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Oil & Gas Sector Update - Turnaround In Marketing Margins: Systematix

Economic growth concern and marginal rise in OPEC supply keep oil prices on check.
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<div class="paragraphs"><p>Oil refinery. (Source: pxhere.com)</p></div>
Oil refinery. (Source: pxhere.com)
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Systematix Research Report

Crude oil prices were largely flattish during February 2023 and dropped between 0.5%-2.5% and were trading in between $79-$86/barrel of oil.

Fear of global recession and higher Organization of the Petroleum Exporting Countries output led to rise in global inventory level. Though OPEC production rose 150 thousand barrles per day in Feb-23, still 700 kbpd lower from Sep-22.

U.S. oil inventory rose for the third month in a row and increased 27 million bbls to 480 million bbls while Organization for Economic Cooperation and Development inventory increased marginally by 11 million bbls to 2.8 billion.

However, impact of lower oil prices were reflecting in rig addition as number of rigs in U.S. declines further by 14 rigs in Feb-23 to 758 rigs.

Asian spot LNG prices continued their downtrend this week, hitting the lowest level since July 2021, due to tepid demand growth and higher inventory levels.

During Feb-23, Japan Korea LNG marker price dipped 32% month-on-month to average $16.8/metric million British thermal unit.

Prices are expected to remain sluggish on the back of-

  1. higher inventory levels in Europe (Currently at 57%),

  2. restart of U.S.’s largest Freeport LNG terminal,

  3. strong wind power generation, and

  4. global economic slowdown.

However, Chinese import has seen sharp bounce back and economic activity in coming months may have a significant say in LNG prices.

Click on the attachment to read the full report:

Systematix Oil and Gas - Monthly Update.pdf
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