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"The Calm Before The Storm In Oil Markets" by Tom Kool of OILPRICE and seen at YahooFinance

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The Calm Before The Storm In Oil Markets

By Tom Kool - May 03, 2022, 2:00 PM CDT

  • U.S. Gulf of Mexico sees burst of drilling activity.
  • Shale drillers focus on investor returns.
  • Heatwave in India sends power demand soaring to unprecedented levels.

The first week of May could have brought us a much-awaited paradigm shift, however the markets still appraise the impact of China’s COVID lockdowns amidst the mass-testing taking place in Beijing and the probability of a comprehensive European embargo on Russian oil. With no clear way out for either of those, Brent futures remained range bound, closing Tuesday around $106 per barrel.



Amid Faltering Demand Prospects


- Whilst OPEC+ is widely expected to agree to another monthly increase of 432,000 b/d, the widening gap between the oil group’s stated objectives and reality is becoming too glaring to ignore.

- For March, the last month for which official OPEC+ data is available, the discrepancy added up to 1.45 million b/d and is set to only increase in April as Russia’s production went downhill. 

- Africa has been a source of headache of its own, with Libya’s key infrastructure blockade trimming some 550,000 b/d from global supply, whilst Nigeria and Angola continue to slide lowed amidst force majeures and terminal declines.

- The IEA’s release of 240 million barrels over the next months and China’s demand falling by as much as 1 million b/d on the heels of its COVID lockdowns have both mitigated demand-side issues, however should demand bounce back in the summer, tightness could be worsening again.

Market Movers

- French energy major TotalEnergies (NYSE:TTE) stated that it will continue shipping LNG from the 17.5 mtpa Yamal LNG project in which it has a 20% stake, protecting its core interests in Russia.

- US oil major Chevron (NYSE:CVX) raised its production target for the Permian by 15% vs 2021 levels, starting expecting to produce 725,000 b/d, whilst keeping the $10 billion buyback pledge unchanged.

- Portugal’s Galp Energia (ELI:GALP) is reportedly considering the sale of its upstream operations in Angola, one of its key areas of production areas, signaling that its drive towards renewables is becoming ever more timely.

Tuesday, May 03, 2022

Germany Drops Opposition to Russian Oil Embargo. Top officials from the German government confirmed that Berlin would be ready to back an immediate European Union ban on Russian oil imports, although yesterday’s EU summit failed to overcome the bloc-wide disagreements on the embargo.

Libya Blockade Squeezes Inventories. Libya’s NOC has warned the country’s warring two governments that the risks of storing some of Libyan grades have long-term consequences – the likes of Bu Attifel require continuous heating, otherwise they solidify in tanks and pipelines because of their high wax content.

Rocket Attacks Rock Kurdish Refining. In a missile attack that was claimed by nobody, a string of rockets targeted two refineries in the Kurdish capital city of Erbil, damaging oil storage capacities at the premises, only two months after Iran’s IRGC carried out a missile strike in the area.

U.S. Gulf of Mexico to See Burst of New Activity. The upcoming months will see the commissioning of BP’s (NYSE:BP) Argos and Shell’s (NYSE:SHEL) Vito floating production rigs, coming on the back of Murphy Oil’s recently started King Quay rig, adding some 280,000 b/d of new output capacity. Related: The U.S. Shale Patch Is Facing A Plethora Of Problems

Shale Pioneers Stick With Payouts. Shale drillers Diamondback Energy (NASDAQ:FANG) and Devon Energy (NYSE:DVN) have boosted their dividend payments whilst keeping production essentially flat, with the former going as far as to quintuple its quarterly payout, despite pressure coming from the Biden administration to ramp up production.

Unprecedented Heat Sends India’s Power Demand Soaring. Seeing the hottest spring months in decades, India’s power demand rose to its highest on record last month at 135 billion KWh, concurrently triggering widespread power cuts across the country as supply fell short of demand by 2.4 billion units.

