“Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova

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Let me note that of course this winter is rather quite severe.

As a result, LNG in Asia costs $ 1,200 per 1,000 m3, Europe imports 50% more gas from Russia and a record amount of coal.

In contrast, in the US, the demand for propane / butane is as high as 2 million barrels per day.

I just wonder what the world would look like if the northern hemisphere had a really I mean really harsh winter as it used to be from time to time in history.

Personally, on behalf of ecologists, I would take into account that four phenomena can occur simultaneously

1) heavy frost

2) no sun

3) no wind

4) heavy frost plus no wind also usually means powerful smog if someone came up with the idea of using coal instead

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Good one by Saudi Anas Alhajii



If we end up with a rolling blackout tonight in #Texas, duration matters.

1- Those who live in completely electrified homes will suffer the most.

A lesson for #California & others where they want to ban natural gas

2- Homes with swimming pools will also suffer.



"Nearly half of Texas' installed wind power generation capacity has been offline because of frozen wind turbines in West Texas, according to Texas grid operators."





Edited by Tomasz
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Russian President Vladimir Putin will meet the head of Rosneft, Igor Sechin, during which he will discuss the company's results in the past year.

The duty on oil exports from the Russian Federation may fall by $ 12.1 from May 1 to $ 448.6 per ton [Version 1]
Russia is increasing the duty on oil exports from March 1
"Igor Ivanovich, I know that practically everything has already been summarized, probably the data for 2020, and you have the opportunity to realize how the company was doing," Putin said.

He also asked about the organization of work during the period of restrictive measures related to the coronavirus pandemic and how the work on vaccinating employees was proceeding.
Sechin said that Rosneft is currently the only global company that showed a profit at the end of 2020.

"Some time ago we provided public reporting in accordance with international standards, it is extremely positive for the company and I must say that despite the dramatic effects of, say, a pandemic, Rosneft showed - so far the only global" main directions "- profit at the end of the year," he said. Sechin.

According to him, the company received 147 billion rubles of net profit for the year. He added that many international companies such as ExxonMobil, Chevron, Shell, Total ended the year with losses.

"So far, the only company in the global oil and gas sector that has made a profit is us," emphasized Sechin.

"Is it the only one?" - the president specified. Sechin replied in the affirmative. “As of today, yes. I admit that other leaders may appear in the reports that will be passed on by the results of the year to other companies, but today it is so, ”he added.

In addition, the company plans to increase the use of associated petroleum gas to 95% from the current 83% in the coming years.

Geological research platform in Texas, USA
Bloomberg warns of the risk of reducing US oil production
“We are constantly working on this job. Currently, the average consumption of bound petroleum gas is 83%. We will reach 95% in the next two years, ”said Sechin.

He recalled that Rosneft has made management decisions to control the prevention of greenhouse gas emissions and minimize the carbon footprint of the company's main production plants. The company's strategy is to become a leader in terms of specific greenhouse gas emissions among comparable international companies.

Sechin added that Rosneft will try to cover the deficit that may arise on the global oil market for various reasons, including the "green" trend, at the expense of new blocks.



The above article is a bit of propaganda, but I will pay attention to one detail, Rosneft's profit last year at 147 billion rubles, or about 2 billion dollars. This will tell us a bit about the real  production costs of the largest Russian oil company.

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Texas Winter Storm Highlights The Importance Of Fossil Fuels


By Irina Slav - Feb 16, 2021, 5:00 PM CST


The message that we need to electrify everything that currently uses fossil fuels to generate energy has become the dominant message of the energy transition. Solar, wind, and energy storage—perhaps with the help of hydropower and some nuclear—can handle the energy needs of mankind, the argument goes, and do it with a much lower carbon footprint.

Yet, the Arctic cold wave that is sweeping across the United States has seriously undermined this argument.

Natural gas prices exploded last week in many parts of the U.S. and are still rising higher, as are electricity prices. In Texas, a state unaccustomed to such weather, wholesale electricity prices hit $9,000 per MWh on the spot market, prompting at least one retail power supplier to urge its clients to switch to another provider to avoid huge utility bills.

Blackouts are now a fact, with two million households across Texas without power at the time of writing. Authorities, meanwhile, are urging people to conserve energy by limiting their consumption. ERCOT has said the blackouts will be rolling, lasting for 45 minutes per area. This may not be a lot, but it does indicate the presence of a problem.

Texas, the Wind Capital of the U.S.

Texas is the biggest producer of wind energy in the United States.

Unfortunately, the state saw half of its wind turbines frozen by the icy winds blowing from Canada to parts of the U.S. that were unaccustomed to such temperatures. Of a total 25 GW in wind power capacity, 12 GW were knocked out by the freezing spell. At the same time, there is a shortage of natural gas, likely because of the sudden spike in demand. And it could get worse.

The cold spell has hit the oil and gas industry in Texas as well. Oil wells are being shuttered, and refineries are being shut down amid the blackouts caused by the deep freeze and a shortage of gas. Pipeline operations have also been affected by the blackouts, which could compromise gas supply further.

Related Video: To Pump Or Not To Pump: Big Oil Diverges On Production Strategy

“Attempting to electrify everything would concentrate our energy risks on an electricity grid that is already breaking under the surge in demand caused by the crazy cold weather,” wrote veteran energy journalist Robert Bryce in an article for Forbes this week. The current weather situation, Bryce said, shows very well why it would be highly risky to put all our eggs, as it were, in the electricity basket. If we electrified everything, he argued, it will only a matter of time before a much more serious blackout hits.

Indeed, a blackout of massive proportions almost hit Europe earlier this year. The fact that the catastrophe was avoided was lucky, but the event highlighted two problems: over-reliance on intermittent solar and wind power, and a possibly excessive interconnectedness of the continent’s national grids.

