Oil Prices Climb on a Bounty of Bullish Catalysts – OIR 220222

  • Oil prices rose to their highest level since 2014 after Moscow recognized the independence of the breakaway regions of Donetsk and Luhansk and moved its troops into eastern Ukraine, aggravating European supply concerns.
  • Spot Brent prices have been trading above the $100 per barrel since last week, now even ICE Brent futures seem to be climbing increasingly closer to that threshold.
  • Backwardation in ICE Brent prices is at the highest in more than a decade, with the 1-month spread between the April and May contracts rising to $2.40 per barrel.
  • The backwardation does not only impact oil markets, gasoil futures are just as tight amid globally low inventories. 

Market Movers

  • US oil major ExxonMobil (NYSE:XOM) signed a deal with the Papua New Guinea government on the development of the long-stalled P’nyang gas field, agreeing on a 63% government take.
  • As elevated crude prices have provided Saudi Aramco (TADAWUL:2222) with windfall profits, the Saudi national oil company is in talks with Chinese companies to further invest in its downstream sector.
  • US oil major Chevron (NYSE:CVX) is reportedly looking to sell its assets in Equatorial Guinea, acquired as part of its $13 billion takeover of Noble Energy in 2020, seeking to garner $1 billion from the sale. 

Tuesday, February 22, 2022

Just as oil industry CEOs have gathered in London for the International Petroleum Week, reiterating their bullish vision for oil prices, Russia’s foreign policy took center stage and added another layer of upside risks by moving its army into eastern Ukraine. Gas prices shot up in Europe and oil prices followed, driven by concerns that supply disruptions from Russia or potential sanctions packages could make oil markets even tighter than they are today. Brent crude hit $99 early on Friday morning before falling back.

OPEC+ Compliance Continues To Be A Problem. According to media reports, OPEC+ compliance with its oil production targets rose to 129% in January, up 7 percentage points from December 2021, with underperformance being even more prevalent for the OPEC-10, standing at 133% last month.

The post Oil Prices Climb on a Bounty of Bullish Catalysts first appeared in Oilprice.com on February 22, 2022.  

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