Commodities

Bloomberg has learned about US’s desire to maintain oil price ceiling

Published

4 months ago

January 20, 2023

Poland, Estonia and other EU countries call for lowering the oil price ceiling from the current $60 a barrel, but the U.S. is against it. They are urging us to wait for restrictions against Russian oil products.

The administration of U.S. President Joe Biden opposes lowering the price ceiling on Russian oil, despite calls from some European countries to “further cut Moscow’s revenues,” Bloomberg reported, citing sources.

The $60-per-barrel price ceiling for Russian oil and the European embargo on Russian crude supplies by sea went into effect on December 5. As Bloomberg notes, Russian Urals oil is now trading below world prices and the established ceiling (according to the Ministry of Finance, the average price of Urals for the period from December 15 to January 14 was $46.82).

States that have set a price ceiling can change the level of the ceiling price at which it is allowed to buy oil from Russia every two months starting from mid-January. According to a Bloomberg source, the US wants to wait for the price ceiling on Russian oil products to work (February 5. the price ceiling has not yet been set) before revising the parameters of restrictions on crude oil. For the price ceiling to change, the consent of all G7 countries and the European Union is needed.

Poland, Estonia and some other EU members are calling for lowering the price ceiling. At the same time, other countries are afraid that this will hit their economies. According to Bloomberg, Germany insists that reviewing prices is carried out within a time frame that won’t mislead markets.

Experts at Finland’s Center for Energy and Clean Air Research CREA estimate Russia’s daily losses from the price ceiling at $172 million, which could rise to $280 million a day after Feb. 5.

The Russian authorities responded by banning supplies of oil and petroleum products to foreign nationals and companies if contracts “directly or indirectly provide for use of the price ceiling fixing mechanism.” Vice Prime Minister Alexander Novak earlier expressed confidence that the Western countries’ restrictions would destabilize the oil industry and that European and American consumers would have to pay for it first of all.

Earlier, we reported that oil prices ended with an increase for the second week in a row.

Commodities

Negative gas prices may form in Europe

Published

2 days ago

May 26, 2023

Negative gas prices may occur in Europe, according to top executives at major commodity market operators. The possibility of prices for short-term gas contracts turning negative this summer is being discussed, as reported by Bloomberg based on discussions at the annual E-World energy fair in Essen, Germany. The reason for potential negative prices would be an oversupply of gas not matching sluggish demand.

This scenario, where gas producers pay consumers to take their gas, is becoming more likely as prices have already approached pre-crisis levels. Recently, gas prices on the European exchange fell below $300 per thousand cubic meters for the first time in two years. During the May 26 auction, the cost of June futures on the TTF Hub in the Netherlands decreased by 0.3% to €25.38 per 1 MWh, approximately $286 per thousand cubic meters, considering the current exchange rate.

Peder Bjorland, vice president of gas trading and optimization at Norwegian oil company Equinor, mentioned that in certain regional gas markets in Europe, prices could go negative during hours or days with high renewable energy production. However, he cautioned that negative prices are still a distant possibility and many factors can influence the market.

Dyerd Varga, the CEO of Swiss trading firm MET International, also believes that the price of gas in Europe will fall below €10 per MWh (about $113 per thousand cubic meters).

“In the short term, within a few days, if the gas storage facilities are full, we could see prices below €10,” Varga stated, attributing the reason to a “bottleneck” caused by insufficient storage space.

Earlier we reported that oil prices rose after the statement by Saudi Arabia’s Energy Minister.

Commodities

Oil prices rose after the statement by Saudi Arabia’s Energy Minister

Published

4 days ago

May 24, 2023

According to trading data, global oil prices rose by more than 1.5% on Wednesday afternoon following the comments made by the Energy Minister of Saudi Arabia.

The price of July futures for Brent oil increased by 1.54% to $78.02 per barrel, and the price of July futures for WTI oil increased by 1.69% to $74.16.

The day before, Minister Prince Abdulaziz bin Salman criticized the International Energy Agency (IEA) for frequently making incorrect forecasts about the hydrocarbon market. Bin Salman also issued a warning to speculators in the oil market ahead of the OPEC+ meeting, stating, “I would just tell them to be careful.”

Representatives of OPEC+ member countries will meet on June 4 in Vienna to decide on their next steps.

According to Stephen Brennock, an analyst at PVM Oil Associates Ltd, cited by Bloomberg, the markets are evaluating the statements made by the Saudi energy minister.

Earlier we reported a decline in the number of oil rigs in the U.S.

Commodities

Baker Hughes reported a decline in the number of oil rigs in the U.S.

Published

6 days ago

May 22, 2023

During the reporting week, the number of active oil rigs in the U.S. decreased by 11, marking the largest weekly decline since September 2021. This information was provided by the oil services company, Baker Hughes, on Friday.

The decline in oil prices is influenced by the U.S. government debt situation.

In addition, the number of active gas drilling rigs also experienced a significant decrease of 17 units during the previous week, the most significant weekly decline since June 2020.

The cumulative number of active oil and gas rigs dropped by 11 units to a total of 720 during the week of May 13-19, which is the lowest level seen since May 2022.

According to Baker Hughes, this figure represents an 8-unit decline or a 1% decrease compared to the same period last year. It is the first decline of this kind since April 2021.

Specifically, the number of active oil rigs in the U.S. decreased by 11 units to 575, reaching its lowest point since June 2022. Meanwhile, the number of gas rigs remained unchanged at 141 units.

The most substantial decline occurred in Texas, where the total number of rigs fell by 9 units to reach 355 units during the reporting week, reaching the lowest level seen since May 2022.

In the Eagle Ford field, the number of rigs decreased by 3 units to 59, which is the lowest level observed since April 2022. Similarly, the Permian Basin experienced a decline of 4 units, reaching its lowest point since March, with a total of 349 units.

On a positive note, the rig count in New Mexico increased by 1 unit to 109, which is the highest level recorded since February.

Earlier we reported that oil prices were preparing to show their first weekly rise in a month.