Cost of Electrification

Speaking of Europe, its solar power production has dropped to zero these days. No country except Slovenia is producing solar power right now, and Slovenia’s production is a meager less than 1 percent of its total generation. Wind power is going strong in most of Europe, but solar is out.

In Sweden, even wind power production is low because wind activity is low. So Sweden, which has ambitions to become all-renewable by 2040, is seeing a jump in electricity prices to the highest since 2011 and is urging people to conserve energy by reducing their consumption. Incidentally, it is also importing electricity from countries such as Poland and Lithuania, which generate it from coal, compromising Sweden’s green commitment.

This is telling us—in no uncertain terms—that the lack of diversification is the opposite of wise. It is as true of electricity supply as it is of economies and businesses. Total electrification and the shutting out of fossil fuels completely will mean blackouts. It’s as simple as that.

Because while the energy generated by the Sun and the wind comes free, it cannot be summoned when you need it, and even combined with energy storage, it will be insufficient. That’s what fossil fuels are for.

Incidentally, a report from last year forecast that the Earth was entering a cooling period because of a phenomenon called a Grand Solar Minimum that could last until 2053 and lead to a “noticeable reduction of terrestrial temperature.”

By Irina Slav for   

Books By Irina Slav





Tom Nolan's NOTE:  Here is the title from Irina's link at the National Institute of Health...

Modern Grand Solar Minimum will lead to terrestrial cooling


...The reduction of a terrestrial temperature during the next 30 years can have important implications for different parts of the planet on growing vegetation, agriculture, food supplies, and heating needs in both Northern and Southern hemispheres. This global cooling during the upcoming grand solar minimum #1 (2020–2053) can offset for three decades any signs of global warming ...


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Oil Prices Soar As U.S. Oil Production Plunges 30%

By Irina Slav - Feb 17, 2021, 7:00 AM CST



West Texas Intermediate jumped over $60 per barrel after the Polar Vortex that brought unusually cold weather to a large part of the U.S. froze—literally—a third of oil production.

Citing unnamed sources from the industry familiar with the details, Bloomberg reported that U.S. oil production is now 3.5 million bpd lower than it was before the cold snap hit, marking the largest ever production decline in history. In the Permian, production came down by as much as 65 percent.

According to the report, temperatures in Texas were so low at the start of this week that oil and gas liquids were freezing at the wellhead as well as in pipelines, which are mounted on the ground rather than laid underground.

“Some producers, especially in the Permian Basin and Panhandle, are experiencing unprecedented freezing conditions which caused concerns for employee safety and affected production,” said the Texas Railroad Commission on Monday.

Besides the plunge in oil production, Texas is also in for a further natural gas shortage because of the well freeze, which has been coupled with a surge in demand for heating.

(90 seconds)

CBS Dallas reported Tuesday that Texas Gas Service, one of the largest gas distributors in the Lone Star State, had warned supply could be tight for the duration of the cold spell because of the abovementioned combination of factors. Meanwhile, a regional electricity supplier in Texas urged its clients to switch to another because of the exploding prices that hit $9,000 per MWh earlier this week.

The shortage of gas, as well as the forced shutdown of several power plants that were not rated for such temperatures, according to energy expert Art Berman, have already caused blackouts in Texas. At the same time, the cold froze half of the state’s wind power capacity.

The good news—for Texans, if not for oil producers—is that the cold weather should be gone by the end of the week. This means the oil rally may also be over soon after as production ramps up at unfrozen wells.

By Irina Slav for

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Gasoline Prices Could Hit $3

By Irina Slav - Feb 17, 2021, 8:30 AM CST


The price of gasoline at the pump could reach $3 per gallon because of the cold snap that froze oil wells and pipelines and caused blackouts that prompted unit shutdowns at several refineries on the Gulf Coast.

Based on media reports, at least 1 million bpd in refining capacity is offline, FreightWaves reports, noting that considering the unconfirmed reports, the capacity taken offline could be double that. And while oil wells can be restarted relatively quickly, refineries may need weeks to return to normal operation.

“What we have is an electric generating problem,” said Andy Lipow, president of Lipow Oil Associates, told CNBC. “You don’t have natural gas, and you don’t have electricity. It’s difficult for refiners to turn crude into gasoline.”

This means a supply crunch in both gasoline and diesel. Even though the stocks of both fuels are above season averages for the last five years because of last year’s demand slump, prices are likely to rise because of the refinery disruptions.

“In terms of $3 a gallon, this simply provides more momentum for us to get there,” Patrick DeHaan, head of petroleum analysis for GasBuddy, told Bloomberg. “The average rise in the national average from late winter to Memorial Day has been 25 to 65 cents a gallon, which could mean we’re right on the doorstep.”

Others, such as Tom Kloza, the global head of energy analysis at Oil Price Information Service, see the problem as a relatively minor one, to be resolved quickly.

“I believe they’ve had orderly shutdowns. They haven’t had any damage or anything knocked out,” Kloza told CNBC. “My guess is this is like a blip in the system, but it’s not a big deal,” he added, expecting the peak in gasoline prices at $2.80 a gallon.

On Tuesday, the average price at the pump in the U.S. was $2.52 per gallon, Bloomberg noted. However, the upward potential may be limited, according to DeHaan, because of continuing movement restrictions enforced because of the pandemic and also because of lower desire to travel amid the Arctic weather.

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Is This Oil Rally The Start Of Something Much Bigger?

By Tsvetana Paraskova - Feb 16, 2021, 7:00 PM CST


Commodities have rallied in recent months, outperforming equity indexes amid expectations of an economic recovery, easy monetary policy, and rising inflation.  

The commodity bull run across the board—spearheaded by a 50-percent jump in oil prices over the past three months—isn’t finished running, analysts and investment banks say. Some of the biggest investment banks have even started to call the start of a new commodities supercycle, which by definition, lasts years—typically about a decade.

Yet, not all investment banks and analysts are as convinced that we are in for a commodities supercycle across the board, warning that the term supercycle is too optimistic for a bull run that could fizzle out within a year or two and could still fall victim to negative COVID-related impacts.   

