Oil Prices Drop
Oil prices fell by roughly 2% on Monday. The third session in a row, after official data, revealed that China’s refining throughput and economic activity slowed. This indicated that Covid-19 outbreaks are weighing on the world’s second-largest economy. By 1211 GMT, Brent crude was down $1.22, or 1.7 percent, to $69.37 per barrel. Oil in the United States declined $1.35, or 2%, to $67.09.
According to data, China’s factory output and retail sales growth fell substantially in July. They fell short of predictions as flooding and new outbreaks of Covid-19 interrupted economic operations. Last month, China’s crude oil processing fell to its lowest daily level since May 2020. Meanwhile, independent refiners slashed output due to stricter quotas, rising stocks, and plummeting earnings.
The International Energy Agency
The International Energy Agency (IEA) said last week that rising crude oil demand reversed course in July and was likely to grow at a slower rate for the rest of 2021 due to a surge in Covid-19 infections from the Delta version. The US Commodity Futures Trading Commission (CFTC) said that money managers cut their net-long position in US crude futures and options in the week ending August 10. Speculators also cut their futures and options positions in New York and London by 21,777 contracts over time. Thus, bringing their total work to 283,601.
The world’s largest mining corporation is charting a new course. It wishes to concentrate entirely on mining.
BHP Group Ltd. stated it is exploring selling its oil and gas division in what would be one of the biggest deals in the energy industry this year. Analysts believe the unit is worth at least $15 billion. It talks with Woodside Petroleum Ltd. in Australia about a possible arrangement in which BHP shareholders would receive Woodside equity.
BHP has long defended its oil-and-gas expenditure. These features distinguish it from competitors in the mining industry, as a strategy to hedge against price changes in other commodities such as iron ore. That position hasn’t always gone down well with shareholders. Elliott Management Corp., an activist investor, purchased a stake in the company four years ago. It advocated for drastic changes, including the sale of oil and gas assets.
BHP’s examination of the business ahead of a prospective sale demonstrates that resource corporations respond to increasing demand from investors and governments to reduce emissions. In May, the International Energy Agency stated that new fossil-fuel supply projects must halt immediately to achieve a global objective of zero net carbon emissions by 2050.