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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, 

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Red Sea Strikes and China's Economic Stimulus Support Oil Prices

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China's attempts to boost its economy and renewed attacks from the Houthis in the Red Sea are adding upward pressure to oil prices this week.

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US Natural Gas Prices Collapse on Milder Weather and Robust Output

Natural Gas

- Russia is struggling to benefit from the extremely constructive diesel cracks lately as repeated Ukrainian drone strikes on Russia’s refinery infrastructure restricted its throughput capacity.

- According to Bloomberg, Russian refinery throughputs have decreased to 5.1 million b/d, a 400,000 b/d drop since the beginning of this year and the lowest run rates since October. 

- Since the start of the year, Ukrainian attacks have damaged six refineries that account for some 18% of the country’s crude processing capacity, pushing more crude towards exports. 

- Russia’s throughputs might recover relatively soon as there have been no new attacks for the past two weeks and some of the damaged refineries resumed operations (Ust-Luga condensate splitter, the independent Ilsky plant). 

Market Movers

- Denmark’s largest gas field Tyra, operated by TotalEnergies (NYSE:TTE), is set to restart production at the end of March, following a 4-year redevelopment hiatus, aiming to produce 2.8 Bcm per year. 

- Gabon has pre-empted the sale of Carlyle Group’s (NASDAQ:CG) Assala Energy unit to French upstream firm Maurel & Prom, paying $1.3 billion for the 45,000 b/d capacity oil producer.

- ADNOC, the national oil company of the UAE, said its future expansion will be anchored around natural gas, seeing it as a transition fuel towards its 2045 net zero target. 

Tuesday, February 20, 2024

There have been four strikes in three days in the Red Sea as a result of the Houthi's renewed maritime offensive, with Rubymar potentially becoming the first tanker to sink in the Bab-el-Mandeb strait since the most recent disruptions started. Combined with China’s record cut to its prime mortgage rate, a signal that Beijing is taking stimulus seriously, Brent’s current pricing range around $83 per barrel might test the mid-80s soon.

Houthis Sink UK-Linked Bulker. Escalating the Red Sea maritime warfare further, Houthi militias attacked a British-registered cargo vessel Rubymar carrying fertilizer in the Bab-el-Mandeb strait, prompting the crew to abandon the ship as it was at risk of sinking. 

Saudi Aramco to Issue 2024 Bonds. Saudi Arabia’s national oil company Saudi Aramco (TADAWUL:2222) will most probably issue a bond this year, said the company’s CFO Ziad al-Murshed, with the bond duration expected to be 15 to 50 years.  

Gas Price Slump Frightens Investors. As US natural gas prices declined to the lowest level in real terms since Henry Hub started trading in 1990, currently around $1.55 per mmBtu, hedge funds have been selling their gas exposure for four weeks, leading to a net short of 1,276 Bcf.

Guyana Nearing in on New Licensing. Guyana intends to disclose the winners of the South American country’s first-ever competitive auction of offshore oil blocks by end-March, with ExxonMobil (NYSE:XOM) bidding again in a consortium with Hess and China’s CNOOC (HKG:0883).  

Colombia Mulls Permanent Ban on New Coal. Colombia’s government is proposing a mining bill that would ban all new exploration and production for coal, in line with President Petro’s 2022 pre-election pledges, despite coal mining accounting for 1% of the country’s GDP.  

Goldman Sachs Has Uranium In Sight. US investment bank Goldman Sachs (NYSE:GS) has greatly boosted its trading in physical uranium supplies, according to market reports it is also trading uranium futures, and writing options on physical uranium for hedge funds. 

UN Acquiesces to Deep Sea Mining. According to the head of the UN-linked International Seabed Authority, deep sea mining is only a matter of time as the organization meets in Jamaica next month, with Norway already greenlighting deep sea exploration in January.

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Mine Closures Finally Affect Lithium. Australian lithium stocks such as Pilbara Minerals or Liontown Resources enjoyed a rare stock rally this week amid rumors that Chinese EV maker CATL had closed its Jianxiawo mine in China, 3% of the transition metal’s global supply.  

Singapore Mandates SAF Usage from 2026. Singapore will require all flights departing the country to use at least 1% of sustainable aviation fuel from 2023 onwards, a target it seeks to raise to 5% by 2030, with SAF currently costing five times more than traditional jet fuel. 

North Sea Drillers Wary of UK Elections. Oil companies operating in the UK continental shelf in the North Sea said they would hold crisis talks to discuss the industry’s future as the opposition Labour Party promised to lift the oil windfall tax to 38% and extend its duration until 2030.  

Qatar Eyes Petrochemical Expansion. Endowed with 11% of the world’s natural gas reserves, Qatar is preparing to break ground for its $6 billion Ras Laffan petrochemical project, set to feature the Middle East’s largest ethane cracker and two new polyethylene trains. 

Europe’s Carbon Market Is Struggling. The combination of mild weather, high wind generation, declining natural gas prices, weak ETS trading activity, and EU recession have brought European carbon prices below €55 per tonne CO2, for the first time since August 2021.

Gunvor Takes Colombia to Court. Global energy trader Gunvor filed an appeal against the Colombian government after Bogota introduced a government trustee to oversee the operations of Gunvor’s Colombian subsidiary, accusing it of creating crime networks and crude smuggling.

By Michael Kern for Oilprice.com

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