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Optimism Over Iran Nuclear Deal Drags Oil Prices Down – OilPrice.com

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Optimism Over Iran Nuclear Deal Drags Oil Prices Down | OilPrice.com


Josh Owens

Josh Owens

Josh Owens is the Content Director at Oilprice.com. An International Relations and Politics graduate from the University of Edinburgh, Josh specialized in Middle East and…

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Iran Nuclear Deal

Chart of the Week

– Largely thanks to a colder-than-average January, European gas stocks are now below 38% of aggregate storage capacity and remain well below any historical range.

– With Gazprom minimizing gas flows via the Yamal-Europe pipeline, Brussels is seeking to clinch guarantees from the US and other producers that would cover its needs in case the Russia-Ukraine conflict degenerates into war.  

– Even though Azerbaijan signaled its readiness to sell whatever incremental supply it has, its output remains relatively minuscule compared to Russian imports – at the same time, Qatar has already stated that it could not do much if there were a disruption to Russian flows. 

– Unutilized import capacity in Europe could accommodate bigger volumes, however as the Qatari case demonstrates, the real difficulty will be in inadequate LNG supply.

Market Movers

– Hitting the highest annual profit in eight years, cashing in $12.8 billion in 2021, UK energy major BP (NYSE:BP) reiterated its deep dive into renewables and now wants to invest at least 40% of its capital spending into transition technologies. 

– Japan’s Toshiba (TYO:6502) conglomerate announced it would break up into two companies, spinning off its devices business by March 2024, though the scandal-ridden firm is still yet to win the support of shareholders.  

– Spain’s oil major Repsol (BME:REP) reportedly seeks to sell some of its Canadian assets located in the Duvernay Basin, availing itself of high oil prices, with the 170,000 acres in question assumed to garner around $600 million. 

Tuesday, February 08, 2022

Whilst last week’s market narrative was overwhelmingly driven by the current tightness in both crude and products markets, the return of Iranian barrels has become the main talking point this week. With negotiations having restarted in Vienna today, media utterances seem to suggest there might not be any further rounds of talks – the draft text of the nuclear covenant is reportedly ready and it is only the deal guarantees that are left to be ironed out. Sensing the prospect of some 1.5 million b/d of Iranian barrels hitting the market (legally) after a hiatus more than three years long, oil prices have subsided somewhat, with Brent futures trading slightly above $90 per barrel and WTI dropping back to around $89 per barrel. 

US Restores Iran Nuclear Waivers. Just as the 9th round of Vienna talks on the restoration of the Iranian nuclear deal has started today, the US administration reintroduced sanctions waivers that enable foreign firms to work with Iran’s civilian nuclear installations, perhaps a harbinger of a diplomatic breakthrough coming soon.

Biden Vows to End Nord Stream 2 if Russia Invades. With the Russia-Ukraine standoff continuing to keep European tensions high, US President Biden pledged to halt Gazprom’s (MCX:GAZP) Nord Stream 2 pipeline should Moscow decide to invade Ukraine.

Mexico Slashes Asian Crude Exports. Mexico’s national oil firm PEMEX has drastically cut its exports to India, previously a key buyer of its heavy Maya grade, as it seeks to divert domestic production to its recently purchased 320,000 b/d Deer Park refinery in Texas, compelling Indian refiners like IOC (NSE:IOC) to turn towards Middle Eastern barrels. 

Norway Prepares for First Offshore Wind Auction. Norway’s government has earmarked two areas in the North Sea that would be tendered in the country’s first-ever offshore wind auction – regional linchpins Shell (NYSE:RDS), BP (NYSE:BP), and Equinor (NYSE:EQNR) have all confirmed their participation. 

Chevron Lobbies Venezuela Ramp Up. US oil major Chevron (NYSE:CVX) has held a series of negotiations with US authorities to give it greater control of operations in its Venezuelan joint venture with PDVSA in return for oil cargoes that would recoup the latter’s unpaid debt. 

Investors Expect Diesel Bull Run. Whilst most of the recent exchange trading saw Brent and WTI move in opposite directions, net positions in US diesel and European gasoil saw the biggest buying activity (+2 and +14 million barrels, respectively) as low inventories pushed the middle distillate long-short ratio to 6:1. 

Guyana Wants Better Oil Terms. The government of Guyana announced it would seek to amend its terms for new production sharing contracts, as the 2% royalty rate included in its first-ever exploration covenant with ExxonMobil (NYSE:XOM) remains one of the most favorable globally. 