Commodity Rally

As early as in October 2020, a few weeks before the first announcement of an effective vaccine candidate, Goldman Sachs said that commodities were headed toward a bull run in 2021. Hedges against expectations of rising inflation, a weakening U.S. dollar in which most commodities are traded, and signals of “very easy” monetary policy from central banks would be the key drivers of rallying commodities, Goldman Sachs said back then.

Goldman expected the S&P Goldman Sachs Commodity Index (GSCI) to return 42.6 percent for energy over a 12-month period, and 17.9 percent for precious metals.

Over the past three months, the S&P GSCI has outperformed the S&P 500 index, with the commodity index rising by 25 percent, compared to (just) a 9-percent increase in the S&P 500.

Related Video: To Pump Or Not To Pump: Big Oil Diverges On Production Strategy

Over the same period, oil prices have rallied from the low $40s to above $60 a barrel, driven by vaccine rollouts, OPEC+ production cuts, and expectations of a tight market and rising oil demand later this year when economies return to growth, helped by large stimulus packages.

Some Drivers Of A New Supercycle Are Here…

According to JPMorgan, there are reasons to believe that a new commodity supercycle may have just started.

“We believe that the new commodity upswing, and in particular oil up cycle, has started,” JPMorgan analysts led by Marko Kolanovic said in a note last week, as carried by Bloomberg.

The latest commodity supercycle ended in 2008 after a 12-year run, boosted by the super-spending and economic surge in China.  

JPMorgan now sees several potential factors underpinning a new supercycle: post-pandemic global economic growth, “ultra loose” monetary policies, increased and tolerated inflation, weakening U.S. dollar, financial inflows to hedge inflation, metals for energy transition markets such as batteries and electric vehicles (EVs), and underinvestment in new oil supply.

The International Energy Agency (IEA) warned last year that if investment in oil were to stay at the 2020 levels over the next five years, it would reduce the previously expected level of oil supply in 2025 by nearly 9 million barrels per day (bpd). 

This year, global upstream investments will stay low, just like they were in 2020, Wood Mackenzie said in December, expecting upstream oil and gas investment at a 15-year low of just US$300 billion, down by 30 percent from the pre-crisis level of investment in 2019.

“The world may be sleepwalking into a supply crunch, albeit beyond 2021. A recovery in oil demand back to over 100 million b/d by late 2022 increases risk of a material supply gap later this decade, triggering an upward spike in price,” said Simon Flowers, Chairman and Chief Analyst at WoodMac. 

Then, “very easy monetary policy” and reflation trade could push oil prices as high as $100 a barrel next year, Amrita Sen, chief oil analyst at Energy Aspects, told Bloomberg earlier this month.    Related: The Single Biggest Threat To The Electric Vehicle Boom

In the week to February 9, hedge funds increased bullish bets on 24 major commodity futures by 5 percent to a fresh high of 2.7 million lots, representing a nominal value of $143.7 billion, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, commenting on the latest Commitments of Traders report.

The combined net long position—the difference between bullish and bearish bets—in Brent and WTI has now increased to the highest in 28 months, while the net long in the grain sector in agriculture is not far from the record set in August 2012, Hansen noted.

Post-pandemic growth, tightening supply, and continued demand for reflation hedges pushed the Bloomberg Commodity index to a 27-month high, Hansen said.

But Is This The Start Of The Next Commodities Supercycle?

Although crude oil and other commodities have rallied and signals have emerged to support the call for a new supercycle, some analysts are cautious and say it is a little early to proclaim the beginning of the next commodity supercycle.

What we see in oil and commodities right now is a cyclical recovery, but a supercycle could be “two to three years away,” George Cheveley, portfolio manager at asset management company Ninety One, told Financial Times’ Natural Resources Editor Neil Hume. 

This bull run is unlikely to turn into a supercycle for commodities, because while investment may be depressed, “the material is abundant” for many commodities, including crude oil, Ed Morse, managing director and global head of commodities research at Citigroup, told the Financial Post in an interview last week.

Commodities have certainly benefited from the optimism that post-COVID growth and stimulus packages will boost demand and prices, but it may be a little premature to trumpet the next decade-long across-the-board commodities supercycle.    

By Tsvetana Paraskova for

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Texas Freeze Causes Largest Ever U.S. Production Decline

By Irina Slav - Feb 18, 2021, 9:00 AM CST



U.S. crude oil production has plunged by as much as 40 percent due to the Polar Vortex that brought freezing temperatures to swathes of the United States, most notably including Texas, where wellheads and pipelines froze. Now, this is turning into a global problem.

Bloomberg’s Alex Longley writes that according to estimates by Citi, the total lost U.S. production by early March could reach 16 million barrels. According to traders, however, the lost production could be twice as high.

“The market is underestimating the amount of oil production lost in Texas due to the bad weather,” Ben Luckock, co-chief of oil trading at Trafigura, said as quoted by Bloomberg.

And it’s not just lost oil production, either. Power outages led to the shutdown of several refineries in Texas, which removed an estimated 3 million bpd or more in refining capacity.

“The Gulf Coast is a gasoline machine and sends products across the U.S. as well as international markets,” said Kitt Haines, Energy Aspects analyst. “For a brief period at least, this could help European refining.”

European refiners will be just one of the groups that will benefit from the Texas deep freeze. Another is OPEC+. The extended cartel is meeting in early March to discuss progress with its production cuts, and the Texas events could strengthen the hand of producers that want to start boosting production sooner rather than later.

Saudi Arabia already signaled that prices are at a more comfortable level for it: the Kingdom said it will end its voluntary 1-million-bpd production cuts from March.

By March, the weather in Texas should be back to normal. In fact, according to forecasts, it should be back to normal by the end of this week. However, it will take more than a few days to bring production and refining back to normal.

