Oil Daily| Saudi Crude Exports Hit Decade Low Amid Weak Asian Demand

Oil Market Recap In June, crude oil exports from major OPEC producers, notably Saudi Arabia, plummeted due to weak Asian market demand and increased domestic consumption. OPEC's forecasts for strong growth in global oil demand remain optimistic despite a divergence with other agencies' predictions. Honeywell's acquisition of Air Products' LNG business, Novatek's strategic moves in China, and significant corporate transactions involving Trafigura and Aramco underscore the dynamic nature of the oil industry. Legal and environmental challenges, including U.S. methane regulations and Alberta wildfires, also impact the sector.

Global Oil Supply and Demand

OPEC Demand Projections: OPEC maintains strong growth predictions for global oil demand in 2024 and 2025, expecting rises of 2.25 million and 1.85 million barrels per day, respectively, driven by resilient economic growth and air travel rebound. However, there's a gap between OPEC's forecasts and those of other agencies like the EIA and IEA, which have downgraded their predictions.

Crude Prices Reaction: Crude oil prices dipped due to disappointing Chinese economic data, raising concerns about consumer demand. Despite this, a decline in U.S. crude and fuel stocks provided some price support.

Oil-Producing Countries Dynamics

Saudi Arabia Export Decline: Saudi Arabia's crude exports hit their lowest in over a decade in June, driven by weak Asian demand and higher domestic consumption. Other Middle Eastern producers also reduced exports.

OPEC Production Drop: OPEC production fell to its lowest point of the year, attributed to stronger domestic consumption and higher crude burn for power generation.

Russian LNG Moves: Novatek is offering LNG to Chinese customers through a new marketing team, though traders are skeptical about the profitability due to ample pipeline gas supply and existing LNG import infrastructure.

Norway Sovereign Fund: Norway's government pension fund reached a market value of over 18 trillion Norwegian crowns, fueled by oil and gas revenues and strong equity investments.

Latest Oil Policies

U.S. Methane Regulations: The U.S. Court of Appeals for the D.C. Circuit denied a request from Republican states to halt new methane emission rules. The states argue that the rule overreaches and imposes burdensome costs.

Industry News

Trafigura Acquisition: The European Commission approved Trafigura's acquisition of Greenergy's European business, concluding the deal wouldn't raise competition concerns.

Company News

Honeywell Acquisition: Honeywell will acquire Air Products' LNG process technology and equipment business for $1.81 billion, aiming to enhance its energy transition capabilities.

Aramco Share Sale: Saudi Arabia gained an additional $1 billion from a secondary sale of Aramco shares, bringing total proceeds to $12.35 billion. The country also plans a $3 billion bond issue.

Occidental Petroleum Deal: Occidental Petroleum signed a deal with Microsoft to sell 500,000 tons of carbon removal credits from a Texas carbon capture facility.

Others

Alberta Wildfires: Wildfires in northern Alberta led to precautionary staff demobilizations at Cenovus Energy's Sunrise project, though operations remain unaffected. Similar conditions have not impacted Imperial Oil's Kearl project.

Market Sentiment: Federal Reserve Chairman Jerome Powell hinted at potential interest rate cuts but indicated the need for more positive economic data before making a decision.