Russia Wants to Build Latest African Gas Pipe Deal. Nigeria’s petroleum minister Timipre Sylva stated that Russia has expressed interest in investing in the long-mulled Nigeria-Morocco gas pipeline that has been discussed since 2016, without specifying if the route will be offshore or onshore.

South African Coal Miners Struggling with Logistics. Mining companies in South Africa have resorted to trucking coal to ports amidst widespread disruptions across the country’s railway network - with Newcastle coal trading at $320 per metric ton the cost is palatable, despite rail being four times cheaper.

US Gas Futures Rise Again Amidst LNG Pull. US natural gas prices have been on the rise again, with the front-month June ‘22 delivery contract edging above $8 per mmBtu amidst an ever-increasing export pull on domestic gas production, with output marginally dropping to 92-93 bcfd.

PEMEX Surprises with Q1 Profit. Mexico’s national oil company PEMEX reported $6.17 billion in Q1 2022 net profit, reversing a $2 billion loss in the year-ago period, as growing output and higher crude prices have allowed it to lower total financial debt to $108 billion from $109 billion.

UK Government Asks Oil Industry to Reinvest. The UK business minister Kwasi Kwarteng has written to companies active in the UK North Sea to set out a clear plan to reinvest their profits into the North Sea, with increasing swaths of the opposition advocating a windfall tax on oil and gas producers.

Mauritania Attracts Investors for Offshore Licensing. Wielding several world-class offshore gas discoveries like BP’s (NYSE:BP) 13 TCf Bir-Allah, Mauritania has opened bids for 28 new offshore blocks surrounding the existing acreage, also seeking to lure in investments for green hydrogen for low-cost reliable power supply.

Ukraine Confronts Storage Tightness. According to media reports, Ukraine is set to face a significant shortage of storage facilities as grain and oilseeds stocks already reached an all-time high of 21 million tons amidst limited export opportunities, weighing on agriculture prices across the globe.

By Tom Kool for

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U.S. Offshore Oil Boom Is No Cure For Global Supply Crunch

By Alex Kimani - May 03, 2022, 7:00 PM CDT

  • U.S. offshore oil production is booming as operators are bringing new platforms online.
  • Years of underinvestment in drilling activity have taken their toll on the offshore industry.
  • Goldman Sachs expects offshore E&P capex to triple from recent lows.

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$100 Oil Encourages Iraq To Fast-Track Production At Two Major Oil Fields

By Simon Watkins - May 03, 2022, 7:00 PM CDT

  • Iraq is encouraging the development of several oil fields in its ThiQar province.
  • The  Iraqi Drilling Company started work on the first of its 20 oil wells at the Nasiriya oil field, in conjunction with the U.S.’s Weatherford.
  • $100 oil has prompted the Iraqi government to fast-track development of more technically challenging oil fields.


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Europe May Lose The Energy Transition Race Before It Really Begins

By Irina Slav - May 03, 2022, 5:00 PM CDT

  • Europe is facing a major hurdle as it races towards a greener tomorrow; a lack of raw materials.
  • Like fossil fuels, Europe has little local mining production, so it is heavily dependent on imports.
  • According to the authors of the KU Leuven study, however, the EU could come to source between 50% and 75% of the critical minerals it needs from recycling.

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The Battery Boom Will Redraw Geopolitical Maps

By Tsvetana Paraskova - May 03, 2022, 4:00 PM CDT

  • The vulnerability of global energy markets is once again back in focus due to Russia’s invasion of Ukraine.
  • The race for a renewable future will come with its own geopolitical issues and could lead to new conflicts as new supply chains emerge.
  • In March, President Biden introduced a plan to secure the strategic and critical materials necessary for the clean energy transition—such as lithium, nickel, cobalt, graphite, and manganese.

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Shale Producers Face $42 Billion In Hedging Losses

By Julianne Geiger - May 03, 2022, 3:00 PM CDT

  • BloombergNEF: hedging losses are mounting in U.S. shale.
  • Hess Corp found itself spending $325 million in March to exit hedges at a serious loss.
  • Shale giant Pioneer lost $2 billion to exit hedges last year.