“Evidence from the last great Permian freeze off is that it can come back very quickly,” Paul Horsnell, head of commodities research at Standard Chartered, told Bloomberg. “But refineries are more likely to be prone to prolonged damage.”

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By Irina Slav - Feb 18, 2021, 10:07 AM CST

Oil Prices Jump Above $61 On Major Crude Draw

Crude oil prices jumped higher after the Energy Information Administration reported crude oil inventories in the U.S. had shed 7.3 million barrels in the week to February 12.

This compared with an inventory draw of 5.5 million barrels for the previous week, as estimated by the EIA.

The American Petroleum Institute had a day earlier seen crude oil inventories down 5.8 million barrels for the week to February 12.

Analysts had expected an inventory draw of 2.175 million barrels for the reporting period.

The EIA also reported a build in gasoline stocks for last week, at 700,000 barrels. This compared with a build of 4.3 million barrels for the previous week. Production averaged 9 million bpd, compared with 8.7 million bpd a week earlier.

This week and next will likely see further hefty gasoline inventory draws due to the refinery outages caused by the Texas freeze. According to industry estimates, more than 3 million bpd in refining capacity is off because of power outages and freezing.

In middle distillates, the EIA reported an inventory decline of 3.4 million barrels for last week, which compared with a draw of 1.7 million barrels for the previous week.

Distillate production averaged 4.6 million bpd last week, down from 4.7 million bpd a week earlier.

Like gasoline, distillates are also likely to see major draws this week and next as refineries take time to return to normal operation once power supply recovers in Texas.

Brent crude was trading at $64.06 a barrel at the time of writing, and Wet Texas Intermediate was changing hands at $60.85 a barrel, both pushed higher by the Texas freeze that slashed total U.S. oil production by as much as 40 percent, according to trader and industry estimated cited by Bloomberg earlier this week.

Prices may go further still as the resumption of normal production rates will take a while even after the cold spell in Texas ends and temperatures return to normal for this season.

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Who Will Win The Carbon Capture Tech Showdown?

By Irina Slav - Feb 17, 2021, 5:00 PM CST


Solar panels and wind farms have become fixtures of the global energy mix even if things like winter cold sometimes interfere with their operation. Hydrogen is garnering growing attention—even if skeptics are warning that it is still prohibitively expensive to become mainstream. And now another aspect of the all-out war on climate change is drawing more attention: carbon capture, also known by the fancier name of negative emissions.

Earlier this month, Elon Musk made headlines yet again, but this time with news unrelated to either Tesla or SpaceX. The billionaire entrepreneur offered a $100-million prize to those who can come up with a large-scale solution to our carbon dioxide problem.

"The world's leading scientists estimate that we may need to remove as much as 6 gigatons of CO2 per year by 2030, and 10 gigatons per year by 2050 to avoid the worst effects of climate change," the XPrize website that announced the prize said, adding that simply reducing emissions from ongoing operations is not enough to meet the Paris Agreement targets.

Carbon capture is not something new, but it has stayed largely out of the spotlight because of the high costs. And yet it is being done, mostly at power plants and other industrial facilities that emit a lot of carbon dioxide. There is also direct air capture, which means exactly what it says on the tin. This is a neat and straightforward way of sucking out carbon dioxide from the atmosphere but—you guessed it—it's the opposite of cheap.

Wood Mackenzie's Vice-Chair for the Americas, Ed Crooks, wrote in a recent article that the short-term costs of direct air capture are in the range of $230 to $266 per ton of carbon dioxide captured. This is unviable over the long term, Crooks said, noting that Wood Mac's scenario for hitting the 2-degree Paris Agreement target—the less ambitious one—will need a cost of removing carbon of $100 per ton by 2050 to work. This means either a surge in financial support for this sort of technology or a sharp drop in costs.

Related Video: Texas Deep Freeze Takes 1.2 Million BPD of Crude Offline

Speaking of financial support for direct air capture, a team of researchers earlier this year published a paper that argued we could actually deploy direct air capture machines on a global scale even at current costs. This deployment, Wired wrote in a report on the paper, would cost between 1 and 2 percent of global gross domestic product.

For context, the 2019 global gross domestic product totaled $87.55 trillion. This means that at 1 percent of global GDP, based on 2019 numbers, the world needs to invest $875.5 billion in direct air capture every year to reduce the amount of carbon dioxide in the atmosphere, at a rate of 2.3 gigatons annually. That would be 400 times the amount of carbon dioxide that is currently being captured and sequestered. Although the team argues this is doable, despite the price tag, Musk and Wood Mac do not seem to agree. The XPrize prize is tied to the solution being economical.

But direct air capture is by far not the only way to reduce the amount of carbon dioxide already released in the atmosphere. Capturing carbon emissions at power plants is much cheaper than DAC: at between $35 and $120 per ton of CO2, according to Wood Mac, some of these are a real bargain. But there are challenges there, too – not all such projects remain economical over the long term, as the Petra Nova plant in Texas demonstrated, getting shuttered after less than four years in operation due to mechanical problems and failure to meet capture targets. Related: Is This Oil Rally The Start Of Something Much Bigger?

This is the main problem with carbon capture facilities: they are very complex, hence they are expensive, but their complexity also makes them prone to a host of mechanical problems. And they also take a lot of time to build, so they are in no way a fast solution for what the media and politicians have labeled a climate emergency.

Yet there are other solutions that don't require much in the way of sophisticated technology: investment in natural carbon sinks such as forests and wetlands is also picking up, with the participation of none other than Big Oil that has recently doubled down on efforts to transform into Big Energy.

While not as direct as sucking out carbon dioxide from the atmosphere, carbon offsetting projects are certainly viable over the long term as they benefit all stakeholders involved: farmers, for example, earn carbon credits for farming practices that lead to the greater retention of carbon in the soil or in forests and the companies that help them develop these practices take a bite out of those credits.

