Displaying items by tag: oil

Oil prices dropped over 2% earlier this week, erasing last week's gains as OPEC revised down its 2024 and 2025 global demand forecasts. China's crude oil imports have now declined for the fifth consecutive month, further weighing on prices. 

Despite China's efforts at economic stimulus, investors remain unconvinced, adding to concerns over demand. Brent crude fell by $1.72 to $77.34 per barrel, while U.S. West Texas Intermediate dropped to $73.82. 

OPEC attributed much of the demand reduction to China's sluggish economic growth and rising electric vehicle adoption. Geopolitical tensions between Israel and Iran also linger as potential risks to oil markets.

Finsum: Oil price declines and yet inflation still remains slightly elevated, investors should monitor this trend in case inflation takes off again. 

The United States needs an "all-of-the-above" approach to meet the growing global energy demand, highlighting their own role as the largest producer and exporter of energy worldwide according to Rob Thummel of Tortoise.  

He notes that the U.S. has an abundance of low-cost, low-carbon energy options, which he views as critical for supporting economic growth both domestically and internationally. According to Thummel, U.S. energy resources help expand other economies while also driving growth at home. 

Additionally, he links the availability of affordable energy to the resurgence of advanced manufacturing and AI development in the U.S. This broad energy strategy, he argues, positions the country to lead in both innovation and economic stability.

Finsum: AI is going to have a drastic impact on the demand for energy in the coming years and with or without structural changes this will move markets in energy prices.

U.S. crude oil futures dropped to around $73 per barrel amid widespread concerns of a looming recession. West Texas Intermediate (WTI) crude oil, now up less than 2% for the year, and Brent crude, slightly down for 2024, saw declines despite earlier gains fueled by Middle East tensions and anticipated market tightening. WTI reached six-month lows earlier in the session. 

The energy prices for the day showed WTI at $72.84 per barrel and Brent at $76.30 per barrel. The downturn followed disappointing U.S. job growth and continued manufacturing sector contraction. 

Adding to the market's unease, China's weaker imports and refinery utilization rates have also impacted sentiment. OPEC+ might reconsider increasing production in October, with potential cuts depending on market conditions. Geopolitical risks persist, notably with rising tensions between Israel and Iran.

Finsum: Weak demand is very common leading into recessions, but with rate cuts around the corner now might be the time to buy energy stocks.

Crude oil futures climbed on Thursday, buoyed by easing inflation data. The consumer price index dropped 0.1% in June, reducing the annual rate to 3%, which raised hopes for Federal Reserve interest rate cuts in September. 

Lower interest rates typically boost economic growth, potentially increasing oil demand. Meanwhile, mixed signals on global oil demand emerged, with the International Energy Agency forecasting slower growth compared to OPEC's more optimistic outlook. 

West Texas Intermediate and Brent crude both saw price increases, while natural gas prices fell. Overall, the oil future looks fairly positive with potential increased demand. 

Finsum: It is potentially shaping up to be a strong fall for energy prices if we see a rate hike.

M&A activity in the energy sector continues at full speed. The latest deal involves ConocoPhillips buying Marathon Oil for $22.5 billion in an all-stock deal that is expected to close in the fourth quarter. Each Marathon shareholder will receive 0.255 shares of Conoco for every share of Marathon, equating to a 15% premium to its price prior to the deal’s announcement.

Last October, ExxonMobil and Chevron completed similar acquisitions of Occidental Petroleum and Diamondback Energy for $60 billion and $53 billion, respectively. The motive for these deals is identical, as the oil majors are looking to scoop up prime North American energy-rich territory. Further, energy companies have enjoyed years of robust cash flow during the post-pandemic period, which they’ve used to pay off debt, return cash to shareholders, and make acquisitions.

According to Conoco CEO Ryan Lance, the deal will strengthen the company’s portfolio of assets and increase its supply of ‘high-quality, low-cost inventory’. He has also said that consolidation is ‘the right thing to be doing for our industry’. Since the Exxon and Chevron deals, there have been rumors of a competitive bidding process between Devon Energy and Conoco for Marathon. Previously, Conoco had lost out to Diamondback Energy as both were vying for Endeavor Energy Resources, a private producer in the Permian Basin.

Finsum: The M&A spree in the energy sector continues with ConocoPhillips buying Marathon Oil for $22.5 billion.