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LNG Terminals In Europe Are Filling Up Fast

By Tsvetana Paraskova - Apr 30, 2022, 6:00 PM CDT

  • Europe’s LNG terminals are maxed out as the region continues to import record amounts of gas.
  • Europe is likely to import even more LNG in the coming years to displace as much Russian gas as possible.
  • As a result of the EU’s new energy policy, natural gas and LNG prices are expected to remain elevated for years to come.

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Oil Prices Hit $110 As Europe Prepares To Ban Russian Crude

By Charles Kennedy - May 04, 2022, 1:00 PM CDT

  • In one month, the European Commission proposes to ban all shipping, brokerage, insurance and financing servers related to the import and transport of Russian oil.
  • 95% of the world’s taker liability coverage goes through the London-based International Group of P&I Clubs.
  • WTI futures were up 5% on the day at 02:00 PM ET.

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Don’t Expect OPEC+ To Boost Production In June

By Charles Kennedy - May 04, 2022, 11:00 AM CDT

  • OPEC+ JTC meeting ends with no demand growth revision.
  • Reuters: OPEC+ leans towards small increase in June output quota.
  • Secretary-General Mohammad Barkindo noted that it was not possible to fill the gap left by dwindling Russian oil output.

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Newsquawk Asia-Pac Market Open - US stocks gained post-FOMC after Powell eased fears of a more aggressive hike path

Wednesday, May 04, 2022 - 04:23 PM
  • US stocks gained post-FOMC after Fed Chair Powell eased fears of a more aggressive rate hike as he noted that 75bps increases are not something they are actively considering.


  • Fed hiked rates by 50bps to between 0.75%-1.00%, as expected, via a unanimous decision and will start trimming the balance sheet on June 1st with the initial caps on reductions set at USD 30bln for Treasuries and USD 17.5bln for MBS before rising to USD 60bln and USD 35bln, respectively, after three months.


  • USD weakened and T-notes were underpinned following Fed Chair Powell’s 75bps rebuttal.


  • Oil prices gained after the EU unveiled its sixth round of sanctions which included a far-reaching ban on Russian oil and related services.


  • Looking ahead, highlights include Australian Building Approvals and Trade Balance, Chinese Caixin Services & Composite PMI, Singapore Retail Sales, China reopening from the Labour Day Holidays, Market Closures in

Stocks Soar To Best Fed-Hike-Day Performance In 44 Years

Tyler Durden's Photo
by Tyler Durden
Wednesday, May 04, 2022 - 03:00 PM

Tl:dr: This was the biggest gain on a Fed day since Dec 2008 (a rate-cut day), but this was the greatest upside-day for the S&P 500 on a Fed Rate-Hike day since Nov 1978!!


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EU Oil And Gas Spending Has Added $50 Billion To Russia's War Chest

By Irina Slav - May 04, 2022, 10:00 AM CDT

The European Union has paid some $50 billion for oil, gas, and coal imports from Russia since the country invaded Ukraine in late February, Standard Chartered said in a Commodity Roadmap report this week.

The data comes from the Finland-based Centre for Research on Clean Air and Energy (CREA). The biggest portion of the payments was for natural gas, followed by oil, and coal imports represented the smallest portion.

Citing data about Russia oil revenues from the International Energy Agency, StanChart concludes that on a daily basis, EU energy payments to Russia have amounted to four times Russia’s daily military expenditure....

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This Is What Sparked Today's Euphoric Post-Fed Meltup

Tyler Durden's Photo
by Tyler Durden
Wednesday, May 04, 2022 - 05:40 PM

A historic Fed decision is in the books and Fed Chair Powell did not disappoint. As Oanda's Edward Moya writes, the Fed delivered the first-rate hike in 22 years and signaled more rate increases are appropriate and that the balance sheet runoff will begin in June, all of which was as expected. What was somewhat surprising is Powell's vow (for now) that larger rate hikes are not on the table. Risky assets got a boost after Fed Chair Powell said, “So a 75 basis point increase is not something that the committee is actively considering.” Surprisingly, Powell's confidence that large hikes aren't coming takes place as inflation is not slowing down anytime soon, but that is not scaring Powell as his confidence grows that he can slow inflation without triggering a recession.

