In a week that is going to have only minor macroeconomic data releases, air travel figures from China (published by the country’s Civil Aviation Administration) have caught the attention of the oil community as the upcoming Golden Week holidays in the first week of May are expected to see 9 million air passenger trips, a 30% increase to 2019 levels. Strong Chinese product demand helped offset the price declines late last week, with ICE Brent trading around $83 per barrel, OilPrice reports.
After oil companies’ net income peaked in Q2 2022, results from the past quarter are set to tally $36.5 billion for the five largest oil and gas companies globally, down by a little less than 40% year-on-year. The general market expectation is that even with lower net incomes, oil majors would seek M&A deals, having curbed outstanding shares by 8% in aggregate and having paid down $87 billion of debt in 2022. Whilst US oil major ExxonMobil was rumored to be in preliminary talks to buy Pioneer Natural Resources, BP was said to be seeking smart M&A whilst Shell is set to disclose its new policies under CEO Wael Sawan at its June meeting.
Weak natural gas prices might be the biggest downside factor for US majors’ profits with Henry Hub pricing languishing below $3 per mm Btu since January, whilst year-on-year European gas pricing was relatively unchanged.