Oil Daily | Refiners Post Strong Earnings Amid Cheap Crude, Germany's Wind Power Falls to 10-Year Low

【Global Oil Supply and Demand】

Despite concerns over cooling global oil demand, refiners are posting strong first-quarter earnings due to improved refining margins. Cheap crude and stable demand for gasoline, diesel, and jet fuel have allowed refiners to profit from widening crack spreads. However, mixed results were reported by U.S. refiners, with market softness affecting performance.

Germany's wind and solar power generation slumped to a ten-year low, leading to a 10% increase in gas and coal use. The drop in wind power, down 31% year-on-year, was due to low wind speeds. Solar power gained, but whether it compensates for low wind output remains uncertain as Europe gears for increased energy demand.

【Oil-Producing Countries Dynamics】

Nigeria has set a new production target of 2.5 million barrels per day by the end of this year. The government believes this target is achievable, having reached similar levels during the pandemic. Challenges such as pipeline vandalism and oil theft are being addressed, and Exxon plans a $1.5 billion investment in deepwater oil development.

Russia and China are actively negotiating the Power of Siberia 2 gas pipeline to boost Russian gas exports. However, no agreement is expected before May 9 due to ongoing disagreements over pricing and volumes. Despite Russia's assurances, China remains cautious, leveraging its position as a key gas customer.

【Latest Oil Policies】

The U.S. has increased sanctions on Iran's oil industry, targeting Chinese refiners. Sanctions have hindered Iranian crude procurement, affecting independent Chinese refiners known as "teapots." The fear of sanctions led some teapots to cease Iranian crude purchases, impacting China's crude import dynamics.

【Company News】

ConocoPhillips reported better-than-expected first-quarter earnings due to increased production volumes, despite lower prices and higher costs. The company produced 2.389 million boed, adjusting its production expectations and lowering capital expenditures guidance for 2025. Diamondback Energy also reduced its capital budget, prioritizing free cash generation amid weak commodity prices.

【Others】