Given the cost considerations around the different carbon capture technologies, it should be clear by now that there is no one single right way to tackle emissions, ongoing or already released in the atmosphere. Some of the ways currently available could become more economical and, as such, more viable but others will ultimately fail to contribute to the climate change war.

But here's a piece of good news that passed unnoticed last year amid the lockdowns and the energy demand crash: the Sun is helping. According to a paper by Maths Professor Valentina Zharkova from Northumbria University, last year, the Sun entered what scientists call a Grand Solar Minimum—a period of minimal activity—that will last until 2053 and will cool the Earth by 1 degree Celsius. Even the Sun has joined the quest to hit those Paris Agreement targets.

By Irina Slav for



Bill Gates says:  "...Climate Change,  It will bring a death rate 5 times the Pandemic per year, and going up every year, and there won't be a single thing like a vaccine that can magically get rid of it."

By the way, Bill Gates has spoken with President Biden repeatedly and approved some of Biden's Cabinet picks.  Bill wants to be sure that Biden is following the Global Agenda.

Hear Bill Gates for yourself...

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As the market stabilizes Iran is let back into the market.

UNITED NATIONS (AP) — The Biden administration on Thursday rescinded former president Donald Trump’s restoration of U.N. sanctions on Iran, an announcement that could help Washington move toward rejoining the 2015 nuclear agreement aimed at reining in the Islamic Republic’s nuclear program.

Acting U.S. Ambassador Richard Mills sent a letter to the U.N. Security Council on behalf of President Joe Biden saying the United States “hereby withdraws” three letters from the Trump administration culminating in its Sept. 19 announcement that the United States had re-imposed U.N. sanctions on Tehran.

Mills said in the letter obtained by The Associated Press that sanctions measures terminated in the 2015 council resolution endorsing the nuclear deal with six major powers, but restored by Trump in September, “remain terminated.”

Iran Just Handed Biden His First Credibility Test

Rocket attacks on an American base in Iraq by an Iran-backed militia will require a clear response. Nuclear negotiations, not to mention the safety of U.S. troops, depend on it.

Edited by Eyes Wide Open

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Oil Is Hot Again, But For How Long?

By Irina Slav - Feb 18, 2021, 7:00 PM CST

From the pariah of industries last year, energy has become a Wall Street darling once again. In the year to date, energy has gained 17 percent on the S&P 500. Thanks to a rally in oil prices and expectations of an economic recovery from the pandemic, it is the S&P 500's best-performing sector.

The catastrophic events in Texas this week lent a hand to the rally as the deep freeze in the state led to a national oil production slump of 30 percent, sending WTI above $61 a barrel. By Thursday, the slump in production had reached 40 percent, according to traders and industry insiders quoted by Bloomberg. As usual, all this has prompted analysts to revise their expectations for oil prices and the energy industry.

Fundstrat's Tom Lee, for instance, said in a note to clients, as quoted by Insider, that energy stocks could gain another 66 percent if oil prices hit $80 a barrel. The company's head of research noted that the 17-percent gain in energy stocks in the year to date took place without any marked support from institutional investors.

And they still had higher to go, according to Lee.

"So the interesting takeaway is that energy stocks still seem to have comparative upside given the sizable move in crude oil prices," the analyst said.

How long this upside remains depends on how long the cold stays in Texas. According to the latest forecasts, the state is in for one more round of winter weather before the freeze lets up and temperatures return to the average for the year. Yet the recovery in oil production—and refining as power outages shut down refineries as well—could take longer.

Initial expectations that the freeze will last a couple of days and things will start returning to normal quickly have largely been replaced by suspicions that the week may end before all the frozen oil and gas infrastructure begins to thaw, Bloomberg's Alex Longley wrote.

The longer the freeze stays, the higher prices will go as the whole world feels the pinch after the U.S. became one of the world's biggest oil exporters. Yet, the upside potential for prices and energy stocks may soften a bit after Saudi Arabia ends its voluntary 1-million-bpd production cut. The Wall Street Journal reported the Kingdom was going to announce an end to this cut at the next OPEC+ meeting in early March.

One million bpd will not replace all lost U.S. production but that should be coming back online by early March. According to Citi, as quoted by Bloomberg's Longley, total production loss from the Texas freeze could reach 16 million barrels by early March. Saudi Arabia could make up that amount in 16 days after it removes its voluntary restraint of 1 million bpd, so the situation, at least with global supply, is not really dramatic.

According to some trader sources that Longley cited, the actual loss in production could go as high as 32 million barrels, which means prices could stay higher for longer. Whether they could reach $80 a barrel is doubtful, however. This will require a much longer production slump, to combine with President Biden's $1.9-trillion stimulus program that is expected to jumpstart the U.S. economy and with mass vaccinations expected to result in a return to pre-pandemic oil demand levels.

The $1.9-trillion plan has yet to be approved by Congress, however, and vaccinations will take at least another few months to create herd immunity, with risks remaining that new variants of the coronavirus could reverse the decline in new cases in the United States and Europe.

In other words, the situation with oil remains highly volatile—even more volatile than usual. This means that optimistic forecasts from this week could become pessimistic in a month, as often happens when unforeseen events flip the market from an oversupply to a deficit.

Truth be told, the oil market had balanced before the Texas freeze hit, which explains the sharp jump in prices. Unfortunately for oil bulls, the decline could be just as sharp when the weather gets back to normal in Texas.

By Irina Slav for


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21 million barrels over the week plus diesel and propane use way up (generators and heating) . Plus stores getting cleared up so a restock needed after. All the driving to get to and from stores through snow and thoes who used cars to warm up during periods of no power or to charge phones ect. This is going to be an epic draw on total petroleum.  And then refining thats online will be 100% to cover lost refining capacity and moving finished product further. And eia weekly data had 10.8M barrels so that shouldn't have been texas yet . 

