Oil gains 2% after U.S. debt deal and jobs data, focus turns to OPEC

Oil prices rose about 2% on Friday after the U.S. Congress passed a debt ceiling deal that averted a government default in the world's biggest oil consumer and jobs data fed hopes for a possible pause in interest rate hikes ahead of a meeting of OPEC and its allies this weekend, said Reuters.

Brent futures rose USD1.36, or 1.8%, to USD75.64 a barrel by 11:46 a.m. EDT (1546 GMT). U.S. West Texas Intermediate (WTI) crude rose USD1.28, or 1.85, to USD71.38.

WTI was headed for its highest close since May 26 and Brent on track for its highest close since May 29. For the week, both contracts were down about 2%, headed for their first weekly losses in three weeks. Open interest in futures contracts rose on Thursday to the highest since July 2021 for Brent and March 2022 for WTI.

The U.S. Senate approved a bipartisan deal to suspend the limit on the U.S. government's USD31.4 billion debt ceiling, staving off a sovereign default that would have rocked financial markets. U.S. employment increased more than expected in May, but a moderation in wages could allow the U.S. Federal Reserve to skip an interest rate hike this month for the first time in more than a year. Higher interest rates can slow the economy and reduce oil demand.

Oil traders have turned their attention to the June 4 meeting of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The group in April announced a surprise cut of 1.16 million barrels per day, but price gains from that move have been erased with crude trading below pre-cut levels. Sources told Reuters OPEC+ was unlikely to announce fresh output cuts.

"While there seems to be a widely held view that (OPEC+) won't announce any further cuts, it's worth noting that the same was true at the last meeting and then the group announced cuts of roughly another million barrels," said Craig Erlam, senior market analyst at OANDA.

"It's hard to ignore the warnings from the Saudi energy minister to 'watch out', threatening more "ouching" for short speculators," Erlam noted. "This may be playing into the mind of traders fearing another surge on the open next week."

Saudi Arabia is the biggest producer in OPEC. On the demand side, manufacturing data out of China, the world's second biggest oil consumer, painted a mixed picture.

China is suffering from early heatwaves, expected to persist through June, putting power grids under strain as consumers in mega-cities like Shanghai and Shenzhen crank up air conditioners.

We remind, Europe's largest economy is also one of the region's most aggressive advocates for shifting energy systems away from fossil fuels, and leads the continent in emissions reduction targets and investments in renewable energy supplies.

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Technip Energies, LyondellBasell and Chevron Phillips Chemical announced the signing of a Memorandum of Understanding for the design, construction and operation of a demonstration unit for Technip Energies’ electric steam cracking furnace technology to produce olefins, said Hydrocarbonprocessing.

The demonstration unit will be located at LyondellBasell’s site in Channelview, Texas, USA, and is designed to prove the technology at industrial scale. Steam cracking furnaces play a significant role in the production of basic chemicals by breaking down hydrocarbons into olefins and aromatics. This cracking process requires a temperature of more than 1,500°F (850°C).

Technip Energies, a leader in the ethylene market, developed the concept and design for the e.Furnace by T.EN technology, which could achieve this temperature using electricity as the heat source. The use of renewable electricity in this process would contribute to significantly reducing GHG emissions associated with olefins production.

Arnaud Pieton, CEO of Technip Energies, stated: “We are delighted to team up with LyondellBasell and CPChem to bring the eFurnace by T.EN to fruition. Consistent with our purpose to engineer a much-needed sustainable future Technip Energies is making huge strides toward reducing the CO2 emissions resulting from the production of ethylene and this design will enable olefins producers to take advantage of the growing supply of available renewable energy to operate the most energy-intensive part of the plant."

Peter Vanacker, CEO of LyondellBasell, said: “We are taking decisive steps toward reducing our absolute scope 1 and 2 greenhouse gas emissions, while creating solutions for everyday sustainable living. Deployment of an industrial-scale electric cracking furnace is one option we are considering in this space because of its ability to reduce furnace GHG emissions by up to 90% compared to a conventional furnace. Our Channelview site has the infrastructure, and our people have the expertise to test this advanced furnace technology and help our industry accelerate climate action.”