And yet, the truth is that virtually nobody actually expected 75bps of rate hikes which emerged as an extra hawkish bogeyman in the last minute, allowing Wall Street to give itself a dovish release is this unlikely outcome did not take place. Sure enough, in his Fed post-mortem, Standard Chartered's Steve Englander asks rhetorically "why the optimistic market reaction?" and answers:

We expected investors to approach this FOMC worried about whether the FOMC would explicitly or implicitly endorse shifting to a hiking pace of 75bps down the road, or raise the possibility of tightening well above neutral. Such fears were evident in asset price moves as the FOMC approached. We consequently saw a risk that an "as expected" outcome would be viewed as dovish as this added risk premium dissolved. While today’s price moves were dramatic, 5Y UST yields and BBDXY are still well above the levels that prevailed for almost the entire month of April. So it is fair to say that positioning and excess pessimism reflect a big part of the market reaction.


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Russia's Oil Output Is Plummeting, And It May Never Recover

By Irina Slav - May 04, 2022, 7:00 PM CDT

  • Russia’s oil output is plummeting, and the decline is expected to worsen in May.
  • OPEC recently warned that markets could see the loss of more than 7 million barrels per day of Russian oil and other liquids exports.
  • With many global producers constrained in their capacity to boost production fast, oil prices are likely to remain elevated for the foreseeable future.

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Oil Bulls Should Beware Of Over-Exuberance On EU’s Proposed Russian Oil Ban

Published: May 5, 2022, 05:35 CDT3min read
Oil prices are being driven higher principally by the prospect of an EU ban on Russian oil but there is a lack of unity among EU member states on imposing the ban and it has to be approved by all 27 EU members to come into effect

Key Highlights

  • Oil prices are being driven higher principally by the prospect of an EU ban on Russian oil.
  • However, there is a lack of unity among EU member states on imposing the ban.
  • The current ban proposal must be approved by all 27 EU members to come into effect.

continued with

‘The Threat Of Committing Suicide Is A Poor Deterrent To Being Murdered’

Edited by Tom Nolan

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Oil Prices Top $111 As Biden’s SPR Buyback Plan Leaks

By Charles Kennedy - May 05, 2022, 10:54 AM CDT

  • The Biden Administration will purchase 60 million barrels of crude in Q3.

  • CNN: Delivery of those first 60 million barrels would be paid for with revenue received from sales of emergency oil.
  • The full process for replenishing the SPR will take years.

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A New EU Proposal Could Cripple Russia’s Ability To Transport Oil Globally

By ZeroHedge - May 05, 2022, 11:00 AM CDT

  • A new European Union proposal could have a drastic impact on Moscow’s ability to shit its oil globally.
  • The proposal could ban Russia from accessing European insurers.
  • The move would be particularly powerful because 95% of the world’s tanker liability cover is arranged through a London-based insurance organization

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JPMorgan Slashes Demand Outlook Amid Soaring Oil Prices

By Irina Slav - May 05, 2022, 10:00 AM CDT

  • JP Morgan revised its forecast for oil demand this year down by 1 million barrels daily.
  • JP Morgan sees total oil demand averaging 100 million bpd in 2022, 400,000 bpd below 2019 levels

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OPEC+ Agrees To Boost Production By 432,000 Bpd In June

By Tsvetana Paraskova - May 05, 2022, 7:30 AM CDT

  • OPEC+ agreed to leave its production plan unchanged.
  • Very short virtual meeting ends with modest 432,000 bpd production quote increase for June.
  • Currently, OPEC+ is producing around 1.5 million bpd below its quota.

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Shell Says It’s Impossible to Trace Russian Crude In Refined Products

By Tsvetana Paraskova - May 05, 2022, 11:30 AM CDT

There is no way to trace whether there is Russian crude oil or how much crude from Russia will go into the refined products market globally, Shell’s chief executive Ben van Beurden said on Thursday. 