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Crude Oil Price Update – Closing Price Reversal Top Confirmed; $57.31 – $56.91 Next Target Area

The direction of the April WTI crude oil market on Friday will be determined by trader reaction to the pivot at $59.80.

2 hours ago (Feb 19, 2021 11:43 AM GMT)

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower early Friday after posting a dramatic closing price reversal top the previous session. The abrupt end to a weather-driven rally and the subsequent lower close was fueled by worries that refineries will take time to resume operations after the big freeze in Texas, creating a gap in demand, while OPEC+ supplies were expected to rise.

At 11:15 GMT, April WTI crude oil is trading $59.30, down $1.23 or -2.03%.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Thursday’s closing price reversal top and today’s subsequent confirmation of the chart pattern has shifted momentum to the downside.

A trade through $62.29 will negate the closing price reversal top and signal a resumption of the uptrend, while a move through $57.31 changes the main trend to down.

The minor range is $57.31 to $62.29. The market is currently trading on the weak side of its pivot at $59.80.

The short-term range is $51.53 to $62.29. If the main trend changes to down then look for the selling to continue into its retracement zone at $56.91 to $55.64.

Daily Swing Chart Technical Forecast

The direction of the April WTI crude oil market on Friday will be determined by trader reaction to the pivot at $59.80.

Bearish Scenario

A sustained move under $59.80 will indicate the presence of sellers. If this move creates enough downside momentum then look for a test of $57.31 to $56.91 over the short-run.

Bullish Scenario

A sustained move over $59.80 will signal the presence of buyers. If this generates enough upside momentum then look for the rally to possibly lead to a retest of $62.29, followed by $62.64 over the near-term.

However, since that high at $62.29 was a weather-driven high, we’re more likely to retrace 50% of the first break. That level is $60.45.

Side Notes

April WTI crude oil is also trading lower for the week. A close below $59.38 will form a weekly closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 week correction.

For a look at all of today’s economic events, check out our economic calendar.


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Big Oil To See Production Peak In 2028

By Tsvetana Paraskova - Feb 19, 2021, 11:00 AM CST

The pandemic shock to demand and the energy transition strategies are set to bring peak crude and natural gas production for Big Oil in 2028, at a lower volume and earlier than previously expected, Rystad Energy said in an analysis this week.

The five integrated supermajors – ExxonMobil, Chevron, BP, Shell, and Total – will see their combined crude oil and natural gas production peak at 18 million barrels of oil equivalent per day (boepd) in 2028, compared to projections from before COVID-19 that had expected the combined production to continue rising until 2030 at over 20 million bpd.

Last year, Big Oil’s combined oil and gas production declined by close to 5 percent, or by 900,000 boepd, compared to 2019, according to Rystad Energy. In 2020, the five supermajors also incurred a record combined $76 billion loss due to the crash in oil prices and oil demand, the analysts said.

Over the past year, emission reduction targets and strategies have altered the long-term outlook for the supermajors’ production.  

Rystad Energy now sees the majors’ net production at around 17.5 million boepd in 2025 and peaking at around 18 million boepd in 2028. Just before the pandemic, Rystad Energy had expected 2025 production to be at 19 million boepd and 20 million boepd in 2028.

Some of the European supermajors that have committed to becoming net-zero emission businesses by 2050 have already said that their oil production would gradually drop over the years.

BP, for example, said it would boost its investment in low-carbon energy ten times to US$5 billion a year and reduce oil and gas production by 40 percent by 2030. Earlier this month, Shell said its oil production peaked in 2019 and is set for a continual decline over the next three decades.

“The key to success for the five majors over the next decade will be to strengthen their business in more resilient regions, restructure and resize to match the market needs, and pay back their high debt levels,” said Rahul Choudhary, upstream analyst at Rystad Energy.  

By Tsvetana Paraskova for


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Oil Rig Count Ends Twelve Week Streak Of Gains As Oil Prices Slip

By Julianne Geiger - Feb 19, 2021, 12:14 PM CST

Baker Hughes reported on Friday that the number of oil and gas rigs in the United States stayed the same this week. The total number of active oil and gas rigs in the U.S. hangs at 397—or 394 fewer than this time last year.

This week marks the end of a twelve-week streak of increases to the number of oil and gas rigs that saw 87 more drilling rigs put into service.

The oil rig count slipped by 1 this week, and the number of gas rigs increased by 1. The number of miscellaneous rigs remained unchanged.

The EIA’s estimate for oil production in the United States for the week ending February 12 fell by 200,000 bpd to 10.8 million barrels. It is the largest weekly decrease in oil production in the U.S. since October.

Canada’s overall rig count decreased this week by 4. Oil and gas rigs in Canada are now at 172 active rigs and down 72 year on year. 

The Permian basin saw another increase this week in the number of rigs, by 1 bringing the total active rigs in the Permian to 204, or 205 below this time last year.

The frac spread count provided by Primary Vision fell dramatically this week, from 161 crews to just 41. The count hasn't been this low since Primary Vision started tracking data in 2014--not even during the pandemic. 

WTI and Brent were both trading down on Friday, after sizable gains made earlier in the week due to the Texas freeze that knocked out natural gas and oil production.

At 12:10 p.m. EDT, WTI was trading up 1.85% on the day at $59.40—down roughly $1 per barrel on the week. Brent was trading down 1.11% on the day, at $63.22 up more than $1 per barrel for the week.

At a few minutes post-data release, WTI was trading at $59.14, while Brent was trading at $62.87.

By Julianne Geiger for

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Oil Prices Fall Back Below $60

By Tom Kool - Feb 19, 2021, 2:00 PM CST

Tom majored in International Business at Amsterdam’s Higher School of Economics, he is's Head of Operations


(Tom Nolan likes Kool's first and last name...they are cool.)

Oil prices have fallen back below $60 but remain at levels not seen since January 2020.

In this week's Global Energy Alert, our investing team breaks down the best way to trade the Texas freeze. Sign up today to get breaking news, expert analysis, and trading tips.








