Oil prices have been slowly but surely edging higher in July as rising optimism around Chinese demand combines with supply concerns to boost bullish sentiment. Oil bulls are optimistic now?
Chinese authorities have reformed natural gas pricing in the country, linking retail residential gas prices to distributors’ purchasing costs to avoid squeezing the margin of power-generating companies too much.
The deregulation of natural gas prices in China has almost immediately engendered a wave of retail price increases, mostly between 10%-15%, with China Gas expecting its gross margin to increase 30% in 2023.
– The pricing reform is expected to boost two areas: coal-to-gas projects that were previously suppressed by the price caps and LNG imports as passing on purchasing costs to customers becomes the norm.
– LNG prices in Northeast Asia hit an all-time high of $69.9 per mmBtu last August, but weaker-than-expected Chinese buying and higher LNG supplies have depressed the JKM marker to $11 per mmBtu currently.
Market Movers
– French oil major TotalEnergies (NYSE:TTE) intends to take full control of Total Eren, a power producer with hydro, wind, and solar plants, buying the remaining 70% and bringing Total Eren’s total enterprise value to $4.2 billion.
– UK-based energy firm Shell (LON:SHEL) agreed to sell its 35% stake in the Masela natural gas block in offshore Indonesia to Malaysia’s Petronas and Indonesia’s Pertamina for a consideration of $650 million.
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Source: Oil Price
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