Has sentiment finally changed in the oil markets?

Oil prices are poised for a second weekly gain as bullish sentiment builds and the prospect of a prolonged price rally becomes more likely.

Friday, September 20, 2024

Oil prices are set for their second straight weekly gain, with WTI back above $70 a barrel and now trading closer to $72 a barrel, but the fact that the US Federal Reserve has finally initiated a new cycle of monetary easing should to have caused a stronger market response. With a weaker dollar and an improved macro risk outlook, next week could see further upside.

U.S. crude oil inventories hit a one-year low. U.S. crude stockpiles fell to their lowest level in a week, posting another week-on-week decline of 417.5 million barrels, with inventories particularly depleted in the Midwest, where they fell to the most lowest level since December 2014.

NGL Pipeline Blaze Becomes a Criminal Case. Human remains were found in a burned-out car that hit a natural gas liquids pipeline operated by Energy Transfer (NYSE:ET)causing a fire that is still being extinguished and crippling operations of the 375,000 b/d Justicie pipeline that feeds the Mont Belvieu fractionators.

Chevron criticizes Biden’s natural gas policy. Chevron’s (NYSE:CVX) CEO Michael Wirth criticized the Biden administration for “attacks on the natural gas industry,” arguing that Permian Basin resources played a key role in fueling the proliferation of artificial intelligence, as the White House established a task force to investigate whether the centers of data does not undercut US climate goals.

European carmakers are panicking as sales of electric vehicles plummet. The European Automobile Manufacturers Association (ACEA) has called for urgent government action to reverse this year’s downward trend in electric vehicle sales, as BEV sales in Germany and France plunged by 69% and 33% respectively, as subsidies were reduced.

Ukraine agrees to Azerbaijani gas transit. Ukrainian media reported that Kiev had agreed in principle to transit Azerbaijani gas to Europe as a temporary measure after its 5-year transit contract with Russia expired in December, with de-risking European imports, while FTT drops to 33 euros per MWh.

US sues shipowners who hit Baltimore Bridge. The US Justice Department filed a civil suit this week against two Singaporean companies that owned the Dali ship that capsized Baltimore’s Francis Scott Key Bridge this week, seeking $103 million in cleanup and repair costs.

Turkey closes another LNG supply deal. Having already signed supply contracts with Shell (NYSE:RDS.A) and ExxonMobil (NYSE:XOM)Turkey’s state energy firm BOTAS has signed a 10-year LNG deal with the French company. TotalEnergies (NYSE:TTE) starting in 2027, for up to 1.1 million metric tons annually.

Colombia abandons peace accord with rebels. Increasing the risks of attacks on the country’s energy infrastructure, particularly pipelines in remote regions, Colombia’s government canceled peace talks with the leftist ELN militia after an attack on a military base near the border with Venezuela killed two soldiers.

India Eyes Bundle Crude Oil Import Agreement with Russia. Indian refiners are jointly negotiating long-term deals to supply Russian crude next year as in 2024 only private refiners have been able to secure long-term contracts, prompting state-controlled refiners to enter into deals as Russia still accounts for 40-45% of India’s imports.

China releases new oil product export quota. The Chinese government issued a new batch of clean product export quotas, adding 8 million tonnes of quotas for diesel, jet fuel and gasoline, paving the way for a rise in Chinese exports in the fourth quarter to 950,000 b/d, after an average of 850,000 b/d in January-August.

Venezuela’s main refinery hampered by outages. The giant 645,000 bpd Amuay refinery, Venezuela’s key downstream asset, which accounts for almost half of the country’s total capacity, remains almost completely offline following a power outage on September 12, limiting product supply.

Copper hits two-month high on US Fed rate hike. The US Federal Reserve’s 50bps interest rate cut lifted copper to its highest level since mid-July, with the Comex October contract hitting $9,640 a metric tonne as hopes of a soft landing boosted the outlook for the metal. transition.

Red Sea risk premiums rise as strikes increase. The cost of insuring a tanker through the Red Sea has more than doubled in the past month as some insurers cut insurance after the sinking of the Sounion, with war risk premiums now quoted as high as 2% of the ship’s value.

By Michael Kern for Oilprice.com

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