The world’s largest oil producers kick off their earnings this week, with profits forecast to slow from last year’s record highs as oil prices slumped in the first quarter. Elsewhere, the BNEF Summit gets underway in New York, while deal watchers will be focused on a Teck Resources Ltd. shareholder vote on splitting up the company — with the outcome dictating the future of Glencore Plc’s $23 billion takeover bid. Here are five notable charts to consider in global commodity markets as the week ge
(Bloomberg) — The world’s largest oil producers kick off their earnings this week, with profits forecast to slow from last year’s record highs as oil prices slumped in the first quarter. Elsewhere, the BNEF Summit gets underway in New York, while deal watchers will be focused on a Teck Resources Ltd. shareholder vote on splitting up the company — with the outcome dictating the future of Glencore Plc’s $23 billion takeover bid. Here are five notable charts to consider in global commodity markets as the week gets underway.
Big Oil
Exxon Mobil Corp., Chevron Corp. and TotalEnergies SE all report earnings this week, followed by Shell Plc and BP Plc in early May. Even though all five posted blowout profits in 2022, adjusted net income is set to cool in the first quarter thanks to softening oil and gas prices. Combined, the biggest western oil companies are forecast to have made $36.5 billion, according to data compiled by Bloomberg. While that’s down more than 40% from the peak in the second quarter of 2022, it would still mark the seventh-highest level recorded since the mega-mergers of the 2000s created the companies in their current form.
Jet Fuel
Keep an eye on China air travel. After punishing Covid restrictions, the country is returning to the skies and the pace is expected to accelerate heading into the Golden Week holiday next month. Jet fuel demand reached nearly 75% of its pre-pandemic levels in the week ended April 15, according to JPMorgan Chase & Co., while international flights to and from the country continue to climb. The likelihood of increased air travel in the coming weeks explains why jet fuel consumption in China is widely seen as the single biggest driver of world oil demand growth this year, analysts from the bank said. Meanwhile, fuel consumption in the rest of the world is also picking up, BloombergNEF data show.
Shipping
Sticking with China, let’s take a look at its ports where container boxes of imported goods are stacking up despite improved economic data. While the economy grew at the fastest pace in a year in the first quarter, ports like the world’s largest in Shanghai are handling more incoming boxes than exports, according to data from Container xChange. That’s because of a slump in demand from major export destinations such as the US and Europe, where economic uncertainty is still weighing on consumer appetite. In Shanghai, inbound containers are consistently making up about 64% of the total number of containers at the port. That’s a far cry from January 2021, when exports accounted for the bulk of activity. The backlog of imports, coupled with empty container boxes not used to carry Chinese exports back across the ocean, may find themselves stuck until global consumption accelerates.
Mining M&A
Glencore is racing to convince Teck investors ahead of a Wednesday vote to reject the company’s plans to separate its metals and coal businesses, a prerequisite for the Swiss commodities giant’s $23 billion takeover bid to move forward. If Glencore prevails and can convince Teck shareholders to accept the proposal on its current terms, the deal would rank in the top 10 biggest among metals producers ever. On Monday, Teck’s B shares were still trading below the value of Glencore’s offer, implying the market isn’t convinced the proposed takeover will happen.
Renewable Energy
Executives from leading utilities, oil producers and natural gas companies will convene at a BloombergNEF summit in New York starting Monday as the world navigates the transition to net zero. Adoption of renewable power is set to continue expanding, with global wind and solar capacity seen roughly doubling by 2026 from current levels to almost 4.2 terawatts, according to BNEF data. In the US, the two sources are expected to be the backbone of power supply by 2050, thanks to generous funding provided by the landmark Inflation Reduction Act. Other topics of discussion at the two-day event include safeguarding critical-mineral supply chains, energy storage, battery technology and clean-energy finance.
–With assistance from Kevin Crowley, Ann Koh, Claudio Lubis, Chunzi Xu, William Mathis, Simon Casey and Brad Skillman.
(Updates Teck’s B shares in fifth paragraph.)
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