It’s been a week of mixed signals for oil markets, with a huge crude inventory build being partially offset by a diesel draw, and supply tightness battling with worrying inflation data and projections of demand destruction.
Oilprice Alert: If you believe that inflation fears are going to overwhelm supply fundamentals and drag oil prices down from here, then you really have to read last week’s Global Energy Alert. The Inside Opportunities column outlines one trading strategy for playing a pullback in oil prices, and it’s certainly not too late to give it a go.
Friday, October 14th, 2022
There were plenty of conflicting signals for the oil market to digest this week. Bearish news included an increase in crude stocks of almost 10 million barrels, a huge week-on-week change. U.S. inflation data was also worrying for oil, with the core consumer price index hitting a 40-year high in September. On the other hand, diesel inventories in the U.S. dropped by 4.9 million barrels, suggesting a troubling shortage ahead of winter. In Europe, strikes in France are adding to fuel supply fears, with one union walking out of talks today after rejecting an offer of a pay rise. The OPEC+ cut and a price cap on Russian crude are two other bullish factors looming over oil markets. Overall, oil prices have fallen this week, with both Brent and WTI set to post weekly losses after two weeks of gains.
OPEC Cuts 2022-2023 Demand Growth. Less than a month after the 2 million b/d production cut pledge, OPEC cut its demand growth figures for both 2022 and 2023, to 2.64 and 2.34 million b/d respectively, citing slowing economic growth, monetary tightening, and ongoing supply issues.
No More Sword Dance in Riyadh. The war of words between the US and Saudi Arabia has moved up a gear this week, with the White House claiming Riyadh pushed other OPEC+ nations into the joint production cut, concurrently proposing legislation to halt arms sales to the Middle Eastern kingdom.
UN Grain Deal Creaking at the Seams. In what might trigger another agricultural pricing storm, Russia has submitted its concerns to the UN about the implementation of the Black Sea grain exports agreement and pledged to quit the deal next month if the guarantees it was given are not met.
EIA Cuts US Production Growth. The US Energy Information Administration lowered its forecast for 2023 crude production in the United States to 12.4 million b/d, up from 11.7 million b/d this year, as capital discipline and a lowering global demand outlook weigh on production.
Suriname Surge Mired by Seismic Confusion. Three years have passed since Apache (NYSE:APA) and TotalEnergies (NYSE:TTE) claimed they have found the Maka Central world-class oil field in offshore Suriname, but recent appraisals unveiled a huge mismatch between seismic and exploration drilling data, rendering the task of locating the field much more difficult.
Iraq Might Finally Have a New Government. The Iraqi House of Representatives elected Abdul Latif Rashid as the country’s new president, paving the way for a new government to be formed after a prolonged political paralysis and providing a huge boost to stalled major oil projects.
White House to Unveil Gas Price Reduction Measures. As the national average of US gasoline prices continues to hover around the 3.9/USG mark, President Biden announced that prices remain too high and that next week the White House would announce new measures to lower fuel prices.
Putin Wants Large Gas Hub in Turkey. Blaming the US for the “sabotage” of the Nord Stream 1 and 2 pipelines, Russian President Vladimir Putin suggested that Russia redirect its Baltic flows to the Black Sea and create a new European gas hub in Turkey.
US Nuclear Powerhouse Finds New Owner. Canada’s uranium miner Cameco (NYSE:CCJ) and Brookfield Renewable Partners agreed to acquire nuclear plant equipment maker Westinghouse Electric in a $7.9-billion deal including debt as the future of nuclear in the Americas has markedly improved.
ExxonMobil Teams Up on Carbon Storage. US oil major ExxonMobil (NYSE:XOM) has struck its first commercial carbon storage deal with the world’s top manufacturer of ammonia CF Industries (NYSE:CF), aiming to store underground 2 million tons of CO2 per year starting from 2025.
Oil M&A Activity Peaks in the US. Mergers and acquisitions in the US oil sector have soared to 16 billion in Q3 2023, the highest quarterly level this year, though the short-term outlook for M&A is relatively weak as oil firms prefer to pay down debt and buy back shares instead of investing.
Term Buyers Feel the Pain of Spiking Coal Prices. According to market reports, global trading major Glencore (LON:GLEN) signed a term coal supply contract with Japanese power utility Tohoku Electric for Oct 2022-Sept 2023 at an all-time high price of $395 per metric ton on a FOB basis, tripling year-on-year.
Russian Copper Piles Up in LME Warehouses. Significant volumes of Russian-origin copper are reportedly piling up in London Metal Exchange-approved warehouses in Germany, the Netherlands, and Taiwan as the exchange is mulling a ban on Russian aluminum, nickel, and copper.
