Markets Await Inflation Data as Oil Prices Continue to Rally

Oil prices have been on the rise for the past three weeks due to increasing geopolitical tensions, although some worrying economic data from the U.S. might bring prices down.

Friday, June 28, 2024

Everyone is watching the U.S. inflation data closely as crude oil prices continue their upward trend, marking a third consecutive weekly gain. Rising tensions between Israel and Lebanon have overshadowed weaker economic data from the U.S. in May. Each day this week has seen oil prices climb, with Brent crude expected to close the week at $87 per barrel.

Calcasieu Pass 2 Gets Approval. The U.S. Federal Energy Regulatory Commission has approved the construction and operation of the 20 million tons per annum Calcasieu Pass 2 liquefaction plant in Louisiana. This decision allows Venture Global to become the second-largest LNG exporter in the U.S.

Not All Mergers Impress Oil Investors. After SM Energy, a company focused on the Eagle Ford region, bought shale assets from XCL Resources in Utah for around $2 billion, its shares dropped by 10% on Thursday.

Hedge Funds Change Course on Oil Futures. Hedge funds and other money managers have increased their investments in Brent futures and options, buying the equivalent of 69 million barrels in the week ending June 18. This is the fourth fastest weekly increase since 2013.

Nigeria’s Refinery Plans Hit by Fire. A fire broke out at Nigeria’s 650,000 barrels per day Dangote refinery this week, causing dark smoke to billow across the port of Lekki. Gasoline deliveries from the refinery are now delayed until at least July.

Norway to Start Seabed Mining in 2025. Norway’s government announced it would open large areas of the Arctic for seabed mining in the first half of 2025. They plan to offer 386 blocks covering 280,000 square kilometers, with two companies already applying for licenses.

Dallas Fed Reports Little Growth in U.S. Upstream. The Federal Reserve Bank of Dallas’s quarterly survey showed that oil and gas activity in Texas, Louisiana, and New Mexico only rose slightly in the second quarter. Most upstream executives expect this trend to continue.

Russia Plans Pipeline Gas Deliveries to Iran. Russia’s gas giant Gazprom has signed a memorandum of understanding with Iran’s national gas company NIGC to supply pipeline gas to Iran, despite Iran having the world’s second-largest gas reserves.

European Airlines to Charge for Clean Fuel. Lufthansa, Europe’s largest airline group, will introduce a surcharge of up to $77 per flight starting in early 2025 to cover the rising costs of alternative fuels. This move aligns with the EU’s requirement to use at least 2% sustainable aviation fuel from next year.

Investment in Alaska’s Offshore Declines. Italy’s oil company ENI has agreed to sell its upstream oil operations in Alaska to U.S. producer Hilcorp for an undisclosed amount. This deal boosts Hilcorp’s production to 135,000 barrels of oil equivalent per day, following the Biden administration’s recent restrictions on Alaska drilling.

Argentina Still Searching for Offshore Oil. Norway’s state oil company Equinor revealed that the first offshore well drilled in Argentina’s waters, the Argerich-1 exploration well, did not find any significant hydrocarbon deposits.

Saudi Aramco Seeks More LNG. Saudi Arabia’s national oil company has signed a non-binding agreement with U.S. energy developer Sempra for the supply of 5 million tons per annum of LNG over 20 years. Saudi Aramco is also preparing to invest 25% in the second phase of the Port Arthur LNG project.

TMX Pipeline Needs More Shippers. The newly launched TMX pipeline in Canada may take years to become profitable. The operator needs full utilization of the spot toll, which is 20% of the pipeline’s capacity, for equity to turn positive by 2026. In a worst-case scenario, it could take 8-9 years.

Trafigura Aims to Replace Glencore in Congo. Global trading giant Trafigura has secured a supply deal with the Kipushi zinc mine in the Democratic Republic of Congo, operated by Ivanhoe Mines. This move strengthens Trafigura’s position in zinc concentrates after rival Glencore chose not to extend its exclusive offtake rights.

By Michael Kern for Oilprice.com

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