Friday, February 19th, 2021

The Texas electricity crisis is easing, but the outages, damage, and human toll were historic. As of Friday morning, Texas grid operator ERCOT said that it would be emerging from “emergency conditions” later in the day. After a crazy week, WTI fell just a bit but held onto gains close to $60, a price not seen since January 2020. 

Texas outage eases. As of Tuesday, around 45 gigawatts of electricity generation from renewables, coal, and natural gas were offline. More than 4 million people lost power. By Friday, most of those people saw power restored. The crisis has once again focused attention on several grid policy questions – the lack of weatherization at Texas power generation assets, the lack of a capacity market, and the state grid’s isolation from the rest of the country.

U.S. oil production impacted. Around 4 mb/d of U.S. oil production was sidelined due to power outages, wellhead freeze overs, and other equipment failures. Most of the outages were in the Permian Basin. Restarting frozen or shuttered wells is not necessarily straightforward, and some restarts could take weeks. 

Related: Is This Oil Rally The Start Of Something Much Bigger?

Texas bans shipment of natural gas out of state. Texas Governor Greg Abbott took the drastic move of banning the export of natural gas from the state in order to conserve supply. The move is highly controversial and potentially illegal, although most analysts note that any legal challenges would be moot because the order will have expired by the time a judge reviews them. The Governor also personally sent requests to several LNG exporters to halt operations. 

LNG cargoes canceled. At least 10 LNG cargoes were canceled because of the grid crisis, according to Bloomberg.

Refinery restarts could take weeks. Four of Texas’ largest oil refineries saw widespread damage from the cold snap and could take weeks to repair, according to Bloomberg. The outages could reduce demand for crude, but cut the supply of refined products. The four refineries include ExxonMobil’s (NYSE: XOM) Baytown and Beaumont plants, Marathon Petroleum’s (NYSE: MPC) Galveston Bay refinery, andTotal’s (NYSE: TOT) Port Arthur facility. The result could be $3-per-gallon gasoline by May. 

The U.S. wants to reopen talks with Iran. The U.S. government said it would accept an invitation from the EU to hold talks with Iran. Iran did not exactly jump at the news, saying it would “immediately reverse” recent actions on its nuclear program, but only after the U.S. lifted sanctions. 

Gas companies hit “jackpot” on Texas deep freeze. While Texans are struggling to keep the lights and the heating on, gas producers in the Lone Star state, or at least those whose wellheads did not freeze, are having a blast.

Saudi Arabia to increase output. Saudi Arabia is poised to reverse its 1-mb/d voluntary production cut in the coming weeks, according to the Wall Street Journal, with the returned barrels hitting the market in April. “A Saudi increase in production…makes perfect sense given the tightness that is starting to emerge in the market,” Ole Hansen, head of commodity strategy at London-based Saxo Bank, told the WSJ. “The market will probably take it quite well.”

Shell to sell Alberta assets for $900 million. Royal Dutch Shell (NYSE: RDS.A) will sell its Duvernay shale assets in Alberta for $900 million to Crescent Point Energy Corp. (TSE: CPG).

Related: Oil Prices Soar As U.S. Oil Production Plunges 30%

Maersk plans carbon-neutral shipping containers. Shipping giant A.P. Moller Maersk A/S is accelerating plans to transition to carbon-neutral operations, including plans to add the first container ship running on biofuels.

U.S. shale sticks with restraint, for now. With WTI surging to $60 per barrel, the U.S. shale industry could be in a better financial position than previously expected. Recent comments from shale executives suggest that drillers won’t return to aggressive spending plans, instead focusing on cash generation. 

Canadian gas drilling on the rise. Canadian shale gas drilling has increased rapidly this year, and Canadian gas exports to the U.S. is also on the rise. Canada’s drillers are hoping to capture more market share as U.S. drillers have cut back. 

Texas freeze raises the cost of charging a Tesla to $900. The electricity shortage in Texas amid the cold snap has sent spot electricity prices soaring so much that the surge in power prices equals a cost of $900 for charging a Tesla.

$100 oil possible on commodity supercycle. Several investment bank analysts say that oil could spike to $100 per barrel because we could be at the beginning of a new commodity supercycle.

Egypt to restart a second LNG plant. Egypt is close to restarting a second LNG facility after being closed for eight years. The restart boosts Egypt’s hopes of developing a major natural gas hub and LNG export industry.

Shell’s Nigerian accounts frozen in a court dispute. A Nigerian court restricted Royal Dutch Shell’s (NYSE: RDS.A) access to its bank accounts in the country over a years-long legal dispute.

By Tom Kool for

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Texas Storm Shut In As Much As 4 Million Bpd Of U.S. Oil Production

By Tsvetana Paraskova - Feb 19, 2021, 5:00 PM CST


The severe winter storm that swept through the United States this week likely shut in between 2 million barrels per day (bpd) and 4 million bpd of the total U.S. crude oil production, IHS Markit said in an analysis.

The Texas Freeze, which started in Texas and moved east across much of the U.S., has also impacted almost 6 million bpd of refining capacity, including 5.2 million bpd of the capacity in the Gulf Coast and 730,000 bpd of refining capacity in the Midwest, IHS Markit says.

Issues with power outages, frozen pipes, roads, and personnel have resulted in a large volume of U.S. oil and natural gas production being shut in. IHS Markit’s estimate of up to 4 million bpd production offline at the peak of the winter storm is close to other projections that as much as 40 percent of America’s crude oil production was shut in.   

Nearly 20 percent of lower 48 U.S. natural gas production was shut-in in the first half of February, with the Permian accounting for the largest share, Point Logic by IHS Markit has estimated.

“While precise crude oil production figures are not available, an equivalent 20% cut in lower 48 U.S. crude oil production would imply a production drop of around 2-2.2 million barrels per day (MMb/d) of output, but this could prove to be even higher—perhaps as high as 4 MMb/d,” said IHS Markit.

