Good morning; here's what the Oilman has for you today:

• Watch China’s Oil Demand

• LNG Exports Are Going To…

• Tweet of the Day

Watch China’s Oil Demand

China’s just issued a new batch of oil import quotas for this year, and the number is 20% higher than a year ago.

This trumps all the worrying economic reports that have pressured prices lately. It’s reasonable to expect a price jump soon.

The scales are about to tip

The oil import quota news comes on the heels of an EIA report that forecasts a jump in shale oil production to a record high in July.

After that, however, growth will slacken off, the EIA said.

But based on those China quotas, demand won’t.

And it’s happening during peak demand season in the U.S.

There really is just one-way prices could go in that situation.

Especially with the Saudis’ planned cut of 1 million bpd.

Just when the DoE said it was beginning to buy oil for the SPR.

Were all the price forecast revisions premature?

Goldman Sachs just revised down its price forecast by 10%, now expecting Brent at $86 at the end of the year.

Morgan Stanley cut its outlook even earlier after OPEC+ announced deeper cuts in April.

Both revisions were motivated by expectations of weaker demand.

And those expectations were based on economic data from China.

Someone is probably feeling silly right now.

Because as China ups import quotas, U.S. inflation has “fallen” to 4% (sure…).

And this means the possibility for higher demand here as well has also grown.

Expect new price forecast revisions soon in the other direction.

The Oilman reckons it sure must be fun to be an oil analyst at an investment bank.

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LNG Exports About to Surge Again

Last year, LNG exports from the U.S. to Europe surged to unseen heights. This may be about to repeat this year as demand jumps.

What this means for the U.S. market is higher prices because output is slowing down.

Europe is back on the gas price rollercoaster

Last year, gas prices in Europe soared into the stratosphere as Russian pipelines ran dry.

U.S. LNG exporters had a windfall.

And this is about to happen again because gas supply from Norway is down due to field outages.

U.S. gas output is falling.

Plus, there is almost no gas coming from Russia, and the EU is about to make sure it stops completely; Ukraine transit fees be damned.

Which means Europe will need a lot of LNG.

Again.

Tough luck for poor Asian nations.

Tough luck for Europeans as well as prices rise.

But great news for LNG exports in the U.S.

Time to start talking about a new normal

The EU’s hoping wind and solar will replace gas, but this is not happening anytime soon.

This means reliance on LNG will only increase.

And this means reliance on U.S. LNG because Europeans don’t like long-term contracts, which Qatar, for example, loves.

This new normal for demand could mean a new normal for gas prices both at home and internationally.

It would also mean more coal use in Asia if last year is any indication, which it is.

Too bad for those emission-cutting efforts.

Around the Global Patch

🇮🇳 India's infinite expands oil refinery venture in UAE.
🇧🇷 Brazil's $7B decommissioning investment by 2026.
🇦🇺 Australian operator advances UK offshore project.

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