Good morning, this is the Oil Patch. We're like a baker. We mix up all the oil and gas-related news which we present to you in bite-sized portions. Nom nom.

Here's what the Oilman has for you today:

• Morgan Stanley Bullish on Oil: Raises Demand Forecast by 36%

• A New Day Rate Dilemma: Supreme Court's Overtime Ruling Rocks Oil and Gas Industry

• Chinese State-Owned Fund Acquires Shares in Global Oil Trader

• Tweet of the Day

Morgan Stanley Bullish on Oil: Raises Demand Forecast by 36%

Morgan Stanley has just raised its global oil demand growth estimate for this year by about 36%! That's right, the bank is feeling more bullish than ever about the future of black gold.

The bank notes

Mobility indicators in China are on the rise, and flight schedules are looking up, leading to a projected increase in oil consumption of about 1.9 million barrels per day. However, higher supply from Russia has put a slight damper on the overall forecast, resulting in a smaller-than-expected deficit in the second half of the year.

But there might be extra supply

Goldman Sachs has also made some noise recently, with upward adjustments to global supply forecasts for 2023 and 2024. But it's not all doom and gloom - Goldman also noted that a 1.1 million bpd rise in Chinese demand this year should push oil markets back into a deficit in June.

The oil market is a bit of a mixed bag at the moment, with falling oil prices causing some concern, but with expectations of tighter global supplies and rising demand from China, there's reason to be cautiously optimistic.

The Oilman's feeling a tad bullish himself.

A New Day Rate Dilemma: Supreme Court's Overtime Ruling Rocks Oil and Gas Industry

The U.S. Supreme Court has just dropped a bombshell on the oil and gas industry. Michael Hewitt, a rig supervisor for Helix Energy Solutions Group Inc, has won his lawsuit for overtime pay in a decision authored by none other than Justice Elena Kagan.

A tale as old as time

Hewitt claimed that he was entitled to overtime pay despite the 1940 regulation that exempts highly compensated workers who earn over $107,000 annually from overtime pay. However, because he was paid a daily rate of $963 and not a salary, he fell outside of the exemption.

A flood of lawsuits?

The 6-3 decision in Hewitt's favor could have a ripple effect throughout the oil and gas industry. Companies may now risk being sued for overtime premiums for highly paid workers who do not receive a guaranteed minimum weekly wage. Oil and gas trade groups, including the American Petroleum Institute, have argued that supervisors in the industry are typically paid daily rates and work long hours – which is true.

This case is a tricky one. Typically drilling engineers and completion supervisors work 12-on-12-off schedule, but there are any number of schedule arrangements possible. What's necessary is for each party to agree – and then hold to – their agreement.

Who's wrong here? Helix or Hewitt? Don't ask the Oilman, the Supreme Court ruled against Helix.

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Chinese State-Owned Fund Acquires Shares in Global Oil Trader

China's state-backed investment fund, CNIC Corp, has acquired a minority stake of just under 5% in Swiss-based Mercuria, a top five global oil trader. The deal, which took place last year, has been kept secret until now.

China has been hiring

And they ain't hiring just anybody. CNIC's HR department has been adding traders from global firms to expand its Chinese-state commodities companies in sectors ranging from oil to metals and grains. This move is strategic, given China's interest in hedging against future Western sanctions.

But buying an actual stake in a trading firm?

This is something more rare. CNIC strengthens its position in the global energy market and broadens its potential for future growth. Mercuria aims to broaden its presence in clean energy sources and pledged in 2020 that 50% of its new investments would go into renewable energy for the next five years. Proof of this is in their hire of former BP exec, Robert Lawson.

Mercuria's equity value in 2021 was about $4.4 billion, which would value the stake at a minimum of $220 million.

Although the purchase has not been officially confirmed, the Oilman thinks this is one bold and strategic move for both CNIC and Mercuria.

Around the Digital Patch

🛢️ The dwindling of low-cost and low-emission oil and gas reserves.🛢️ Poland working towards first nuclear plant.🛢️ U.S. Republicans introduce American Energy Act.

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