“We do not have systems in the world that trace back whether that particular molecule originated from a geological formation in Russia.... that doesn't exist,” van Beurden told journalists, as carried by Reuters.

“So therefore, diesel coming out of an Indian refinery that was fed with Russian crude is considered to be Indian diesel,” Shell’s top executive added, highlighting the challenge the West faces in truly banning Russian oil from the market. ....

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Japan Says EU Oil Embargo Will Be Hard To Join

By Irina Slav - May 05, 2022, 9:00 AM CDT

Japan would be hard placed to follow in the EU’s footsteps and embargo Russian oil and oil products, the country’s economy, trade, and industry minister Koichi Haguida said today, as quoted by Reuters.

The comments come after the U.S. president said he would discuss further sanction pressure on Russia with fellow G7 members. The U.S. itself banned all Russian oil and refined product imports last month.

Earlier this week, the European Union’s executive arm, the European Commission, proposed a gradual six-month phase-out of Russian oil imports, with the deadline for refined products set for the end of the year.

"Given Japan has its limit on resources, we would face some difficulty to keep in step immediately," Haguida told media on the sidelines of a visit to the United States, where he asked Energy Secretary Jennifer Granholm for a boost in U.S. LNG deliveries to Japan.

According to Reuters, Russian oil accounts for just 4 percent of Japan’s total oil imports. In this context, Haguida’s comment basically suggests Japan cannot find an alternative supplier for those 4 percent, at least not quickly. To compare, the EU imports about 26 percent of its crude oil from Russia.

Earlier this year, amid the mass exodus of Western businesses from Russia, Japan said it was not going to quit oil and gas projects in the country where it is a minority shareholder. 

Japan is a shareholder in the Arctic LNG 2 project of Novatek as well as the Sakhalin 2 LNG project, which Shell exited earlier this year. The country is also involved in the Sakhalin-1 and Sakhalin-2 oil projects.

“We are concerned that if Japan withdraws from the project and the concessions are acquired by Russia or a third country, it could further boost resource prices and benefit Russia, which will not result in effective sanctions,” minister Hagiuda said in April.

By Irina Slav for

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Oilfield Services Are Set For Years Of Profits

By Tsvetana Paraskova - May 05, 2022, 7:00 PM CDT

  • After suffering through a wave of bankruptcies during the covid pandemic, the oilfield services sector is bouncing back in a big way as the world attempts to boost oil production.
  • Executives at oilfield service companies are preparing for a multi-year upcycle, with demand for their drilling services already outpacing supply, allowing them to increase pricing and profits.
  • The major hurdle currently being faced in the sector is a labor shortage, with the industry losing a lot of its workers during the 2020 downturn.

...The U.S. rig count increased last week to 698, which was 258 rigs higher than this time in 2021 and the highest count since April 2020, according to the latest data from Baker Hughes. Drilling has picked up substantially since the Russian invasion of Ukraine, adding 48 rigs over the last nine weeks....

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Oil Markets Are Bracing For Further Supply Disruptions

By Josh Owens - May 06, 2022, 2:00 PM CDT

Oil markets are once again on edge about potential supply disruptions. The continued efforts by the EU to ban Russian oil imports and the renewed efforts by the U.S. Senate to pass the NOPEC bill would both result in supply disruptions.

Global Energy Alert: Do you know why May 9th is such an important deadline for Russia's war in Ukraine? Do you think energy markets will continue to outperform in the coming month? Do you know how the British Government is attempting to influence Libya's election? All these questions and more are answered in today's Global Energy Alert, so make sure you don't miss it. 

Oil prices

Oil production


Crude oil





Friday, May 6th, 2022 

Another week has passed with the European Union unable to agree on a comprehensive oil embargo on Russian crude, hindered by internal disagreements on the timeline of the phasing out. Should the draft see adoption, we might be in for another supply squeeze as OPEC+ has clearly indicated it values consistency over abrupt moves. Should the United States push forward with its NOPEC bill, the willingness of the oil group to satiate global demand might fall even further. 

