The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil inched up, by $3.29 (+3.9%) to $87.55 per barrel in October. That increase occurred within the context of a noticeably stronger U.S. dollar (broad trade-weighted index basis -- goods and services), the lagged impacts of August’s increase of 256,000 barrels-per-day (BPD) in the amount of petroleum products demanded/supplied (to 20.6 million BPD), and accumulated oil stocks that continue rising in rather “grudging” fashion (October average: 438 million barrels).
Selected
highlights from the 38 October 2022 issue of OilPrice.com’s Oil &
Energy Insider include:
“Strong corporate earnings have breathed new life into the oil markets, with most oil majors sticking to their set policy of increasing dividends and ramping up share buybacks,” wrote editor Tom Kool. “This might not sit well with the White House ahead of the midterm elections as the flurry of optimism has supported oil prices well, with ICE Brent within touching distance of the $100 per barrel psychological barrier. The difficulties that sprang up earlier this week -- widespread dumping of Chinese assets amidst Xi Jinping’s re-election, the ECB’s sullen interest rate increase, and many others -- appear to have been forgotten, for now.”
IEA Casts a Long Shadow on 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
especially surprising for natural gas, previously seen as the bridge fuel
towards a greener future.
World Bank Projects Energy Price Decline. The World Bank announced it expects
global energy prices to drop 11% in 2023 after a massive surge this year,
putting Brent prices at $92 per barrel and expecting decreases in both natural
gas and coal prices next year amidst weaker growth.
US Rail Strike Odds Increase Again. After the second rail workers’ trade union rejected
the national tentative agreement reached in mid-September, the likelihood of
seeing a railway strike in the US in December is rising again, potentially
putting some 30%
of US cargo shipments in jeopardy.
US Diesel Tops the Shortage Agenda. With US distillate inventories at the lowest
level for this time of the year since the EIA started collecting weekly data in
1982, at 106 million barrels, diesel prices will have a massive upside in the
winter months unless rates of diesel consumption decline.
UN: We Might Not be Able to Halt Global Warming. Ahead of the COP27 next month, the UN said
it sees no “credible pathway” to limit the rise in global temperatures to 1.5°
C above pre-industrial levels and that with the current course it is set to
rise by 2.8° C.
High LNG Prices Bring Dual-Fuel Tankers Back. Confronted with exorbitantly high natural gas
prices, with LNG JKM hitting $70/mmBtu this year, shipping companies have substantially
increased their interest in dual-fuel tankers that can run on LNG or diesel as
a means of hedging their bunkering costs.
US Government Wants to Mine its Own Uranium. With US nuclear firms still depending on Russian and Kazakh uranium, the Biden Administration is building up its own uranium strategy with a view to mining more domestically -- the IRA already allocated $700 million for producing high-assay low enriched uranium.
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.
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