Monday’s stock market crash appeared to temporarily halt the oil price rally, but oil prices began to rebound on Tuesday morning.
Chart of the Week
- With 2021 providing an illustrative case of runaway power prices, nuclear power investments will be increasing over the short-to-mid term as nations seek non-emitting ways of securing electricity.
- According to Rystad Energy estimates, investments in nuclear will rise to $45-46 billion in 2022-2023, with 52 reactors currently under construction in 19 countries worldwide.
- Europe remains the region with the most installed capacity, with just under a third of global capacity, although Asia is stepping up its nuclear game with 60% of all under-construction reactors being located there.
- Attesting to the growth potential of nuclear in Asia, of the four reactors that started construction in 2021 three were in China, with the fourth in Turkey.
Market Movers
- Abu Dhabi’s national oil company ADNOC has created a new subsidiary (called ADNOC Murban) to act as a debt issuing unit for its multi-billion expansion projects, expecting the third-highest credit rating from all three main independent ratings agencies.
- Italian oil major ENI (NYSE:E) intends to list its Norway-focused joint venture Var Energi that it operates with private equity firm HitecVision on Euronext’s Oslo exchange, using the assumed €10-13 billion from the IPO to fund its green energy initiatives.
- UK-listed oil major Shell (NYSE:RDS.A) has reportedly made a significant oil and gas discovery with its Graff-1 wildcat in offshore Namibia, the first-ever reported in the African country, simultaneously increasing the potential of the adjacent Venus-1 well that is drilled by TotalEnergies (NYSE:TTE).
Tuesday, January 25, 2022
Following the blistering rise in crude prices over the past weeks, Monday's trading saw a much more balanced picture as the faltering performance of the equity market (world equities are set for their biggest post-pandemic monthly drop since March 2020) offset the still-tight balances worldwide. The geopolitical premium is still priced in, with the Russia-Ukraine standoff continuing and Yemen’s Houthis adding another (unsuccessful) twist to their strategy of targeting oil-relevant targets in key countries of the Gulf Security Council. Even if geopolitical tensions subside, the oil market fundamentals still point to an elevated price – US crude inventories remain at multi-year lows, with Cushing stocks at their lowest level since 2012.
Hostage Release Now Part of Iran Nuclear Deal. US special envoy for Iran Robert Malley stated that Iran releasing prisoners is a precondition for the revival of the JCPOA nuclear agreement, adding an extra layer of complexity to the already strained negotiation process.
Russia-Ukraine Escalation Brings Sanctions Back to Table. As the Russia-US diplomatic talks seem to have run aground and rhetoric on the Russia-Ukraine front is becoming increasingly bellicose, EU authorities discussed potential sanctions against Russia in case it launches an attack.
Houthis Attack UAE Again. UAE military defenses have repelled two drone missile attacks, most probably coming from Yemen’s Houthi militias, scattering shrapnel all over Abu Dhabi yet managing to avoid any human casualties as in the case of the first attack a little more than one week ago.
Shipping Giant Seeks Electric Charging of Idle Tankers. Danish shipping firm Maersk (CPH:MAERSK) plans to install hundreds of offshore charging stations worldwide that would see electric buoys charging vessels that are lying idle outside ports, waiting for discharge, so as to minimize fossil fuel burning.
Too Many USGC Refineries to Sell. According to media reports, LyondellBasell is having difficulties selling its 264,000 b/d Houston Refinery amid several other assets to be sold in Louisiana and Alaska, despite Marathon (NYSE:MPC) and Chevron (NYSE:CVX) having been linked to the purchase previously.
Container Rates Start Ticking Up Again. Container freight rates started to move up again despite the upcoming Lunar New Year holidays in China usually providing some respite in trading, expectations of rising COVID cases and subsequent delays pushed the FBX global index to a 2-month high, flirting with the $10,000/FEU mark.
Angola Delays Partial Privatization of Sonangol. Despite its volition to return to international markets in 2022, the Angolan government delayed the privatization of a 30% stake in the national oil company Sonangol, arguing due diligence to render its balance sheet reflective of actual assets it owns will take 12-15 months.
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Peru Threatens Repsol with Oil Spill Sanctions. Peru’s prime minister Mirtha Vasquez said the Latin American country is considering whether to sanction the Pampilla refinery owned by Spanish oil firm Repsol (BME:REP) after a massive oil spill triggered by the Tonga eruption that has been termed an ‘ecological disaster’.
Chinese Companies Vie for Guyana Gas Deal. Five Chinese state-owned companies have pre-qualified for a project to develop a 300 MW gas-fueled power plant and an NGL treatment facility in Guyana, assumed to run on associated gas from ExxonMobil’s (NYSE:XOM) Stabroek Block.
US Crude Summit Shows Divide in Supply Outlook. US oil CEOs provided differing outlooks on the growth of American crude production at the ongoing Americas Crude Summit, with ConocoPhillips (NYSE:COP) predicting that output would beat the 2019 record and eclipse 13 million b/d this year, whilst Occidental expects more measured upticks.
Germany Warns Against Labelling Nuclear ‘Green’. Germany’s government has voiced its reservations against the EU draft plan to qualify nuclear power as green, arguing it is ‘risky and expensive’, but it refrained from threatening the European Commission with legal action as Austria did.
Saudi Arabia and Iraq to Connect Power Grids. The governments of Saudi Arabia and Iraq agreed to connect their national power grids in the next two years, providing notoriously power-strapped Baghdad a new source of electricity, i.e. relying less on imports from Iran.
Shell Officially Drops Royal Dutch. Europe’s largest energy company Shell (NYSE:RDS.A) officially changed its name and dropped ‘Royal Dutch’ as it moved its headquarters from the Netherlands to the United Kingdom and scrapped its dual share structure.
By Josh Owens for Oilprice.com
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