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Traders Seek Bullish Signals Ahead of Key Fed Meeting

by Krystal

This week, Texas is bracing for its largest power generation challenge as temperatures soar to 105-110°F. The intense heat is expected to push electricity consumption to unprecedented levels. Last year’s record of 85.5 GW might be surpassed, with ERCOT forecasting a new peak between 86-87 GW.

Electricity prices are surging in response to the heat, with day-ahead quotes for Tuesday reaching $500 per MWh, marking the highest price in two weeks. Despite the extreme temperatures, natural gas prices at the Waha hub have remained negative at -$1 per mmBtu, suggesting that increased solar power and battery storage will help manage the heatwave.

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Market Movers

Quantum Capital, a Texas-based private equity firm, is set to acquire Caerus Oil and Gas assets in Colorado’s Piceance Basin and Utah’s Uinta play for $1.8 billion, highlighting growing M&A activity in the Rocky Mountains.

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APA Corporation (NASDAQ) is considering selling $1 billion worth of oil and gas assets in the Permian basin to reduce debt from its Callon Petroleum purchase.

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Norway’s state oil company Equinor (NYSE) has shut down its Gullfaks C offshore platform in the North Sea due to a well control issue, resulting in staff evacuation.

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Oil Prices Struggle Amid Weak Economic Data

Oil prices remain below $80 per barrel, with ICE Brent trading at $78 per barrel, as weak economic data from China dampens market confidence. Speculative positions are leaning bearish, and the market awaits the Fed’s minutes and Jerome Powell’s Jackson Hole speech for potential bullish signals. With Libya’s supply disruptions easing, there are fewer current concerns affecting the market.

M&A Activity Rises in the U.S.

According to Ernst & Young, U.S. oil and gas M&A activity surged to $49.2 billion in 2023, a 57% increase from the previous year. The $59.5 billion Exxon-Pioneer deal and the $53 billion Chevron-Hess deal are expected to surpass last year’s total.

Canada’s Rail Strike Threatens Oil Industry

A nationwide rail strike in Canada on August 22 could impact the movement of undiluted bitumen across Alberta. However, the effect on crude oil should be minimal, as TMX can handle an additional 200,000 b/d of oil.

Guyana Expands Oil Partnerships

Guyana has concluded its first competitive bidding round, securing production sharing contracts for eight offshore blocks. Deals have been signed with TotalEnergies, QatarEnergy, Petronas, Hess, CNOOC, and ExxonMobil.

TotalEnergies Plans Kuwaiti Solar Expansion

French oil major TotalEnergies (NYSE) is poised to sign an agreement with Kuwait to build a 1,100 MW solar photovoltaic plant in partnership with Acwa Power and Masdar. Kuwait aims to increase its renewable energy share to 15% by 2030.

Gold Prices Reach New Heights

Gold prices have surpassed $2,500 per ounce for the first time. Although there has been a slight dip, ongoing recession fears, geopolitical tensions, and high demand are likely to drive prices even higher.

Algeria Assists Lebanon After Blackout

Following a nationwide blackout on August 17, caused by Lebanon’s last operational power plant running out of fuel, Algeria has pledged to deliver fuel oil to Lebanon.

Venezuela Faces Oil Spill Crisis

A 90-square-mile oil slick has formed in Venezuela’s Golfe Triste, near the El Palito refinery, exacerbating the country’s ongoing oil contamination issues, which saw 86 spills in 2022 and 2023.

West Africa Resolves Oil Export Dispute

Niger will resume oil exports through Benin after the pipeline connecting the two countries, which was shut in June due to military tensions, was reopened. This move will allow CNPC to ramp up production from the Agadem oil field.

China Advances Nuclear Power

China has approved five new nuclear power projects with a combined capacity of 2,866 MW. This expansion supports the country’s goal of increasing its no-emission power generation.

Libya Resumes Production at Sharara Field

Libya’s national oil company has restarted production at the 300,000 b/d Sharara field after a two-week suspension. Current output is around 85,000 b/d, helping maintain operations at the Zawia refinery.

Copper Prices Recover

Copper’s three-month contract has risen to $9,110 per metric tonne this week. This rebound follows a 40% drop in Chinese copper exports, suggesting improving demand conditions in China.

Senegal to Review Oil Contracts

Senegal’s new President Diomaye Faye has initiated a review of the country’s oil and gas contracts. The aim is to rebalance them in the national interest, coinciding with the commencement of the 100,000 b/d Sangomar project in June.

Mexico Provides Pemex Tax Relief

The Mexican government has exempted Pemex from profit-sharing levies and production taxes for July. This marks the fourth tax break this year, saving the state oil company over $6 billion in 2024.

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