November 2022 - Portland Fuel

Monthly Pricing - 01/11/2022

Brent crude started October at $87.8/bbl, hitting its highest point earlier in the month on Friday 7th at $97.3/bbl, as global supply concerns gripped the market following the announcement that OPEC+ would cut production by an additional million bpd than was previously expected, before ending the session in a similar position at $96.12/bbl.

GBP traded at $1.123 against USD at the start of October, before falling as low as $1.104 against USD on Monday 10th October, following a turbulent time in British Politics under ex-Prime Minister Liz Truss and her announcement of the UK mini-budget. This has since improved under new British Chancellor, Jeremy Hunt who all but scrapped his predecessor’s mini-budget and, laterally, under new British Prime Minister, Rishi Sunak as GBP ended the month at $1.153 against USD.

October has seen a number of refinery strikes across France at both ExxonMobil sites and TotalEnergies. By mid-October, ExxonMobil had reached agreements with the unions over employee pay, however, strikes at 2 TotalEnergies sites are still ongoing and are costing the company 240,000 bpd at the Gonfreville site and 119,000 bpd at the Feyzin site.

Price Drivers

Supply OPEC+ announced that they were going to cut production by 2 million bpd from November which threatened US and Saudi relations, with President Biden labelling the cut as “unnecessary”. The EU released further sanctions earlier in October to condemn the Russian invasion of Ukraine by banning the exportation of Russian crude and by implementing further restrictions on tankers transporting Russian crude.

Demand The EIA US stock reports a net increase of 9.4 million barrels of crude in October, indicating a large decrease in demand, largely down to the fears of a potential global recession. Aggressive monetary tightening has been evident in most global economies with the ECB, US Federal Reserves & Bank of England all announcing rapid interest rate hikes in an attempt to combat inflation and the global risk of recession that is currently impacting demand.

Geo-Political October has seen the third British Prime Minister move into No.10 this year, as Rishi Sunak was voted into power on Monday 24th October to replace Liz Truss, after only 44 days in office – the shortest term in British history. China’s President Xi Jinping has been re-elected for a third five-year term as the leader of the Communist party, a privilege only accorded to party founder Mao Zedong.