Oil prices continue to trade sideways this week, with supply shocks being counteracted by continued macroeconomic pessimism, OilPrice said.
Oil prices continue to struggle for direction this week after upward momentum created by the Garyville refinery explosion and rising transportation fuel cracks was toned down by the same old macroeconomic woes from China. Hurricane Idalia threatens Florida, avoiding Gulf Coast.Tropical Storm Idalia is expected to strengthen into a major hurricane, the first of its kind in 2023, and make landfall in Florida which doesn’t have a refinery, largely avoiding key oil and gas infrastructure in Texas and Louisiana. Hurricane Idalia might have provided upward support for oil prices, but its movement towards Florida will most probably limit potential damage to US Gulf Coast production. With US PCE and non-farm payrolls issued later this week, it seems macro forces will be the driving factor behind oil prices this week. Blaze halts operations at Louisiana megarefinery. A huge blaze at the naphtha tank farm of Marathon Petroleum’s596,000 b/d Garyville, Louisiana refinery prompted a swift refinery shutdown, buoying diesel cracks even further as NYMEX ULSD soared to a 7-month high last Friday.
China has at last issued product export quotas that would enable Chinese refiners to ship their surplus barrels overseas, with state-owned Sinopec getting the highest quota share of all. According to market sources, China will export around 3.5 million tonnes of oil products in September, with almost half of it coming from jet fuel, a 10% month-on-month increase compared to August allocations. Just as Asian refining margins soared to $15 per barrel, the highest in 2023 to date, China’s total annual export quota is set to rise to 41 million tonnes, almost 4 million tonnes higher than in 2022. China’s monthly product exports are still yet to surpass their annual peak in February when 1 million b/d was exported, with exporters struggling to regain market share in Singapore and forced to rely more on demand from Malaysia and Hong Kong.China is ramping up coal imports. Confronted with drought-induced hydropower problems and renewed coal mine safety checks after the most recent mine explosion in Shaanxi, Chinese power generators boosted their monthly coal imports to 29 million tonnes in August, the second highest of 2023.
Brazil’s national oil firm Petrobras signed a strategic cooperation agreement with China’s CNOOCon refining, oilfield services, green energy, and oil trading, paving the way for more Chinese investment into the Latin American country. China’s national oil companySinopec refuted claims that it seeks to buy Shell’s Singapore refinery, announcing that it would instead invest in Saudi Aramco’s Jafurah natural gas project. Norway’s oil majorEquinorhas acquired a 25% stake in the Bayou bend carbon capture storage project in southeast Texas, joining Talos Energy and Chevron in the project. Chevron workers approve strikes.Unions representing workers of Chevron’stwo major LNG complexes in Australia, Wheatstone and Gorgon, have officially announced they will take industrial action from September 07 after counting ballots, putting at risk 5% of global LNG supply.Cyprus hinders Chevron’s gas plans.US oil major Chevronhas once again failed to have its development plan for the 124 BCm Aphrodite field offshore Cyprus approved by Cyprus’s government, probably due to its insistence on a subsea pipeline to Egypt rather than a standalone FPSO.