Iraq Wants Qatari Gas. In an attempt to wean itself off dependence on Iranian natural gas, Iraq’s acting electricity minister Axel Karim expressed interest in ramping up imports of Qatari gas despite not having any liquefaction capacity – indicating that the flows might be routed via Kuwait, a politically sensitive proposition. 

Chinese Coal Prices Jittery Again. With total coal inventory in Chinese ports standing at a mere 47 million tons on the back of logistics constraints and COVID restrictions – the lowest in a year – Chinese coal prices have surged this week to ¥880 per metric ton ($140/mt). 

Nigeria Desperately Needs Gasoline. Nigeria’s national oil company NNPC reached outto trading firms for emergency supplies of up to 500,000 metric tons after several incoming cargoes were rejected because of their poor quality, triggering a politically sensitive fuel shortage in the country’s main cities. 

Argentina Oil Output Hit by Union Strike. Shale production in the Vaca Muerta play was debilitated by a strike started on Monday by Argentina’s largest oil union, demanding salary increases amid galloping inflation in the Latin American country. 

US and Japan Settle Steel Dispute. Washington and Tokyo announced a deal to remove Trump-era tariffs on Japanese steel, the second such deal after the US-EU steelmakers covenant, stipulating that the steel ought to be fully produced in Japan so that China cannot skirt US tariffs. 

Aluminum Prices Soar to 14-Year Highs. Just as China’s main aluminum production hub in the city of Baise went into a COVID-triggered lockdown, aluminum prices reached their highest level since 2008, with LME quotes trading around $3,240 per metric tonne, up 15% on the year.

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Metro Vancouver house prices plunge as interest rate rises – Business in Vancouver

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“Buyers, your time is now,” real estate agent says as home prices fall across the region | Photo: Chung Chow

A forecast from TD Bank that B.C. average home prices will fall by 8.1 per cent by next year appears too optimistic in Metro Vancouver as June sale prices dropped for the third straight month.

The June composite benchmark price for all residential properties in Greater Vancouver was $1,235,900, down 2 per cent from May and a 2.2 per cent decrease over the past three months, reports the Real Estate Board of Greater Vancouver.

Detached house prices are seeing the largest dollar decline, down an average of $37,000 per month since March to a June benchmark price of $2,058,600.

On the bellwether Vancouver West Side market, the median price for a detached house plunged $194,000 from May to $3,063,500 in June.

“We’re seeing downward pressure on home prices as we enter summer due to declining home buyer activity, not increased supply,” said Daniel John, REBGV Chairman.

Total residential sales in Greater Vancouver totalled 2,444 in June 2022, a 35 per cent decrease from June 2021, and a 16.2 per cent decrease from the 2,918 homes sold in May 2022.

The Fraser Valley Real Estate Board (FVREB) processed 1,281 sales in June, down 5.8 per cent compared to May and a 43 per cent plunge compared to June of last year.

“In just two months our market overall has shifted into balance, mainly due to a softening of demand for single-family detached homes,” said FVREB president Sandra Benz, who noted the effect of rising mortgage rates.

Fraser Valley detached house price dropped 3.5 per cent, or $57,855, month-to-month to a June benchmark of $1,653, 000 reports the Fraser Valley Real Estate Board.

The Bank of Canada, which has increased its trend-setting interest rate 75 basis points since March, is expected to jack the rate from 50 to 75 basis points on July 6 to fight inflation.

This will trigger a further decline in home sales and prices, according to TD Bank. In a June 30 report, TD forecast that B.C. will see among the sharpest corrections, with average home prices falling by 8.1 per cent into 2023.

The price drops and increased supply should be welcome by homebuyers, according to real estate agents.

“In most areas of Metro Vancouver and especially at higher price points, it is a buyer’s market now,” said Kevin Skipworth, managing partner with Dexter Associates Real Estate in Vancouver.

He pointed to the city of Vancouver strata sector as especially enticing due to increased supply and falling prices. The benchmark price of a townhouse in the city dropped nearly 2 per cent in June from a month earlier and condo prices fell 2.3 per cent month-to-month, with the biggest decline in the trendy West Side.

“Vancouver’s West Side has seen townhouses and condos go up to five-month’s supply from three months last year,” Skipworth said. “What a switch and an opportunity compared to a year ago. Buyers, your time is now.”

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