OPEC+ raises output by de minimis amount¹
Electricity transmission links undervalued
Freeport LNG to restart partially in October
Automakers see weakening demand
¹ Higher oil production by Saudi Arabia and the other Gulf monarchies was briefed as one of the benefits from U.S. President Joe Biden’s visit to the region and “reset” of the relationship with Saudi Arabia last month. The tiny output increase of +100,000 b/d was the smallest that could be announced without appearing to snub the president completely. But it raises the question of what diplomatic benefits the president achieved from the trip – if not higher oil output did he secure some other objectives? Who advised the president to make this trip, within the administration and outside? Does the president ultimately see it as a success or a disappointment?
BRENT spot prices and calendar spreads have weakened consistently in recent weeks, a sign the recent upward price cycle has begun to break down. Prices and spreads are softening in response to the increased probability of a recession dampening oil consumption:
BRENT’s calendar spread from December 2022 to December 2023 has softened to a backwardation of $7.20 per barrel, down from $16.50 in early June, and close to its lowest levels since Russia invaded Ukraine in February. Traders are anticipating an imminent business cycle slowdown will relieve under-production in the oil market and stabilise inventory levels:
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