Oil Daily | China's Refinery Slowdown and Stronger Dollar Pressure Oil Prices Amid Mixed Demand Signals
Friday, Nov 15, 2024 7:00 am ET
1min read 【Global Oil Supply and Demand】
Refinery run rates in China decreased for the seventh consecutive month, dropping 4.6% annually in October. This decline contributed to an average 2% decrease for the year's first ten months. The decrease is attributed to maintenance shutdowns at Sinochem-owned refineries and reduced rates at independent refiners. Despite China’s industrial output and retail sales growth, oil prices declined due to bearish demand forecasts by IEA and OPEC.
Despite the IEA's upward revision of oil demand growth predictions for the current year, crude oil prices are expected to remain low. Even though demand is predicted to grow by 920,000 bpd this year, a surplus is expected in 2025. This, combined with lower Chinese refining rates and a stronger U.S. dollar, has further pressured prices.
Europe's natural gas prices surged following warnings from Austria's OMV of a potential Russian pipeline gas supply halt. Dutch TTF Natural Gas Futures rose due to colder weather increasing heating and electricity demand. OMV indicated a possible supply disruption, but assured it can still meet customer needs with current gas reserves.
Investments in Norway's oil and gas sector are set to reach a record high of $22.9 billion in 2023 due to increased activity in new projects and cost inflation. The rise is driven by significant development projects and increased exploration. Oil production is expected to grow, particularly with the Johan Castberg field's launch, while gas production may slightly decline.
【Oil-Producing Countries Dynamics】
Nigeria increased its oil production to 1.8 million bpd, with a target of reaching 2 million bpd by year-end. This growth is attributed to collaborative efforts with joint ventures and security forces. The "war room" strategy has tackled crude theft and pipeline sabotage, contributing to Nigeria's production rebound.
【Latest Oil Policies】
President-elect Donald Trump's transition team plans to eliminate the $7,500 EV tax incentive, impacting EV makers. The move, part of broader tax reforms, could affect EV demand amid slowing sales and complex eligibility rules. Tesla, a leading EV maker, supports the removal, which could harm struggling traditional automakers.
【Industry News】
Seven major U.S. LNG export plants are receiving high gas volumes, with feedgas expected to reach a nine-month high. Venture Global's Plaquemines facility, the second largest, is beginning operations, boosting U.S. LNG exports. LNG shares rose after Trump’s election victory, with potential trade deals favoring U.S. LNG exports to Europe.
【Company News】
Ovintiv agreed to purchase Paramount Resources' assets in Canada's Montney shale for $2.37 billion. The deal includes properties with 114 million barrels of oil equivalent reserves. This acquisition aligns with a trend of U.S. firms seeking opportunities in Canadian non-oil sands assets due to lower valuations and high reserves.
Refinery run rates in China decreased for the seventh consecutive month, dropping 4.6% annually in October. This decline contributed to an average 2% decrease for the year's first ten months. The decrease is attributed to maintenance shutdowns at Sinochem-owned refineries and reduced rates at independent refiners. Despite China’s industrial output and retail sales growth, oil prices declined due to bearish demand forecasts by IEA and OPEC.
Despite the IEA's upward revision of oil demand growth predictions for the current year, crude oil prices are expected to remain low. Even though demand is predicted to grow by 920,000 bpd this year, a surplus is expected in 2025. This, combined with lower Chinese refining rates and a stronger U.S. dollar, has further pressured prices.
Europe's natural gas prices surged following warnings from Austria's OMV of a potential Russian pipeline gas supply halt. Dutch TTF Natural Gas Futures rose due to colder weather increasing heating and electricity demand. OMV indicated a possible supply disruption, but assured it can still meet customer needs with current gas reserves.
Investments in Norway's oil and gas sector are set to reach a record high of $22.9 billion in 2023 due to increased activity in new projects and cost inflation. The rise is driven by significant development projects and increased exploration. Oil production is expected to grow, particularly with the Johan Castberg field's launch, while gas production may slightly decline.
【Oil-Producing Countries Dynamics】
Nigeria increased its oil production to 1.8 million bpd, with a target of reaching 2 million bpd by year-end. This growth is attributed to collaborative efforts with joint ventures and security forces. The "war room" strategy has tackled crude theft and pipeline sabotage, contributing to Nigeria's production rebound.
【Latest Oil Policies】
President-elect Donald Trump's transition team plans to eliminate the $7,500 EV tax incentive, impacting EV makers. The move, part of broader tax reforms, could affect EV demand amid slowing sales and complex eligibility rules. Tesla, a leading EV maker, supports the removal, which could harm struggling traditional automakers.
【Industry News】
Seven major U.S. LNG export plants are receiving high gas volumes, with feedgas expected to reach a nine-month high. Venture Global's Plaquemines facility, the second largest, is beginning operations, boosting U.S. LNG exports. LNG shares rose after Trump’s election victory, with potential trade deals favoring U.S. LNG exports to Europe.
【Company News】
Ovintiv agreed to purchase Paramount Resources' assets in Canada's Montney shale for $2.37 billion. The deal includes properties with 114 million barrels of oil equivalent reserves. This acquisition aligns with a trend of U.S. firms seeking opportunities in Canadian non-oil sands assets due to lower valuations and high reserves.
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