Oil Updates — crude prices rise on OPEC+ cuts, weaker dollar

Oil Updates — crude prices rise on OPEC+ cuts, weaker dollar
Brent crude futures rose 38 cents, or 0.49 percent, to $78.07 a barrel at 8:38 a.m. Saudi time, while US West Texas Intermediate crude was up 40 cents, or 0.55 percent, at $73.39. (Shutterstock)
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Updated 11 July 2023

Oil Updates — crude prices rise on OPEC+ cuts, weaker dollar

Oil Updates — crude prices rise on OPEC+ cuts, weaker dollar

RIYADH: Oil prices edged higher on Tuesday, recouping some of the losses from the previous session, as traders focused on supply cuts by the world’s biggest oil exporters, Saudi Arabia and Russia, and a weaker dollar. 

Brent crude futures rose 38 cents, or 0.49 percent, to $78.07 a barrel at 8:38 a.m. Saudi time, while US West Texas Intermediate crude was up 40 cents, or 0.55 percent, at $73.39. 

Prices had eased 1 percent on Monday on higher expectations that further US interest rate hikes are coming and as investors booked profits after last week’s 4.5 percent rise. 

Supply cuts by Saudi Arabia and Russia set for August helped to lift the benchmark prices, which were also supported as the US dollar fell to a two-month low. A weaker dollar makes crude cheaper for holders of other currencies and often boosts oil demand. 

Saudi Arabia last week said it would extend the cuts of 1 million barrels per day at least to August, and Russia said it would cut its oil exports next month by 500,000 bpd. 

Oil market to tighten with China demand and OPEC+ cuts: IEA 

Oil demand from China and developing countries, combined with the output cuts of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is likely to keep the market tight in the second half of the year despite a sluggish global economy, the head of the International Energy Agency said on Monday. 

“Even in sluggish economic growth, China and other developing countries’ demand is strong,” IEA Chief Fatih Birol told Reuters. 

He added: “Taken together with the production cuts coming from key producing countries, we still believe that we may see tightness in the market in the second half of this year.” 

Global energy demand to rise 23% by 2045: OPEC 

Global demand for all energy forms is forecast to rise by 23 percent through 2045, OPEC Secretary-General Haitham Al-Ghais told a Nigerian oil and gas conference on Tuesday. 

Oil executives and officials from the OPEC have repeatedly made the case for continued investment in oil, warning that prices will otherwise spike higher. 

Al-Ghais also said calls to limit or stop funding new oil projects were unrealistic and unwise. He acknowledged the need for technology to tackle continued fossil fuel emissions. 

“Global primary energy demand is forecast to increase by a significant 23 percent in the period up to 2045, which means we will need all forms of energy,” he said. 

Al-Ghais added: “We will require innovative solutions such as carbon capture utilization and storage and hydrogen projects in addition to a circular carbon economy, which has received a positive endorsement from the G20.” 

The global oil industry needs $12.1 trillion in investment during the same period, he said, adding the sector was still not on track to reach that level of investment. 

BP settles US market manipulation case for $10.75m 

Oil major BP agreed to pay a civil penalty of $10.75 million to cover allegations company traders manipulated natural gas markets in 2008, which is less than BP has already settled in the case, US energy regulators said in a filing. 

The US Federal Energy Regulatory Commission alleged that BP violated the Natural Gas Act by manipulating the next-day gas market at Houston Ship Channel from mid-September through Nov. 30, 2008. 

BP paid a civil penalty of $24.35 million in December 2020 and a disgorgement of unjust profits of $250,295 in January 2021 in the case. But the company paid those penalties under protest and appealed the case to the US Court of Appeals for the Fifth Circuit, which remanded the matter back to FERC to reassess the civil penalty. 

The settlement announced in the filing late on Friday resolves the case. 

Under the settlement, FERC said BP would not seek a return of the $250,295 of disgorgement it has paid. 

The regulator also said its Office of Enforcement “will not object should BP choose to seek to reclaim the excess payment of $13,606,686 through a suit” in the US Court of Federal Claims or any other forum of competent jurisdiction. 

The case related to actions by BP traders to take advantage of market dislocations around the time Hurricane Ike smashed into the Houston area in September 2008. 

FERC’s Office of Enforcement alleged BP traders made uneconomic physical gas sales to suppress the Houston Ship Channel Gas Daily index and boost the value of BP’s financial position. 

Poland wants NATO pipelines to reach further east: president 

Poland wants NATO to discuss extending its Cold War-era oil pipeline system further east, President Andrzej Duda said on Monday before leaving for Vilnius for a NATO summit that will start on Tuesday. 

“We will certainly raise the issue of the expansion of fuel supply pipelines, NATO pipelines. Today they end in Germany because they are the remnants of what was built during the Cold War,” Duda told reporters. 

He added: “We would like, after more than 20 years of our presence in NATO, for the alliance to finally decide that it will finance the expansion so that they reach NATO’s eastern flank.” 

NATO’s Central Europe Pipeline System is a high-pressure pipeline network that transports jet fuel, gasoline, diesel fuel and naphtha across Belgium, France, Germany, Luxemburg and the Netherlands. 

(With input from Reuters)