Oil Prices Rise As Chinese Demand Begins To Rebound

Oil Prices Rise As Chinese Demand Begins To Rebound

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Oil Prices Rise As Chinese Demand Begins To Rebound

Oil Prices Rise As Chinese Demand Begins To Rebound

week planner

Diesel cracks were never like this before

Oil Prices Rise As Chinese Demand Begins To Rebound

Confirming the unprecedented tightness in middle distillates around the world, low-sulfur diesel continues to trade at a very steep premium on a wide scale against Brent-specified crude, which is currently around $38 a barrel.

While tight stocks in Asia may be eased in the long run by Chinese shutdowns, US diesel stocks continue to fall despite already declining in 4 years, leaving only India and the Middle East as potential sources of additional diesel supplies.

– While Russian diesel exports fell by about 100,000 b/d on a monthly basis in March and are heading towards 650,000 b/d, outflows remain largely uninterrupted compared to expectations.
– However, diesel stocks in Northwest Europe remain low, nearly half of what they were this time of year in 2021 and may continue to decline amid refinery maintenance in the region.

market movers

A major American oil company chevron (NYSE: CVX) cemented its foothold in Argentina’s Vaca Murray rock theatre, signing up for the Trapial Este franchise as exclusive operator and holder.

– Chinese offshore oil producer CNOOC HKG:0883 said it expected to raise 32 billion yuan ($5 billion) in a Shanghai stock listing, just six months after the company was delisted from the New York Stock Exchange on suspicion of links to the Chinese military.

French energy pioneer total energy (NYSE: TTE) said it would expand production at the Sempra-operated Cameron LNG project in Louisiana, with the expansion in the form of a fourth train with a production capacity of 6.75 million tons per year.

Tuesday 12 April 2022

After last week’s drop, oil prices are starting to rebound again on hopes that Chinese demand will rebound soon and OPEC’s warnings that it will be impossible to replace 7 million barrels per day of Russian oil exports and products. Thus, CFDs for Brent crude have moved into contango while the Brent futures curve retains its usual backward shape, albeit narrower. All of this indicates that while the release of the International Energy Agency (IEA) SPR has succeeded in easing fears of immediate tightening, structural supply and demand deficits remain on the agenda in the oil markets.

Prolonged lockdowns in China have sparked demand. Chinese refineries are slashing their productivity as coronavirus-free shutdowns continue to hamper demand for products across the country, with Shanghai remaining closed, while the southern city of Guangzhou is expected to follow the same path soon.

US warns India against Russian purchases again. US President Joe Biden has warned India that buying more oil from Russia is not in the “country’s interest”, against the background of Indian refineries already buying 16 million barrels of Urals since the start of the Russo-Ukrainian war.

Iran details the terms of returning the Joint Comprehensive Plan of Action. A group of more than 250 Iranian lawmakers issued a set of preconditions for restoring the 2015 nuclear deal, including guarantees that the United States would not withdraw from the deal, that would not limit Tehran’s freedom to sell its oil and return the proceeds.

US gas stocks fall to their lowest level in three years. Driven by unprecedentedly high LNG exports from the US, US gas inventories ended the winter at just 1,382 billion cubic feet on April 1, the lowest level in three years, pushing Henry Hub prices higher and causing a downturn on the The length of the futures curve.

Russian oil embargo on the agenda of the next round of sanctions. According to media reports, the European Commission is drafting proposals for an oil embargo on Russia by the EU although many governments oppose a blanket ban and may opt instead for an ad hoc tariff.

Italy signs a new supply agreement for Algeria. Italy signed an agreement with the Algerian government to increase natural gas imports by 40%, as the country’s main oil company ENI (NYSE:E) saw progressively higher flows through its Transmed pipeline, reaching 9 billion cubic meters annually of additional gas by 2023-2024. .

Ford wins first public deal to buy lithium. US automaker Ford Motor (NYSE: F) has signed an initial deal to buy lithium from the Sydney-based ASX:LKE direct-extraction project in Argentina, the first for the company to publicly announce its source for the electric vehicle battery. metal.

OPEC lowers oil demand forecast for 2022. OPEC slashed its forecast for oil demand growth this year citing the impact of the Russian invasion of Ukraine, and predicted a 2022 increase of 3.67 million barrels per day, a drop of nearly 500,000 barrels per day compared to previous forecasts.

The zinc market storm is picking up its pace. Europe faces a growing zinc shortage as exorbitant energy prices limit regional smelting production, with the LME contract trading at $4,300 per metric ton amid tight stocks, with only 25 tons available to market in LME depots.

Nigeria is collapsing the power grid again. Nigeria’s national power grid has collapsed for the second time in a month, raising fears that high diesel prices are affecting power supply across the country that uses blackouts but not complete blackouts.

The Indian refiner is facing financing problems. Several Indian and foreign banks have stopped extending trade credit for oil imports to Nayara Energy, the refiner operating the 400,000 bpd Vadinar refinery co-owned by Russia’s Rosneft (MCX: ROSN), forcing it to sell more Products locally.

European wheat prices set a new record. With no end in sight to the Russo-Ukrainian war yet, European wheat prices have reached an all-time high as supply from the Black Sea remains restricted, with December 22 futures exceeding the 350-euro mark per metric ton.

NYMEX suspends trading of Russian platinum and palladium. The New York Mercantile Exchange indicated that it will stop trading platinum and palladium produced by two Russian refineries, after a similar move by London markets, which pushed palladium 5% higher during the week.

By Tom Cole for Oilprice.com

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