Despite Covid Concerns Oil Bulls Remain Confident

U.S. inventory dynamics provided significant support for crude prices this week, with commercial stocks falling to the lowest level since January 2020, and signs that tightening will continue.

The markets are now accustomed to the fact that there won’t be an Iranian cliffhanger as President-elect Raisi will be sworn into office. This reduces concerns that Tehran might flood market with more barrels. However, COVID headwinds remain as many European countries experience rising Delta variant cases.

The EU fails to replenish gas storage. European countries are having trouble replenishing their gas reserves due to high LNG prices and limited pipeline supply. Total EU gas reserves now stand at 616 TWh. This is equivalent to 63 billion cubic metres, which is the lowest level since 2015.

TotalEnergies purchases EV charging in Singapore. TotalEnergies (NYSE.TTE) teamed up with Bollore to purchase Singapore’s most prominent electric vehicle charging network. This network accounts for 85% of city-state’s charge point charges. TotalEnergies also acquired Blue Charge for an undisclosed amount. TotalEnergies plans to double its charge point count to 150,000 by 2025.

Gasoline market backwardation. While gasoline cracks are still the most profitable segment of most European refiners’ slates, the derivatives market shows that the global gasoline balance has been tightening. The Eurobob oxy M1 and M2 swap surged above $20 per metric ton earlier in the week, the largest increase in nearly two weeks.

London court will reopen $7Billion BHP dam lawsuit. London Court of Appeal has reopened a case against BHP (NYSE,BHP), an Anglo-Australian mining company, over the 2015 Mariana dam catastrophe, Brazil’s worst-ever environment disaster. It allowed a 200 000 strong claimant group to appeal against a lower court ruling.

ADNOC will ease October 2021 production reductions. ADNOC, the UAE’s state oil company, informed term buyers it would reduce its October 2021 export nomination cuts. This will bring back 10 percent of its output compared with September. This is a clear indicator that the Emirates are still serious about their production ramp-up.

European Majors Leave Venezuela. France’s TotalEnergies and Norway’s Equinor have resigned from their Petrocedeno joint venture. They are now transferring their stakes in a subsidiary PDVSA. The JV is responsible for the Juni oil field in Orinoco Belt, as well as a 180kbpd heavy-crude upgrader. Both companies used this to argue that the development of heavy barrels was incompatible with their low carbon strategies.

UK Wants to Get China Out of Nuclear Projects. UK media reports that China’s nuclear company CGN may be prevented from building new infrastructure in the British Islands. This is due to concerns that China’s increased participation in Britain’s energy infrastructure might pose a threat to its overall energy security.

Rio Tinto Launches $2.4 Billion Serbia Lithium Project. Rio Tinto (NYSE.RIO) made a long-awaited investment decision regarding the project. It stated that construction would begin next year and it would be commissioned by 2026-2027. Jadar, Serbia, is set to be Europe’s largest source of lithium.

Biden Administration will revise toxic coal wastewater rule. According to Reuters, the White House will change a Trump-era rule that allowed US-based coal-fired plants delay in installing equipment that could prevent lead or selenium from seeping into streams and rivers. The new rules will be finalized by the US government by 2024.

Shell Purchases Inspire Energy in a Strike for Green Credentials. Shell (NYSE:RDS), a US-based retailer of renewable energy, purchased Inspire Energy, Reuters reports. This purchase came amid increasing domestic pressures to accelerate its decarbonization efforts.

Spanish High Court Clears Repsol CEO. Antonio Brufau (BME:REP), the CEO of Spanish oil company Repsol, was cleared of accusations that he had spy on market rivals to stop a takeover bid from PEMEX and its partner. The court did not find any evidence that the chairman was involved in the spying case. This triggered a more than 2 percent increase in Repsol stock prices.

Inclement Weather Causes Wheat to Rise. The Chicago BOT saw wheat futures rise to a two-month high after droughts in the US Midwest, and freezing temperatures in Brazil slowed global spring wheat yields. The Wv1 CBOT contract exceeded the $7 threshold while the Paris December contract rose above EUR220 per ton (equivalent of $7.1 per bushel).

Indonesia sets 2060 net zero goal. Indonesia declared it would aim to reach net carbon neutrality in 2060 or earlier, with its total greenhouse gas emissions expected to peak in 2030. It is oil that will be eliminated the fastest in the future. However, there will still be plenty of coal to power generation long into the 20th century.

NOVATEK Reopens Obsky LNG. Russian LNG-focused manufacturer NOVATEK abandoned its Obsky LNG project at 5mtpa and restructured it into a gas processing complex, which would produce hydrogen and ammonia from natural gas. NOVATEK originally planned to use its Arctic Cascade liquefaction technique for the project.

The Offshore Suriname Oil Production is Real. TotalEnergies (NYSE.TTE) conducted two appraisal drilling programs in Suriname’s Block 58. These proved net black oil pay in the Sapakara as well as Kwaskwasi prospects. This is another significant step towards oil commercialization. The Bonboni field will see an additional appraisal well and a flow test for Sapakara this year.

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