China’s attempt to kill the oil rally has to fail


In normal times, a message from China that it would release crude oil from its strategic reserves would bring oil prices down, but these are not normal times and the relentless oil rally has continued.

China’s attempt to kill the oil rally has to fail

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Refinery

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Petrol

Friday, January 14, 2022

It may seem somewhat counterintuitive for the oil market to shake off news of a potential Chinese SPR release, but that’s exactly what has happened this week. With the mood still strongly bullish amid a weakening of the dollar, Libyan supply problems and lower-than-expected OPEC + production, the rise in oil prices was driven higher by reports of product inventories reaching a low for several years. With refineries still on guard to increase operations to full capacity, stocks of intermediate distillates have become so scarce that setbacks in the fast-moving month for both diesel and jet fuel rose to the highest level since September 2019. With stocks barely will see a rapid replenishment, the global argument for oil prices seems to be very bullish. As of Friday, global benchmark Brent traded around $ 85 per share. barrel, while WTI approached $ 83 per barrel. barrel.

China announces New Year’s SPR release. As part of the ongoing US-led initiative to tame runaway oil prices, China announced it would release crude oil from its strategic stocks around the lunar new year without specifying the exact quantities.

Spot Asian LNG price declines due to weak demand. Spot-LNG prices in Asia continued to fall this week as abundant stocks and above-average hot weather kept purchasing activity subdued, with delivery prices in March ’22 already at $ 25 per tonne. mmBtu.

Fire blows up Kuwait’s main refinery. An explosion shakes Kuwait’s 350,000 b / d Mina al-Ahmadi refinery after a gas condensing unit caught fire, with two victims reported, although export and refinery operations are assumed to be unaffected so far.

Saudi Aramco buys stake in Polish refinery. Saudi Aramco agreed to buy a 30% stake in the Polish company Lotos Asfalt, one of the largest bitumen producers in Europe and owner of the Gdansk refinery at 210,000 b / d, while signing a renewed supply agreement with Poland of around 300,000 b / d d. .

India’s largest refinery is turning green. India’s largest private refinery Reliance Industries (NSE: RELIANCE) will Setup a $ 80 billion green fund to expand beyond its flagship oil-to-chemicals business, including the construction of 100 GW renewable energy plants, primarily solar energy.

Related: The IEA says Russia is to blame for Europe’s gas crisis

LG Energy Solutions Rocks IPO. South Korean battery maker LG Energy Solutions raised $ 10.8 billion in its first IPO, the largest IPO in Korean history, paving the way for one of the most-watched IPOs of 2022 to come on January 27th.

The EU demands a response from Gazprom. With Russia Gazprom (MCX: GAZP) still fails to increase gas flows to Europe, says EU antitrust chief Margrethe Vestager quizzet the gas giant after accusations that it is holding back extra production to keep gas prices high.

Microsoft will produce aviation fuel out of alcohol. Joins Shell and Suncor Energy, the US software company Microsoft (MSFT) invested a $ 50 million batch at a LanzaJet plant in Georgia that will produce aviation fuel from ethanol next year, the largest SAF project in the United States.

New oil war brewing in East Africa? Kenya continues exploration activities in a disputed (presumably oil-rich) part of the Indian Ocean, which the ICJ allocated to neighboring Somalia, with Italian major oil ENI (NYSE: E) spudding the Mlima-1 wildcat last month.

Equinor suffers reserveblow with Mariner. norsk oliemajor Equinor (NYSE: EQNR) said it would face a $ 1.8 billion depreciation after lowering resource and production estimates on the offshore Mariner oil field on the UK continental shelf, following further assessment drilling on the upcoming project.

The US will soon hold record offshore wind auctions. According to President Biden, the United States will hold next month its largest offshore wind auction to date, which can kickstart projects with a capacity of up to 7 GW, located in shallow water between New York’s Long Island and New Jersey.

Related: Saudi Arabia reserves $ 10 billion to buy the stock market

Venezuela gas pipeline explosion causes chaos. One recently explosion along a major pipeline supplying eastern states with gasoline exacerbated the long-running shortage of fuel for transportation in Venezuela, where PDVSA-powered refineries operated at a fraction of their nameplate capacity.

ExxonMobil launches Appalachian sale. In another episode of US majors divesting non-core assets in the US, ExxonMobil (NYSE: XOM) started from the sale of its shale gas properties in the Appalachian Basin, which currently produces about 81 million cubic feet a day.

Saudi Arabia wants to become a uranium power plant. Although there are no official figures on Saudi Arabia’s uranium reserves, the desert kingdom has launched a new mining program to kickstart uranium mining to feed its assumed 17 GW fleet of plants by 2040 and potentially become a major exporter.

By Tom Kool for Oilprice.com

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