India Launches Another Oil Auction. One of the most import-dependent major oil buyers globally, India has launched a new licensing round, offering 26 oil and gas blocks (mostly deep-water with only 3 onshore lots) and 16 coalbed methane blocks, seeking to attract Western majors with drilling know-how.
By Michael Kern for Oilprice.com
More Top Reads from Oilprice.com:
Railway Strike Looms After Union Rejects Biden-Backed Labor Deal
EU Eyes November Deal To Tackle Runaway Gas Prices
Will Azerbaijan’s New Gas Pipeline Be Enough To Ease Europe’s Energy Crisis?
Read this article on OilPrice.com
Related Quotes
Being patient doesn't always pay off.
The Senior Citizen’s League says there ‘may be no COLA payable in 2024.'
The economist warned in 2006 that the U.S. housing bust would cause a financial crisis. Now he has a new economic doomsday prediction, and it isn't pretty.
The U.S. stock market took an unusual swing after Thursday’s inflation report. “Shortly after the open, the S&P 500 index had dropped nearly 4% from its pre-market highs before staging an epic rally of over 5%,” Bespoke Investment Group said in a note Friday. “Even in this ‘all or nothing’ type of market environment, reversals of that magnitude are rare.”
Inflation and higher interest rates could be here to stay. BofA says changing demographics, deglobalization, and underinvestment in energy production have created a new “regime” for the global economy.
Investors seemingly can’t stop trying to pick a stock market bottom, no matter how bad the news—and it continues to backfire. Consider: This past Thursday, September’s consumer inflation report came in much hotter than expected, with the core CPI hitting a 40-year high. The initial response was exactly what you’d expect—the traded down as much as 2.4%—but then it started rallying…and rallying.
The chart, from Redfin, shows how higher mortgage rates and a pullback in buyer demand, has forced sellers to cut prices to entice bids.
Investors were surprised by the big rally in the stock market on Thursday, but Friday brought another dose of reality and disappointment. After having posted monumental gains despite high readings on inflation, the Nasdaq Composite (NASDAQINDEX: ^IXIC) closed at its worst level of the year, and the S&P 500 (SNPINDEX: ^GSPC) and Dow Jones Industrial Average (DJINDICES: ^DJI) gave up most of their advances from earlier in the week. One of the biggest stock stories of the past several years has been Tesla (NASDAQ: TSLA).
The U.S. Treasury Department put an item on its agenda Friday to start talking with primary dealers about the potential for it to buy back some of its older debt to help keep markets functioning smoothly.
Everyone is hoping the market might be bottoming and by the recent actions of Bank of America clients, some evidently think the lows must be in sight. Last week, BofA customers splashed out $6.1 billion on US stocks, in what amounted to the third largest inflow since 2008. While the bank has stated it is not as confident the bottom is quite so close, it’s not hard to see why investors feel the time is right to lean into equities. The widespread losses have left scores of beaten-down stocks looki
Investors have become more confident that the company can put the past behind it as demand for air travel recovers.
Yahoo Finance Live anchors discuss the dip in stock for Tesla amid CEO Elon Musk’s ongoing Twitter trial
These diversified natural-resource giants have solid balance sheets, earnings, and dividends. All that they need is a rebound in commodity prices.
Nikola (NKLA) founder Trevor Milton was found guilty of three counts of criminal fraud on Friday in a case accusing him of spreading lies about the electric truck startup for his own personal benefit.
Dividends are the bread and butter of income investors. You don't need to sell your assets or spend hours every day managing your accounts. Instead, dividend stocks simply generate income on their own. Putting together a portfolio that generates at least … Continue reading → The post How to Make $1,000 a Month in Dividends appeared first on SmartAsset Blog.
In this video, Matt Frankel, CFP®, discusses three stocks — all down by 75% or more from recent highs — that he owns and would buy more of right now. Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services.
In the midst of a bear market, with rising interest rates and the threat of a prolonged recession in the air, real estate investment trust (REIT) stocks have endured tremendous price declines. Given this, it isn’t easy to find REITs that could see dividend increases soon. Two questions come to mind. Why would a company raise its dividend when the yield is already increasing with each drop in price? And how do you find REITs with the dividend well-covered by funds from operations (FFO) and with s
Making investments pay out for the long term is the true challenge in today’s market environment. The series of headwinds piling up – from persistently high inflation to rising interest rates to slowing demand to bureaucratic bloat – are rising to hurricane force, and renewing investors’ attention to defensive stocks. It’s only logical. The classic defensive stock, the dividend payer, ensures an income stream no matter how the markets move, and if the yield is high enough, these stocks can also
Herschel Walker and Raphael Warnock face off in bizarre debate
Yahoo Finance Live’s David Briggs discusses stock performance for Kroger and Albertsons amid news that Kroger has acquired the U.S. grocer in a $24.6 billion merger.