In terms of impact on refining capacity, this week’s storm had a larger impact than Hurricane Harvey in 2017, which at its height resulted in the shutdown of 4.8 million bpd of refining capacity. The storm’s impact should be shorter in duration and have a more moderate impact on consumers compared to the aftermath of Harvey, Debnil Chowdhury, executive director, IHS Markit, said.

“There is always a question of how equipment and systems will respond to extreme weather conditions that they were not designed for, but it appears that the refineries and other facilities will come back online much quicker this time once power systems recover,” Chowdhury said.

By Tsvetana Paraskova for

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Some Of Texas' Biggest Refineries Could Take Weeks To Restart

By Charles Kennedy - Feb 19, 2021, 2:30 PM CST

Some of the largest oil refineries in Texas could take weeks to restart as they would need to repair the damages from the big Texas freeze, Bloomberg reports, citing sources with knowledge of the situation.

The Baytown and Beaumont refineries of ExxonMobil, Marathon Petroleum’s Galveston Refinery in Texas City, and the Port Arthur refinery operated by Total are expected to be down for at least several weeks as the winter storm caused damage to the facilities.

Those four refineries have a combined refining capacity of 1.76 million barrels per day (bpd) - Marathon’s refinery has a 585,000-bpd capacity, Exxon’s Baytown refinery can process 580,500 bpd, and its Beaumont refinery has a 369,000-bpd capacity. Total’s Port Arthur facility has a capacity of 225,500 bpd.

Weeks of shut refineries in the Gulf Coast will tighten gasoline supply in the U.S. and lead to hikes in gasoline prices, which are already evident this week.

Many more refineries were shut down at the start of the Texas Freeze. IHS Markit estimates that almost 6 million bpd of refining capacity, including 5.2 million bpd of the capacity in the Gulf Coast and 730,000 bpd of refining capacity in the Midwest, was impacted.

According to GasBuddy’s analysis, 11 refineries in Texas and one in Kansas have at least partially shut due to the extremely cold weather. The national average price of gasoline may jump over the next two weeks by 10-20 cents per gallon from its current price of $2.54 per gallon as a result of the refinery shutdowns, GasBuddy said on Wednesday.

The national average could even increase toward $3 per gallon closer to Memorial Day weekend as refineries eventually begin to switch over to EPA-mandated cleaner summer fuels.

“While a $3/gal national average is far from guaranteed, the odds are certainly rising,” GasBuddy said.

By Charles Kennedy for

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Pemex’s Oil Production Increase Is More Illusion Than Reality

By Irina Slav - Feb 19, 2021, 10:30 AM CST



Mexico’s Pemex reported its oil production grew last year, for the first time in fifteen years. However, there’s a big catch—the increase was only a result of how the company is counting barrels, Bloomberg reports.

And anyone trying to compare production figures from year to year will run into a problem of comparing apples to oranges.

The change in calculations is pretty straightforward; Pemex simply started adding gas condensate output to the total crude oil production it counts.

Without condensates, Pemex and its partners produced 1.66 million bpd of oil last year, down 1 percent on 2019.

With condensates, oil production was 0.23 percent higher last year.

The boost was made possible by new condensate discoveries that added 46,000 barrels daily to Pemex’s condensate production: a twofold increase. A positive as this is, it is questionable whether the condensate production increase should actually count towards the company’s total oil production, which it has been struggling to boost after a persistent decline.

The Andres Manuel Lopez Obrador government has prioritized Pemex and has provided the company with massive tax relief and other help to restore its control of the Mexican energy market, but the expected results from all this support have been slow in coming.

Pemex is the most heavily indebted oil company in the world, with a burden of about $100 billion. This and the lack of foreign partners because of the government’s policies has hampered Pemex’s efforts to boost oil production. In fact, it has had to revise down its forecast output rates for this year, from 2.027 million bpd to 1.857 million bpd as the higher target proved unattainable.

In its efforts to help, the government last year reduced Pemex’s shared utility tax rate from 65 percent to 58 percent. This year, it could be cut further to 54 percent. It is doubtful if that generous support will help, however, as exports of crude and as a result revenues, continue to decline, limiting the company’s financial ability to invest in production growth.

By Irina Slav for

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Mexican President Urges Population To Conserve Energy Amid Power Shortage

By Irina Slav - Feb 19, 2021, 9:30 AM CST



Mexico’s President Andres Manuel Lopez Obrador has urged people to reduce their power consumption amid a shortage caused by the Texas deep freeze that prompted the state to restrict natural gas imports to Mexico.

“I call on all Mexicans to help us by consuming less,” Lopez Obrador said, as quoted by Reuters, advising Mexicans to turn off unnecessary lights during peak demand in the evenings, “To be totally sure that our electricity system is maintained and that we don’t suffer from blackouts.”

Texas Governor Greg Abbott earlier this week banned the exports of natural gas until normal production is restored, which he expects to happen by Sunday.

Texas’ natural gas production, normally accounting for about a quarter of the U.S. total, slumped by more than half during the freezing spell in the state, creating power shortages in the state. The shortages spilled over into Mexico soon enough, leaving several million people in the northern Mexican states without power.

Mexico is heavily reliant on natural gas imports from the United States for its electricity generation. Most of this gas comes from Texas, where this week production and processing equipment froze. As a result of the outages, Mexico might shed 1 percent of its GDP this year.

The country is now looking for ways to solve the export ban issue diplomatically but has signaled that it will not retaliate.

“I want to make this clear, there is no reprisal, this is a difficult circumstance for them, and they think that by closing, they protect Texas,” Lopez Obrador told the media.

Meanwhile, the situation in Texas and Oklahoma is still challenging. Power has been restored to millions of Texans, but access to clean water remains problematic, according to a CBS report. In one town, authorities have advised that water be used only to sustain life at this point.

By Irina Slav for

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