Oil Prices Move Higher As OPEC, IEA Forecast Demand Growth

Two weeks before the start of the COP28 summit in the United Arab Emirates, market watchers are bracing for tough talks as even the creation of a World Bank-led climate disaster fund turned out to be too difficult for participating states.

In the Middle East itself, the energy transition is a distant dream as a mere 1% of power generation in Saudi Arabia, Qatar, or Oman comes from renewable sources. Even in the UAE the same metric stands at just 7%.

Dependent on hydrocarbon revenue to fund their national budget, Middle Eastern nations would most probably lobby for the tripling of current renewable capacity by 2030, but would want to avoid any restrictive measures on oil investments and production.

The UAE and Oman aim to reach net zero emissions by 2050; Bahrain, Kuwait, and Saudi Arabia by 2060 and Qatar has so far failed to put forward a net zero target of its own.


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Market Movers

Oklahoma-based drilling firm Mach Natural Resources (NYSE:MNR) said it would buy oil and gas assets in the Anadarko Basin producing 32,000 boepd from privately-held Paloma Partners for $815 million in cash.

US storage and distribution firm Global Partners (NYSE:GLP) agreed to buy 25 fuel terminals from US refinery Motiva for $306 million, almost doubling the company’s storage capacity to 18.3 MMbbls.

Canada’s midstream giant TC Energy (NYSE:TRP) said it is looking to spin off its assets in Mexico and Canada, ideally to form joint ventures with partners, as part of its $2.2 billion divestiture program.

Tuesday, November 14, 2023

A relatively upbeat OPEC monthly report was surprisingly backed up by the IEA’s oil demand growth hikes as the international agency lifted both its 2023 and 2024 annual numbers, arguing that a more palatable oil price will boost consumption next year. The prospect of tougher US enforcement of Russian price cap sanctions and potentially renewed SPR purchases helped push Brent past the $83 per barrel mark, despite market fundamentals remaining softer than throughout most of 2023.

OPEC Remains as Optimistic as Ever. Brushing aside fears of recession, OPEC reiterated its bullish view on oil demand growth in 2024 at 2.25 million b/d, only slightly lower than this year’s 2.46 million b/d, saying the market was exaggerating negative sentiments amidst robust demand.

Iraq to Resume Kurdish Oil Exports. Iraqi oil minister Hayan Abdel-Ghani announced that Baghdad reached an understanding with Turkey over the resumption of northern oil exports and expects to reach an agreement with the Kurdish authorities on restarting production over the upcoming days.

US Shale Production to Fall Further. The EIA’s Drilling Productivity Report sees US shale output decline to 9.652 million b/d in December, just a tad below its November forecast, as production is set to edge lower in the Anadarko, Appalachia and Eagle Ford basins.

LNG Prices Defy Seasonality, Trend Sideways. Europe and China are both set to record the highest LNG imports in months, however sufficient inventories combined with adequate supply have so far failed to lift liquefied gas prices into the winter, with JKM still hovering around $17 per mmBtu.

Exxon Aims for 2026 Lithium Start. In its inaugural lithium strategy presentation, US oil major ExxonMobil (NYSE:XOM) confirmed it plans to start production of EV-quality battery metal at its Arkansas “Project Evergreen” venture by 2027, testing direct lithium extraction technologies.

Chinese Major Takes Over Iraq’s Leading Field. Following years of disputes, the Iraqi government has signed a settlement agreement with ExxonMobil (NYSE:XOM) that would allow the US company to fully quit the West Qurna 1 oil field, with PetroChina (SHA:601857) becoming the project’s operator.

Chevron Restarts Key Israel Field. US oil major Chevron (NYSE:CVX) announced it had resumed production from Israel’s offshore Tamar field, a month after hostilities in Gaza prompted it to halt supply altogether, with Egypt and Jordan expected to see higher imports over the upcoming days.

Referendum Puts an End to Ecuador’s Oil Frontier. Ecuador’s national oil company Petroecuador announced it would shut down its 57,000 b/d upstream project in the Yasuni ecological reserve in the midst of the Amazon rainforest, following an August referendum on the issue.

Glencore Comes to the Rescue. Swiss-based international trader Glencore (LON:GLEN) provided Africa-focused driller Tullow Oil (LON:TLW) a $400 million five-year debt facility to help manage its 2026 maturity bonds, in return taking over the marketing of Tullow’s offshore Ghana oilfields.

China Keeps Copper Under Tight Control. The international clout of Chinese players in the copper market is increasing as China is increasing its copper smelting capacity by 45% by 2027, the majority of incremental smelting capacity globally, turning into a net exporter by the end of the decade.

Saudi Arabia Wants to Move into EV Batteries. Saudi Arabia’s Minister of Investment Khalid al-Falih stated that Riyadh is considering investments into the production of EV batteries and hydrogen-powered vehicles, seeking to become the regional carmaking powerhouse in the Middle East.

Pressure Mounts on Venture Global. European energy majors BP (NYSE:BP), Shell (LON:SHEL), or Edison (BIT:EDN) pressed the US-EU Task Force to intervene in Venture Global LNG’s failure to deliver cargoes into their term deals, as the Louisiana plant is still not fully operational due to faulty equipment.

White House Investigates Russian Oil Shippers. The US Treasury Department sent information requests to some 30 ship management companies about 100 oil tankers it suspects of violating Western sanctions on Russian crude exports, aiming to enforce the $60 per barrel oil price cap.


Source: OILPRICE.com

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