Oil Prices Fall as Protests Over China's Zero COVID-19 Policy Continue
The energy sector is set for a lower start, pressured by weakness in the crude complex and the major market futures. U.S stocks are expected to start the week in negative territory, tracking losses in European and Asian markets amid protests in major Chinese cities against the country’s zero-COVID policy.
WTI and Brent crude oil are down as Chinese citizens showed their resentment towards the nation’s COVID-19 restrictions over the weekend. Oil futures are now trading at their lowest this year and have now erased 2022 gains. Last night, hundreds of demonstrators clashed with police in Shanghai as protests over COVID-19 curbs continued for a third day. Investors are concerned over the impact the coronavirus measures will have on demand and the political stability of the nation. OPEC+ is set to meet on December 4th following their agreement to reduce their output target by 2 million barrels per day through 2023.
Natural gas futures are trading sharply lower on forecasts for milder weather than previously expected. Also adding pressure is the uncertainty over the restart of flows from the Freeport LNG export plant.
BY SECTOR:
US INTEGRATEDS
Chevron on Saturday received a U.S. license allowing the second-largest U.S. oil company to expand its production in Venezuela and bring the South American country's crude oil to the United States.
INTERNATIONAL INTEGRATEDS
bp has been awarded two exploration blocks in the Mediterranean Sea, offshore Egypt by the Egyptian Natural Gas Holding Company. The Northwest Abu Qir Offshore Area - in which bp, the operator, holds 82.75% and Wintershall-Dea holds 17.25% - is located west of the recently awarded North King Mariout block (bp 100%) and north of the Raven field. It covers an area of approximately 1038 square kilometres with water depths ranging between 600 metres and 1600 metres.
Operations are resuming at bp's large Rotterdam refinery, a spokesperson confirmed. The refinery has been idle for a week amid a dispute with workers over pay. A spokesperson for unions said earlier on Saturday that workers are planning to restart some operations on Monday.
China's Shenzhen Energy Group has signed a long-term agreement with bp to buy liquefied natural gas (LNG), aiming to lock in supplies with gas-fired power generation poised to surge in the world's second-largest economy.
Italy needs to significantly increase its liquefied natural gas (LNG) import capacity, the chief executive of Eni said, adding that the country would ideally need four new LNG terminals.
Prosafe has been selected as the winning bidder for a 650-day firm period contract by Petrobras using Safe Zephyrus, commencing in May 2023. The contract value is approximately USD 73 million (equivalent to USD 112,500 per day).
Shell's Nigeria subsidiary SPDC has begun exporting limited amounts of oil from the Bonny terminal as it works to reinstate full pipeline production, a spokesperson said.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
APA provided an update on exploration activities in Block 58 offshore Suriname. APA holds 50% working interest, while TotalEnergies is the operator on the block with a 50% working interest. Drilling operations have concluded at the Awari exploration prospect in the previously untested northwest portion of Block 58. The well was deemed noncommercial.
Bank of America downgraded Diamondback Energy Inc, to Underperform from Neutral.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
KBR announced it has been awarded a $69.2 million task order to deliver total life cycle management of critical airborne manned reconnaissance aircraft systems for the Naval Surface Warfare Center Crane (NSWC Crane) and the Naval Air Systems Command (NAVAIR) E-2/C-2 Airborne Command and Control Program Office (PMA 231).
National Energy Services Reunited Corp has announced that the company has been awarded a long-term contract for Directional Drilling services in Kuwait, covering Directional Drilling, Measurements while Drilling, Performance Drilling, Well Engineering and Logging While Drilling services for five years, with an option to extend an additional year.
DRILLERS
Noble announced changes to its share capital. 3,170 A ordinary shares with a nominal value of USD 0.00001 each issued by Noble in connection with the completion of the compulsory purchase of the remaining outstanding shares of The Drilling Company of 1972 A/S ("Maersk Drilling") have been cancelled.
REFINERS
No significant news.
MLPS & PIPELINES
EnLink Midstream, LLC announced that the EnLink Board of Directors have appointed Benjamin D. Lamb as Executive Vice President and Chief Financial Officer (CFO) and Walter Pinto as Executive Vice President and Chief Operating Officer (COO). As part of this change, EnLink announced that its commercial and business development teams, previously overseen by the COO, will be led by a Chief Commercial Officer (CCO) to be hired from outside of EnLink. The CCO will join the EnLink Executive Leadership Team and will focus on strategically growing the company's strong gathering and processing segments alongside its new carbon capture transportation business. EnLink's commercial and business development teams will report directly to Chief Executive Officer Jesse Arenivas until the CCO is hired to ensure continued focus on growth. The Board is thankful to former CFO Pablo Mercado for his service to EnLink.
MARKET COMMENTARY
Wall Street futures fell, mirroring the bearish sentiments in European and Asian markets, as rare protests in major Chinese cities against the country's strict zero-COVID curbs hit growth expectations in the world's second-largest economy. Oil prices slumped over concerns about the outlook for fuel demand in China. Gold ticked higher as the dollar weakened to make bullion more attractive for other currency holders. Later in the day, European Central Bank President Christine Lagarde is expected to speak at the European Parliament.
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