Hurricane season is back, and oil markets are on alert as the first Category 5 hurricane to form this time of year heads toward Jamaica.- As commodity markets turn to policy discussions following last week’s Biden-Trump debate, analysts are looking to gauge the impact of U.S. gasoline prices on voter satisfaction.- National gasoline prices are 3% to 4% lower year-over-year, with gasoline consumption in the US being down this year, with gasoline “cracks” being nearly $10 a barrel lower than in 2023 and inventories being about 12 million barrels higher.- However, swing states like Arizona, Georgia or Nevada have recorded gasoline consumption below the national average, at 551 gallons per year compared to a federal average of 576 gallons, while tending to pay more since Biden’s presidency ($1.12/USG compared to $1.06/USG nationally).- Given that the States that voted for Trump tend to be more exposed to price volatility at the pump, due to more rural populations or lower average disposable incomes, so even lower gasoline prices could pose a challenge for President Biden.Market Shifts:- Oilfield services giant SLB (NYSE:SLB) is ending its operations in Libya as of July 1, as more than a dozen oil companies owe it about $240 million in unpaid debts.- The Spanish oil giant Repsol (BME:REP) plans to sell up to 49% of its assets in the Eagle Ford field in Texas, currently producing more than 50,000 barrels of oil equivalent per day, in the hope of reaping at least $1 billion from the sale.- The Italian energy giant ENI (BIT:ENI) plans to divest more than $4 billion of upstream assets, with projects in Indonesia and Cyprus among the most likely candidates following its recent sale of Alaska assets.Tuesday, July 2, 2024:Oil traders turned professional meteorologists in July, with the market tracking the rapid start to this year’s Atlantic hurricane season. Hurricane Beryl threatens Jamaica as it barrels toward the U.S.-Mexico coast, becoming the first Category 5 hurricane to form at this time of year.Saudi Aramco bets on natural gas. Saudi Arabia’s national oil company Saudi Aramco has signed contracts worth more than $25 billion for Phase 2 of its massive 229 trillion cubic feet Jafurah gas field and Phase 3 of its main gas grid expansion, seeking to use more gas in power generation. The United States is backtracking on its commitment to replenish the SPR. The Biden administration failed to award any contracts in its recent request to purchase an additional 6 million barrels of sour crude oil for the U.S. SPR by the end of 2024, with no bidders offering prices below the $79.99 per barrel threshold.China Creates New Rig for Tight Oil. Beijing is setting up a new state-controlled entity that would consolidate existing producers, combining CNPC, Sinopec, and steel and industrial equipment companies, to seek out productive ultra-deep reservoirs and tackle tight oil fields. Global miner Rio Tinto is in talks with workers at its Grosvenor metallurgical coal mine, which accounts for about 30% of the company’s annual coke output, after it cut wages by up to 80%. France’s oil giant TotalEnergies is considering giving up its concessions in South Africa, having discovered 4.5 TCF of gas assets with the Luiperd and Brulpadda discoveries, hampered by government bureaucracy and regulations.Shares in mining giant AngloAmerican fell nearly 6% this week after a methane explosion sparked a fire at the Grosvenor metallurgical coal mine, which accounts for about 30% of the company’s annual coke production.Chinese manufacturing activity contracted for the second straight month in June, with the PMI index unchanged at 49.5, trade tensions with U.S., Europe weigh on new export orders.By Michael Kern for Oilprice.com
