Oil Down, Continue to Dampen Fuel Demand
Even as a rising number of COVID-19 cases worldwide continue to cloud the fuel demand forecast, oil was down in Asia Monday morning.
After rolling over to the Oct. 21 contract on July 25, 2021, Brent oil futures slid 1.16 per cent to $72.59 at 1:31 a.m. ET (5:31 a.m. GMT). WTI futures fell 1.25 per cent to $71.17 per barrel.
We saw an overreaction in the market last Monday. Like all other technical corrections so far, oil’s downturn has typically proven short-lived. Bargain hunters came out in droves when Brent fell below $70. Economic demand for energy appears to be strong,” OCBC Bank economist Howie Lee told CNBC. However, since the number of COVID-19 cases involving the Delta form has increased, countries such as Thailand and Vietnam have implemented curfews. In dealing with the latest wave of COVID-19 cases, US White House medical advisor Anthony Fauci also cautioned that the country is going in the wrong direction.
In addition to recent catastrophic flooding in sections of the country, China, a significant petroleum importer, is coping with an increasing number of COVID-19 cases. Beijing is also cracking down on the abuse of import quotas. When paired with increased crude prices, this could result in China’s oil import growth slowing to its lowest level in two decades in 2021. However, in the second half of 2021, refining rates are likely to rise.
The recent increase in COVID-19 instances corresponds to an anticipated increase in supply from the Organization of Petroleum Exporting Countries and its Allies (OPEC+) beginning in August. For the dark liquid, this might imply a tightening market and turbulent waters ahead.
However, efforts to resurrect a 2015 nuclear deal, which might reintroduce Iranian supplies to the market, have been pushed back to August. If the discussions fail to materialize, or if they do, Iran would adopt a difficult posture. The US is considering imposing sanctions on Iranian oil sales to China. Meanwhile, Baker Hughes Co. reported on Friday that US oil rigs increased by seven to 387 in the previous week. This is the highest level reached since April 2020.
South Korea’s Oilbank
Hyundai Oilbank, a South Korean refiner, would sell majority ownership in its oil storage terminal in Ulsan, on the country’s southeast coast, to help fund green energy initiatives.
According to a corporate official, the company’s board of directors has approved a plan to sell a 90 per cent stake in Hyundai Oil Terminal to J& Private Equity Fund. The official refused to provide the deal’s financial specifics but said the 90 per cent stake is worth roughly Won 180 billion. Since December 2013, Hyundai Oilbank has managed and operated Hyundai Oil Terminal. This makes it the first domestic refiner to perform a commercial oil storage operation.
Hyundai Oilbank has set a target of producing 100,000 mt of blue hydrogen per year by 2025. The carbon dioxide from the refinery will be serving as the hydrogen feedstock. Blue hydrogen forms by capturing carbon dioxide emissions while producing hydrogen from fossil fuels.