Oil markets are closely watching the upcoming OPEC+ meeting this Sunday after top officials from the three largest producers in the alliance, Saudi Arabia, Russia, and Iraq, met in Baghdad on Tuesday. European gas prices have soared nearly 45% this year, with cold weather forecasts further straining gas supply. Adding to the pressure are US sanctions on Gazprom’s banking subsidiary, Gazprombank.
Cold Weather Pressures Gas Supplies
Throughout November, temperatures in Northwest Europe have mostly been near or below the 30-year average, signaling the first cold winter since 2021. This has led to a drawdown in gas inventories, now at 87.7% of capacity. Limited increases in LNG supply this winter, mainly from Plaquemines in the US, may not be enough to offset production disruptions. For example, Woodside has halted LNG liftings from Australia’s Pluto due to an unplanned outage.
Natural Gas Prices Surge
On November 21, front-month TTF natural gas prices hit their highest point in a year, reaching €48.3 per MWh (roughly $16.1 per mmBtu). Meanwhile, JKM prices, though higher than $15 per mmBtu, have lagged behind European prices.
US Midstream and LNG Deals
US midstream giant ONEOK (NYSE: OKE) has agreed to buy the remaining publicly held units of EnLink Midstream for $4.3 billion, expanding its 50,000-mile pipeline network. Leading US gas producer EQT (NYSE: EQT) is also forming a joint venture with investment firm Blackstone, which will take a $3.5 billion stake in the Mountain Valley Pipeline.
AngloAmerican Sells Coking Coal Mines
Mining giant AngloAmerican (LON: AAL) is divesting its remaining coking coal mines in Australia, selling them to Peabody Energy (NYSE: BTU) for up to $3.78 billion in cash.
OPEC+ Focus Intensifies Ahead of Meeting
As the December 1 date for the OPEC+ meeting approaches, oil markets are increasingly focused on the potential outcomes. Following a surprise meeting on Tuesday between Saudi Arabia, Russia, and Iraq, it appears that OPEC+ may delay planned production increases. ICE Brent crude has remained steady at around $73.50 per barrel.
OPEC+ Meeting to Be Held Online
OPEC+ will hold its much-anticipated policy meeting online instead of in person. Oil markets are speculating that Saudi Arabia and Russia may choose to postpone production hikes indefinitely due to weak global demand.
China Increases Crude Import Quota
China has issued an additional crude import quota of 5.84 million tonnes (nearly 120,000 b/d) for independent refiners. This move aims to boost refinery runs in the final weeks of 2024, especially benefiting major independent refiner Hengli.
Pemex Faces Pressure Over Debts
Oil service companies in Mexico are putting pressure on state-owned Pemex to pay overdue debts totaling $5.1 billion. This comes as the new Sheinbaum government has simplified Pemex’s tax duties by merging three separate levies into one.
Venezuela’s Gas Crisis Deepens
Venezuela is bracing for gas shortages after an explosion at the Muscar gas complex severely impacted its propane production, which has dropped by 97%. The country faces a cooking gas shortage for the next four to five months, until repairs are completed.
Diesel Backwardation Widens
The time spread between the front-month and second-month ICE gasoil futures has widened to its highest level since April, with a $7.5 per metric tonne premium. This steep backwardation signals tight supply conditions, driven by lower incoming volumes from Saudi Arabia and the US, as well as limited availability in Europe.
Bangladesh Opens Offshore Exploration
Bangladesh is set to open its international bidding process for offshore gas exploration next month. At the same time, the country is liberalizing its LNG market, allowing any commercial entity to import LNG from the spot market.
Russian Gas Flows to Austria Stable
Despite ongoing legal disputes between Gazprom and Austrian oil company OMV, natural gas flows from Russia to Austria have remained steady, with deliveries averaging 42.2 million cubic meters per day.
Adani Controversy Hits TotalEnergies
French energy company TotalEnergies (NYSE: TTE) has announced that it will stop funding projects linked to India’s Adani Group. The move comes after the US SEC charged Adani with bribery, which affects four renewables-focused assets in development.
ExxonMobil Exits Suriname
ExxonMobil (NYSE: XOM) has relinquished its 50% non-operated interest in deepwater Block 52 off Suriname’s coast. Malaysia’s Petronas has taken over full ownership of the block, located near Exxon’s highly productive Stabroek block in Guyana.
Other Market Movements
Coffee Prices Surge: Arabica coffee futures have hit their highest level since 1997, climbing nearly 65% this year, as ongoing droughts in Brazil are expected to severely reduce next year’s crop.
Turkey Seeks Sanctions Waiver: Turkey is reportedly negotiating with the US to secure a waiver allowing it to continue paying for Russian gas through Gazprombank, despite US sanctions.
Saudi Arabia Invests in Metals: Saudi Arabia has signed nine investment deals worth over $9.3 billion with Asian mining giants, aiming to expand its domestic capacity in metals such as copper, zinc, and platinum.
Petrobras Announces $3.4 Billion Dividend: Brazil’s Petrobras (NYSE: PBR) has approved an additional $3.4 billion in extraordinary dividends, reversing a policy under previous management, while lowering its minimum cash reserve requirement to $6 billion.
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