Oil Prices Climb As Bullish News Continues To Mount
Oil prices continued to climb on Tuesday morning as the EIA predicted a continued slowdown in U.S. shale production, adding to concerns about a tightening oil market.
Chart of the Week
- Low inquiry levels stemming from Saudi Arabia’s production cuts, reoccurring congestion in China, and seasonally declining demand have driven freight rates to their lowest since May 2022.
- Losing steam after their November 2022 peaks, freight rates from West Africa to East Asia have dropped to Worldscale 43.5, whilst Gulf-to-East Asia rates are even lower than that, with most recent deals done at w37.
- Saudi Arabia accounts for more than a quarter of VLCC deliveries, with more than 90% of Aramco exports taking place by means of VLCC tankers, hence the oversized impact of Saudi cuts on freight rates.
- Whilst the freight market expects depressed VLCC rates to recover later this year, so far there’s been little upside – quite the contrary with Suezmax tankers that bottomed out earlier this month and the Gulf-East Asia route strengthened from w75 to w90 over the past two weeks.
- Losing steam after their November 2022 peaks, freight rates from West Africa to East Asia have dropped to Worldscale 43.5, whilst Gulf-to-East Asia rates are even lower than that, with most recent deals done at w37.
- Saudi Arabia accounts for more than a quarter of VLCC deliveries, with more than 90% of Aramco exports taking place by means of VLCC tankers, hence the oversized impact of Saudi cuts on freight rates.
- Whilst the freight market expects depressed VLCC rates to recover later this year, so far there’s been little upside – quite the contrary with Suezmax tankers that bottomed out earlier this month and the Gulf-East Asia route strengthened from w75 to w90 over the past two weeks.
Market Movers
- UK oil major BP ( $BP PLC (BP.US)$ ) intends to invest up to $11 billion in low-carbon fuels, renewables, and EV charging stations in Germany by 2030 as it seeks to expand in Europe’s largest economy.
- US refiner Valero Energy $Valero Energy (VLO.US)$ announced it had authorized a share repurchase of up to $2.5 billion, with no expiration date, in addition to the $2.5 billion already authorized earlier this February.
- French energy company TotalEnergies ( $TotalEnergies (TTE.US)$ ) is reportedly in talks with Adani Green Energy to invest up to $700 million in the Indian firm’s clean energy projects, the first deal since Hindenburg Research’s short-selling recommendations. $Invesco QQQ Trust (QQQ.US)$ $SPDR S&P 500 ETF (SPY.US)$ $S&P 500 Index (.SPX.US)$ $Dow Jones Industrial Average (.DJI.US)$ $Nasdaq Composite Index (.IXIC.US)$ $Occidental Petroleum (OXY.US)$ $Chevron (CVX.US)$ $Exxon Mobil (XOM.US)$
- US refiner Valero Energy $Valero Energy (VLO.US)$ announced it had authorized a share repurchase of up to $2.5 billion, with no expiration date, in addition to the $2.5 billion already authorized earlier this February.
- French energy company TotalEnergies ( $TotalEnergies (TTE.US)$ ) is reportedly in talks with Adani Green Energy to invest up to $700 million in the Indian firm’s clean energy projects, the first deal since Hindenburg Research’s short-selling recommendations. $Invesco QQQ Trust (QQQ.US)$ $SPDR S&P 500 ETF (SPY.US)$ $S&P 500 Index (.SPX.US)$ $Dow Jones Industrial Average (.DJI.US)$ $Nasdaq Composite Index (.IXIC.US)$ $Occidental Petroleum (OXY.US)$ $Chevron (CVX.US)$ $Exxon Mobil (XOM.US)$
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