Bruce Chinn, President and CEO of Chevron Phillips Chemical, said: “Climate change is a global issue that will take action from all segments of society, and we want to be part of the solution by reducing the intensity of our carbon footprint. This project supports our efforts toward lowering the carbon intensity of our operations and demonstrates our continued focus on accelerating change for a sustainable future.”

We remind, Technip Energies is pleased to announce that a joint venture, led by Technip Energies in partnership with Consolidated Contractors Company, has won a major Engineering, Procurement, Construction and Commissioning contract by QatarEnergy for the onshore facilities of the North Field South Project.

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Oil steadied on Thursday as a potential pause in U.S. interest rate hikes and the passing of a crucial vote on the U.S. debt ceiling bill were offset by a report of rising inventories in the world's biggest oil consumer, said Hydrocarbonprocessing.

U.S. Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the U.S. House of Representatives passed a bill suspending the government's debt ceiling, improving the chance of averting a disastrous default.

Brent crude futures fell 10 cents, or 0.14%, to USD72.50 a barrel by 1339 GMT while U.S. West Texas Intermediate crude (WTI) rose 7 cents, or 0.1%, to $68.16. Both benchmarks fell on Tuesday and Wednesday. "Oil markets may have been oversold in the last two trading days," said CMC Markets analyst Tina Teng. "Sentiment rebounded amid the debt bill's passage in the House and (the) Fed's rate hike pause signal."

Mixed demand indications from China, the world's biggest oil importer, have nonetheless weighed on the market, as has industry data showing a rise in U.S. crude inventories. Market sources citing American Petroleum Institute (API) figures on Wednesday said that U.S. crude inventories rose by about 5.2 million barrels last week. Government stocks data is due at 1430 GMT on Thursday.

"The current mood is one of pessimism," said Tamas Varga of oil broker PVM. "Investors have been pragmatic and risk averse of late." Also in focus is the June 4 meeting of the OPEC+ producer group, in which the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia will discuss whether or not to cut oil production further.

Four sources from the alliance told Reuters that OPEC+ is unlikely to deepen supply cuts at their ministerial meeting on Sunday despite a fall in oil prices toward USD70 a barrel. These price levels are "not at all comfortable" for OPEC+ members, said Ole Hansen, head of commodity strategy at Saxo Bank.

"Failure to deliver some price supportive action at the OPEC+ meeting this weekend could see oil prices drop further, but overall, we see the downside risk as limited with last month's production cuts yet to be fully felt and priced in," Hansen said.

We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.


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ExxonMobil Low Carbon Solutions’ newest carbon capture and storage agreement – with Nucor Corporation, one of North America’s largest steel producers – demonstrates our continued momentum in helping industrial customers reduce emissions, said Hydrocarbonprocessing.

We will capture, transport and store up to 800,000 metric tons per year of CO2 from Nucor’s manufacturing site in Convent, Louisiana. The site produces direct reduced iron (DRI), a raw material used to make high-quality steel products including automobiles, appliances and heavy equipment.

It’s the third carbon capture agreement we’ve announced in the past seven months, following previous ones with industrial gas company Linde and CF Industries, maker of agricultural fertilizer.

It also marks a milestone – bringing the total CO2 we’ve agreed to transport and store for third-party customers to 5 million metric tons per year (MTA). That’s equivalent to replacing approximately 2 million gasoline-powered cars with electric vehicles, which is roughly equal to the total number of EVs on US roads today.

“Our agreement with Nucor is the latest example of how we’re delivering on our mission to help accelerate the world's path to net zero and build a compelling new business,” said Dan Ammann, president of ExxonMobil Low Carbon Solutions. “Momentum is building as customers recognize our ability to solve emission challenges at scale.”

The Nucor project, expected to start up in 2026, will tie into the same CO2 transportation and storage infrastructure as utilized by our CF Industries project, and supports Louisiana’s objective of reaching net-zero CO2 emissions by 2050.

As outlined in our recent Low Carbon Solutions Spotlight event, we are focused on developing and deploying emissions solutions for the energy-intensive sectors of the economy, including industries like steel.

We remind, ExxonMobil Corp has started up its long-planned project to expand light crude oil processing capacity by 250,000 b/d at ExxonMobil Product Solutions Co's integrated refining and petrochemicals complex along the US Gulf Coast in Beaumont, TX, US.

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