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Bearish Sentiment Drives Lower Oil Prices

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Sunday April 24, 2022 / 07:48 / by Josh Owens of Oilprice.com / Header image credit: Reuters

While there are still plenty of supply risks that could push oil prices higher, bearish sentiment has taken over such weak oil markets due to lower Chinese demand and the expectation of a global economic slowdown.


Friday, April 22, 2022

The outlook for weaker global economic growth continued to weigh on crude prices, with the US Fed hinting at a half-point interest rate hike at the next policy meeting in May and the woes China’s COVID-related lockdowns drag on as Shanghai announces another round of lockdowns. Upside risks are still on the table, with the European Union considering oil sanctions against Russia and Libya on the brink of war, but for now, bearish sentiment is dragging prices down.

Russia’s ruble payment system is compatible with EU law. The European Commission declared that Russia’s new gas payment system that would convert prices into rubles from Gazprombank, a subsidiary of the country’s gas giant Gazprom (MCX:GAZP), could be compatible with the EU sanctions regime, allaying fears in the European gas market.

The world is heading for a prolonged energy crisis. The world must find $1.3 trillion in additional investment by 2030 to increase global energy production and improve infrastructure, US investment bank JP Morgan has said. mentionedotherwise the world risks seeing energy demand exceed supply by 20%.

US SPR barrels should stay home. The US Department of Energy rewardcontracts for 30 million barrels of SPR crude, with an American refiner Valero (NYSE: VLO) and Saudi-owned Motiva Enterprises, picking up the largest volumes at 6.85 and 4.05 million barrels, respectively, implying that most barrels will be refined in the country.

China’s overseas coal ban halts 15 projects. According to a recent studyChina’s decision to ban overseas coal financing has shut down 15 power generation projects with a total capacity of 12.8GW and could potentially shut down an additional 37GW that are currently in phase of pre-construction.

The United States wants Brazil to produce more oil. Bento Albuquerque, Brazilian Minister of Energy mentioned the United States has asked the Latin American country to produce more crude to bring down oil prices, a feat that Brazil considers logistically difficult, as production recently hovered around 3 million barrels per day.

Argentina wants gas connections in a context of booming gas production. While Argentine gas production increased by 10% in March to reach a new monthly record, Argentina mentioned he wants to speed up the construction of gas connections that would connect the Vaca Muerta shale field to Buenos Aires, with the government calling for a mid-2023 deadline for the Nestor Kitchener gas pipeline project (which has not even been awarded the contract).

Low-production wells are becoming an emissions headache in the United States. According to a new studylow-production oil and gas wells that account for just 6% of total U.S. production are emitting more than half the methane from all well sites, a harbinger of methane monitoring changes to come from the Environmental Protection Agency.

Russia asks for full pre-payment when bidding for rough. Russian national oil company Rosneft (MCX:ROSN) possesses asked for full prepayment in rubles (alternatively Chinese yuan or Turkish lira as well) in its latest Urals and ESPO tender for cargoes loaded in May, amid markedly weak buying interest from the West.

American refiners receive the last Russian shipments. As the April 22 deadline for U.S. refiners to stop buying Russian crude and products goes into effect today, a total of nine tankers delivered their cargo to the USGC, the overwhelming majority of which carried crude oil. fuel oil.

LyondellBasell leaves American refining and closes Houston. International Chemistry Major LyondellBasell (NYSE: LYB) announcement he would permanently close the 265,000 bpd Houston refinery by the end of 2023 and exit U.S. refining altogether, citing high costs and low margins as key reasons for the decision.

Shell is preparing to sell its stake in Russian gas to Chinese companies. According to the media reportsBritish oil major Shell (LON:SHEL) is in talks to sell its 27.5% stake in the Sakhalin-2 LNG project with Chinese state-owned oil companies CNOOC (HKG:0883), CNPC (SS:601857), and Sinopec (SS:600028).

Carbon prices in Europe are soaring due to weak auctions. European carbon prices have exploded to a seven-week high of €89 per metric ton this week, most likely coming on the back of market participants rebuilding positions amid weak auction activity and falling gas prices.

PEMEX will finally pay its debt. Thanks to windfall profits from high crude prices, Mexico’s national oil company PEMEX would have resume its debt maturities this year, totaling some 5 billion, no longer obliging the State to make the payments of its expenses.

Copper hit by unease in Chinese demand. Along with other industrial metals, copper prices stumbled this week, down to $10,230 per metric ton, on fears that longer-than-expected lockdowns in China and aggressive monetary tightening in the United States could hamper demand, as seen in rising stocks of copper.

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