August 2022 Monthly Average Crude Oil Price

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The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil slid by $7.95 (-7.8%) to $93.67 per barrel in August. That decrease occurred within the context of a marginally weaker U.S. dollar (broad trade-weighted index basis -- goods and services), the lagged impacts of June’s increase of 695,000 barrels-per-day (BPD) in the amount of petroleum products demanded/supplied (to 20.8 million BPD), and accumulated oil stocks that have finally coincided with levels of a year earlier (August average: 432 million barrels). 

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Selected highlights from the 2 September 2022 issue of OilPrice.com’s Oil & Energy Insider include:

"Chinese weakness has become the key talking point of the past week," wrote editor Tom Kool. "First, the country’s PMI index for August recorded a mere 49.4, roughly in line with July, indicating that the much-anticipated economic activity rebound is still far from becoming real. Second, the return of lockdowns in multi-million megapolises such as Shenzhen or Chengdu will inevitably weigh on oil demand as (once again) no one really knows how long the restrictions will last. Political instability in Iraq has failed to bring about any bullish trend, just as the prospect of an Iran nuclear deal keeps on lingering around without anyone seeing the smaller picture of political guarantees. Until OPEC+ meets on September 05, China-driven demand fears will lead the market narrative, seeing ICE Brent down at $92 per barrel."

EU Tries Its Luck with Power Price Cap. Brussels is working on an electricity price cap that would limit the maximum price for generators who run on wind, solar or nuclear – under current EU rules the market price is set by the last power plant needed to meet demand, most often a gas one, allowing lower-cost generators to cash in. 

Germany Charters Fifth FLNG Terminal. The German government intends to charter another floating LNG terminal for the winter season of 2023/24, planning to place the 5 bcm per year FSRU off the northern coast in Wilhelmshaven and have it operated by E.ON, Engie, and Tree Energy Solutions.

Gazprom Savors the Turbine Blame Game. With Russia’s Gazprom halting gas flows via Nord Stream 1 for another round of maintenance, the company CEO took to the media, saying that “sanctions confusion” resulted in Siemens Energy not being able to service the pipeline’s turbines, potentially pointing towards further disruptions.

Chinese Coal Stocks Shine as Power Supply Stays in Limelight. Betting on China’s authorities prioritizing economic growth over environmental concerns, investors have been mopping up Chinese coal stocks recently, with the country’s coal index surging some 50% in 2022 to date already, spearheaded by top producer Shenhua Energy.

Venezuela Softens Tone for Chevron Role Revamp. Venezuela’s oil minister Tareck El Aissami said that the relaunching of Chevron’s operations in the Latin American country depends largely on the terms and conditions of new U.S. licenses, hinting that it does not see an issue with the US oil major taking a larger role.

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For other oil-related headlines, see the 6 September 2022 edition of The Energy Bulletin Weekly.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.