The oil market is once again relatively rangebound. To the upside, growing Chinese demand concerns are capping the market, following a raft of data earlier this week suggesting a softer demand picture. To the downside, expectations of a tight market through the third quarter continue to provide a floor to prices. While, in the short term, supply concerns from Canada provide a more solid floor.
Wildfires in Alberta, Canada are posing a growing threat to oil sands output. More than 130 fires are burning in Alberta, putting in the region of 500k b/d of oil supply at risk. Several producers have already evacuated some workers, with the latest being MEG Energy, which is evacuating non-essential workers from its Christina Lake oil-sands site, which produces around 100k b/d. The evacuation has not led to any production curtailments yet.
Both Slovakia and Hungary have stop receiving pipeline oil from Russia’s Lukoil after a transit ban was imposed by Ukraine, following the inclusion of Lukoil on Ukraine’s sanction list. However, both countries are still receiving oil from other Russian producers.
Feedgas supply to the Freeport LNG export facility continues to recover following Hurricane Beryl, however, flows remain well below usual operating levels. The outage at the LNG export plant has reportedly led to at least 10 cargoes being cancelled. These supply disruptions along with warmer weather across large parts of Europe have provided a boost to European gas prices with TTF rallying 2.45% yesterday.
The EIA’s weekly natural gas storage report showed that US inventories increased by 10Bcf last week, below the 27Bcf the market was expecting and quite a lot lower than the 5-year average increase of 49Bcf. This leaves total storage at 3,209Bcf, 16.9% above the 5-year average.