In what is proving to be a very impressive earnings season, nearly all of the oil majors are beating expectations and rewarding shareholders with higher dividends and share buybacks, much to the chagrin of the White House.
Oil price alert: This week Global Energy Alert argues for a return of oil prices above $100, with signs of a bull market building. Meanwhile, a major geopolitical risk is mounting in the Middle East. register todayand if you don’t enjoy it after the first month, we’ll give you your money back.
Friday, October 28, 2022
Strong corporate earnings have breathed new life into oil markets, with most oil majors sticking to their policy of boosting dividends and stepping up share buybacks. This may not sit well with the White House ahead of the midterm elections, as the wave of optimism has been supporting oil prices well, with ICE Brent within touching distance of the psychological barrier of $100 a barrel. The troubles that surfaced earlier this week – widespread dumping of Chinese assets amid Xi Jinping’s re-election, dismal ECB interest rate hikes and more – seem to have been forgotten, for now.
The IEA casts a long shadow over fossil fuels. In its 2022 edition of the World Energy Outlook, the International Energy Agency (IEA) indicated that global demand for every fossil fuel will peak around 2030, which is particularly surprising for natural gas, previously considered the fuel of transition to a greener future.
The World Bank predicts lower energy prices. The World Bank has announced that it expects global energy prices to fall 11% in 2023 after a massive spike this year, putting Brent prices at $92 a barrel and expecting a lower natural gas and coal prices next year amid weaker growth.
The chances of a rail strike in the United States are increasing again. After the No. 2 railroad union rejected the nationwide tentative agreement reached in mid-September, the likelihood of a US railroad strike in December is rising again, potentially jeopardizing some 30% of US freight shipments.
US Diesel at the top of the shortage program. With U.S. distillate inventories at the lowest level for this time of year since the EIA began collecting weekly data in 1982, at 106 million barrels, diesel prices will see a massive rise in the months winter, unless diesel consumption rates decline.
UN: We may not be able to stop global warming. Ahead of COP27 next month, the UN said it saw no “credible path” to limiting global temperature rise to 1.5C above pre-industrial levels and that with the current course it is expected to increase by 2.8°C.
High LNG prices are bringing back dual-fuel tankers. Faced with exorbitant natural gas prices, with JKM LNG reaching $70/mmBtu this year, shipping lines have dramatically increased their interest in dual-fuel tankers that can run on LNG or diesel to cover their bunkering costs.
TotalEnergies doubles on the Lebanese offshore. After the Russian Novatek gave up its 20% stake in the Lebanese offshore block 09, the French oil major TotalEnergies (NYSE: TTE) was given temporary majority control of the project, potentially also a farmer in Qatar Energy at a later stage.
The Germans do not appreciate the Chinese participation in Key Port. The German government has allowed Chinese shipowner and operator Cosco to acquire a 24.9% stake in a Hamburg port terminal, triggering widespread dissent within the government as the move appears to strengthen Beijing’s grip on the EU. Germany.
The US government wants to mine its own uranium. With US nuclear companies still dependent on Russian and Kazakh uranium, the Biden administration is developing its own uranium strategy for more domestic exploitation – the IRA has already allocated $700 million for nuclear production. low-enriched uranium at high dosage.
The Guyanese gift that keeps on giving. American oil major ExxonMobil (NYSE:XOM) recorded two other discoveries in the Stabroek block in Guyana with its Sailfin-1 and Yarrow-1 wildcats, which, despite moderate net oil revenues (23m), will be linked to larger projects.
Namibia plans to join OPEC. Following the announcement of at least two major discoveries off the coast of Namibia, with TotalEnergies’ (NYSE: TTE) venus and Shell (LON:SHEL) With Graff being potentially multi-billion barrel discoveries, Namibia could consider joining OPEC in the coming years.
Venezuela opens the door to the departure of JV partners. Venezuela is allowing partners in its state-owned oil company PDVSA to exit joint ventures if they renounce payment of past debts and unpaid dividends – at present the only majors left in the country are Chevron (NYSE: CVX), ENI (BIT:ENI), and Repsol (BME:REP).
President Biden singles out Shell. US President Joe Biden has pointed the finger at a major UK-based energy company Shell (LON:SHEL) to channel profits to shareholders instead of lowering gasoline prices, a reaction to the oil company’s 15% dividend increase and continued share buyback program.
The French nuclear generation has hope for 2023. The French government will demand a public service EDF (EPA:EDF)which will soon be fully nationalized, to sell less of its nuclear energy at below-market prices (100 TWh instead of 120 TWh this year), raising hopes that this could improve the company’s balance sheet.
By Michael Kern for Oilprice.com
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