field maintenance planned for October until next year, citing gas shortages, canceling the OPEC+ country’s compensation plan.

Libya’s oil fields remain shut despite rumours. The Kriti Samaria and Front Jaguar tankers will load Libyan crude this week despite Haftar’s oil embargo on the African country, depleting remaining port stocks as output remains limited to about 600,000 b/d, half of Libya’s usual output.

NOCs from Saudi Arabia and the Emirates Compete for Shell’s assets. The giant Middle Eastern oil producer Saudi Aramco and ADNOC are competing to buy Shell (LON:SHEL) petrol stations in South Africa as the UK energy major seeks to raise $1bn from its African divestment programme.

Norway is trying to end the climate order on new fields. Norway’s government asked the appeals court to drop the actions against three oil and gas fields operated by Aker BP and Equinor (NYSE:EQNR)effective since January after a ruling found the state failed to fully assess their climate impact.

Diesel protests in Colombia disrupt supply chains. After Colombia’s Petro government ended a diesel price subsidy that had kept fuel prices stable for four years, protests broke out across the country, including attacks on pipelines, with the state oil firm. Ecopetrol (NYSE:EC) warning of loss of oil production.

Indian major seeks approval for new projects in Venezuela. State owned by India ONGC Videsh (NSE:ONGC) is seeking US regulatory approval to operate two new projects in Venezuela, citing a similar permit Chevron (NYSE:CVX)to help it recover a pending dividend of more than $500 million.

ExxonMobil continues to drill in Guyana. Following the US oil major’s sixth FID ExxonMobil (NYSE:XOM) in Guyana’s prolific Stabroek block, the Texas producer has started appraisal drilling on its seventh oil project, the Hammerhead project which is believed to produce up to 190,000 b/d from 2029.

The African oil producer is looking for new routes. South Sudan’s output remains severely curtailed after Sudan’s ongoing civil war blocked its only pipeline route, prompting the country to invite China’s CNPC to develop an alternative pipeline to Djibouti via Ethiopia, bypassing its northern neighbor altogether .

Argentina’s Star Performer exits lithium assets. Argentina’s state oil company YPF (NYSE:YPF)up 45% year-to-date in 2024, is considering selling its lithium unit as part of a broad divestment that will see it streamline investments in the Vaca Muerta shale area, just three years after its creation.

European automakers are scaling back EV ambitions. Europe’s top automakers, Volkswagen and Volvo, have adjusted their electric vehicle strategies to the downside, with the former closing electric vehicle operations in Europe due to slower demand and the latter abandoning a strict mandate to produce only cars without emissions by 2030.

DoE grants first LNG export approval since Biden ban. US Department of Energy licensed LNG developer New Fortress Energy (NASDAQ:NFE) to export LNG from its offshore Altamira LNG plant in Mexico to non-FTA countries, the first such approval since the Biden administration halted the permitting process.

Venezuela’s oil exports rose to the highest level in 4 years. Venezuela’s oil and fuel exports rose in August to the highest level in more than four years, reaching 885,000 b/d or 62% more than a year earlier, defying the reimposition of US sanctions as production from JVs with Chevron and Repsol cooperation continues to rise higher.

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