Donna Dong
Research Analyst, Flux
Brent Strengthens to $101.95/bbl
Brent rises on supply shocks; Russia exports hit, refinery restarts, US shale steady, Japan eyes stock release, spreads firm.
The May’26 Brent futures contract gained strength this afternoon, from $98.79/bbl at 13:15 GMT to $101.95/bbl at 16:55 GMT (time of writing).
In the news, Valero Energy is scheduled to restart its Port Arthur oil refinery (capacity 380kb/d) later this week, following an explosion and fire at its 47kb/d diesel hydrotreater that led to an earlier shutdown. Elsewhere, ExxonMobil's head of upstream, Dan Ammann, has said the company has a team in Venezuela this week assessing the country's oil and gas resources and infrastructure. This follows CEO Darren Woods' January comment that Venezuela was “uninvestable.” According to Ammann, the company is “looking to assess the state of the infrastructure on the ground.” In Russia, Reuters calculations suggest that 40% of Russia’s oil export capacity has been halted amid Ukrainian drone attacks, pipeline disputes, and tanker seizures; the shutdown is one of the most severe supply disruptions in modern Russian history. Back in the US, shale producer Devon Energy will maintain production activity despite the surge in oil prices. CEO Clay Gaspar has said that the company will “not be oversteering on near-term signals,” adding that shale oil prices greater than $100/bbl will not spur a material rise in US output unless they remain elevated for more than a quarter. In Japan, Prime Minister Sanae Takaichi has asked the International Energy Agency to be ready for another release of oil stocks if necessary. Japan has already begun preparations to release 80mb of crude oil this week. Finally, at the time of writing, the front-month (May/Jun) and 6-month (May/Nov) Brent futures spreads are at $4.64/bbl and $18.52/bbl, respectively.
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