OPEC+ Rubberstamps Another 432,000 b/d Deal. In a meeting that lasted only 13 minutes, OPEC+ countries have agreed to increase their June 2022 production target by 432,000 b/d, avoiding any talk about sanctions on Russia and indicating global supply/demand picture is more or less balanced. 

Russia Oil Ban Hinges on CEE Pushback. Despite Germany coming to embrace a Russian oil embargo, the European Union has still been unable to agree on a phase-out of Russian crude imports as most dependent countries like Hungary or Slovakia keep on asking for exemptions. 

US Senate Committee Passes NOPEC Bill. A US Senate committee passed the NOPEC bill that was presented with bipartisan support, potentially revoking the sovereign immunity protecting OPEC countries and Middle Eastern NOCs from lawsuits, as high gasoline prices and inflation compel US lawmakers to take more aggressive action. 

Vale Clinches Tesla Nickel Supply Deal. Brazil’s Vale (NYSE:VALE), the world's largest producer of iron ore and nickel, signed a long-term deal with EV carmaker Tesla (NASDAQ:TSLA) to supply it with nickel coming from its Canada operations. 

India Stands by Its Increased Russian Buying. The Indian government defended its continued purchases of Russian crude, having bought more crude in April 2022 than over the totality of 2021, saying they were a part of a wider strategy to diversify away from the Middle East and keep fuel prices at bay.  Related: OPEC+ Agrees To Boost Production By 432,000 Bpd In June

Venezuela’s Crude Exports Drop Amid Quality Issues. According to media reports, crude exports of Venezuela’s national oil company PDVSA fell 8% month-on-month in April to some 650,000 b/d as poor crude quality and limited upgrading capacity were limiting further upticks. 

China Doubles Down on Its LNG Tanker Fleet. China’s state-controlled CNOOC (SHA:600938) has reportedly awarded 2.5 billion worth of contracts to build 12 liquefied natural gas tankers at the Hudong Zhonghua shipyards, seeking to grab a higher share of the LNG freight market in Asia. 

Nordic Power Prices Rise to All-Time High. Front-year electricity prices in Europe’s Scandinavia have raised to an all-time high this week of €92 per MWh, driven by low hydro storage available in the south of Norway with the country’s total water reservoirs being only 22% full.

Wind Turbine Makers Looking Forward to Forgetting Q1. Wind turbine makers like Vestas (CPH:VWS), GE Renewable Energy (NYSE:GE), and Siemens Gamesa (BME:SGRE) all reported losses for the first three months of 2022, coming on the back of soaring raw material costs and increasing competition.

Petrobras Sees a New Guyana in Its Northern Frontier. Brazil’s state-controlled oil company Petrobras (NYSE:PBR) is hoping to recreate the oil exploration success of Guyana in its northern offshore frontier, having decided to invest 2.5 billion in drilling the Equatorial Margin. 

EU Countries Starts Replenishing Gas Inventories. Gas inventories in the European Union and the United Kingdom have seen steady increases over the past weeks with total stocks increasing to 380 TWh by 01 May as exceptionally high prices of gas have been discouraging consumption by power generators.

LME Bans Russian Lead from Market. The London Metal Exchange announced this week that it would stop trading Russian-produced lead and allowing it to its warehouses, stoking fears that a similar decision might take place on aluminum and nickel where its impact would be much more severe than the 2% uptick in lead. 

Germany Charters 2 FSRUs to Cope with Russian Supply Risk. German utility firm Uniper (ETR:UN01) will charter two large FSRUs from Greek shipping firm Dynagas, each having a gas-send-out capacity of 7.5 bcm per year, to cope with a potential Russian gas supply cutoff. 

India Pushes For Maximum Coal Supply. India is planning to reopen more than 100 coal mines previously considered financially unsustainable as heatwaves continue to batter power generation across the country, potentially staving off-peak consumption later into the late 2020s.

By Josh Owens for

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