Commodities Update — Gold falls to 10-week low; Soyoil retreats; Copper dips

RIYADH: Oil prices dropped on Thursday as investors remained cautious about dwindling fuel demand in China, the world’s biggest oil importer, as COVID-19 restrictions there continue.

Brent crude futures fell $1.48, or 1.41 percent, to $103.84 a barrel by 0426 GMT. US West Texas Intermediate crude futures slipped $1.39, or 1.36 percent, to $100.63 a barrel.

Both contracts settled over 30 cents higher in the previous session due to ongoing concerns about tight worldwide supply, and another drawdown in US distillate and gasoline stocks.

Aker BP again posts record profit in Q1

Norwegian independent oil company Aker BP reported its fifth consecutive record quarterly profit on Thursday as petroleum prices soared, the company said on Thursday.

Earnings before interest and taxes for January-March 2022 rose to a fresh record of $1.78 billion from $591 million a year ago, Aker BP said.

Sinopec expects rebound in Q2

China’s Sinopec Corp. expects demand for refined oil products to recover in the second quarter as COVID-19 outbreaks in the country are gradually controlled and see full-year oil consumption reaching positive growth.

Asia’s biggest oil refiner has cut its refining runs since the second half of March and is maintaining an “optimal” refinery operation ratio of around 85 percent, compared with 92.6 percent earlier in the year, Sinopec officials said at a briefing on Thursday.

Cities across China, including the financial hub of Shanghai, were put under lockdowns following a flare up of COVID-19 cases, leading to road freight clogs and port congestion.

“The anti-COVID measures have restrained consumption of refined oil products. But we expect oil demand to gradually resume in the second quarter with the pandemic outbreak under control,” said Li Li, deputy head of Sinopec’s operation management department.

“At this moment, we are confident about the 2022 fuel consumption in China…even if the recovery in the second quarter is moderate, the full-year growth will remain positive.”

Sinopec also expects its total liquefied natural gas imports to stay steady in 2022.

Singapore’s Sembcorp Marine agrees $6.3 billion merger

Singapore’s Sembcorp Marine, also known as Sembmarine, has agreed to a $6.29 billion merger with Keppel Corp’s larger offshore and marine unit, a year after the Temasek-backed firms began deal talks amid an industry downturn.

The loss-making oil rig builders have been whiplashed by years of oversupply, oil price volatility and a drop in new orders.

Such troubles have been exacerbated by the global transition toward renewable energy, consolidation of Chinese and South Korean rivals and major disruptions during the COVID-19 pandemic when oil prices fell.

The combination “brings together two leading O&M companies in Singapore to create a stronger player that can realize synergies and compete more effectively amidst the energy transition,” Keppel CEO Loh Chin Hua said.

The downturn increased competition for a shrinking pool of projects, driving up industry debt levels and leading Sembmarine to raise S$3.6 billion of equity over the past two years, with strong backing by Singapore state investor Temasek.

Temasek, Sembmarine’s majority shareholder, will ultimately become the largest shareholder in the merged company, with a 33.5 percent stake.

(With inputs from Reuters)