“Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova

[Tom Nolan + 2,443]

OIl Slides On UK Lockdown Fears

by Tyler Durden

Sunday, Dec 20, 2020 - 19:05

https://www.zerohedge.com/markets/oil-slides-uk-lockdown-fears

Martha Stewart has a knack for brevity, and we refer to her 2013 tweet with oil prices sliding as both Brent and WTI are sharply lower at the start of trading following UK's Tier 4 lockdowns and a number of EU countries halting travel with the UK, sparking fears that already fragile oil demand will be dampened further.

As noted earlier, PM Boris Johnson announced a new Tier 4 level of COVID restrictions across southeast England including London, effective Sunday, which as Newsquawk notes is equivalent to a full lockdown. Non-essential shops, gyms, cinemas, hairdressers and bowling alleys will close for two weeks, while people can kiss their Christmas and New Year's Plans goodbye as they will be restricted to meeting with only one other person from another household in an outdoor public space. Tier 4 restrictions could be toughened further and remain in place until close to Easter, Government sources have admitted.

In response, Germany, France, Italy, the Netherlands, Austria, Ireland and Belgium (and Iran) have all halted flights and travel from the UK amid the more infectious COVID-19 variant. France also banned incoming freight by air, sea, or rail. While the measures vary between the countries, they are generally short-term, yet even so fears are that oil demand will be further depressed in coming weeks. An EU meeting will be held on Monday morning to discuss a more co-ordinated response, the BBC reported.

The news was enough to send WTI lower by about 70 cents, down to $48.50 from a high of $49.43 on Friday, while Brent is also down about 1.30% to $51.60 at last check...

... both down from nearly 10 month highs. 

[Tom Nolan + 2,443]

Oil Plunges As New Coronavirus Strain Spooks Markets

By Tsvetana Paraskova - Dec 21, 2020, 8:30 AM CST

https://oilprice.com/Energy/Energy-General/Oil-Plunges-As-New-Coronavirus-Strain-Spooks-Markets.html

Oil prices plummeted early on Monday as a new strain of the coronavirus in the UK, found to be spreading faster among people, prompted tougher lockdowns in Britain and many European countries banning flights from the UK.

As of 8:41 a.m. ET on Monday, WTI Crude was plunging by 4.20 percent to $47.04, and Brent Crude was down by 4.17 percent on the day at $50.12, after briefly slipping to below $50 a barrel.

The steep correction on the oil market, as well as on all European equity markets, followed the news out of the UK that a new mutated strain of the coronavirus is spreading faster in London and southeast England.

The UK introduced on Saturday a new highest-alert lockdown level, Tier 4, for London and areas in southeast England, in which people must not leave or be outside of their home or garden except where they have a ‘reasonable excuse’ such as going to work that cannot be done from home, medical reasons, or fulfilling legal obligations. Basically, more than 15 million people in England are again under the same restriction levels as the nationwide lockdown in November.

France closed on Sunday evening all its borders with the UK for 48 hours, while many European countries banned flights from the UK, sparking renewed fears that travel bans and low fuel demand would further delay the long-awaited oil demand recovery.

In addition, the Arab Gulf states Saudi Arabia, Kuwait, and Oman are shutting their borders and suspending commercial flights because of the new virus strain.

“These developments being another sign that the market may have to go through a prolonged period before the vaccine rollout eventually supports a recovery in fuel demand and the price of oil,” John Hardy, Head of FX Strategy at Saxo Bank, said on Monday.  

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

This interview gives insight as to how commodities and stocks are manipulated by the big players who take profits at the expense of the average person.

 

[Tom Nolan + 2,443]

Oil Prices Rise On Bullish EIA Inventory Report

By Irina Slav - Dec 23, 2020, 9:37 AM CST

https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Rise-On-Bullish-EIA-Inventory-Report.html

Crude oil prices today moved higher after the Energy Information Administration reported an inventory draw of 600,000 barrels for the week to December 18.

This compared with a draw of 3.1 million barrels estimated for the previous week and an inventory build of 2.7 million barrels for the week to December 18, as estimated by the American Petroleum Institute and reported yesterday. Analysts had expected the EIA to report an inventory draw of 3.25 million barrels for last week.

Oil prices have been on the rise the past two weeks on positive vaccine news and hopes for a rebound in demand once vaccinations started on a large scale. However, earlier this week, oil reversed its climb on the news about a new, more virulent variant of the coronavirus infecting thousands in the UK and prompting new travel restrictions in Europe and other parts of the world. The news saw oil traders exit their positions in droves, driving prices down.

A decline in crude oil buying by Asian refiners also contributed to the most recent reversal of oil prices’ fortunes.

Meanwhile, the EIA reported an inventory decline in gasoline, to the tune of 1.1 million barrels, with production last week averaging 8.8 million bpd. This compared with an inventory build of 1 million for the week before last and average production of 8.5 million bpd.

In distillate fuels, the authority estimated an inventory fall of 2.3 million barrels, with production at an average of 4.6 million bpd. This compared with a modest inventory increase of 200,000 barrels for the prior week and production of 4.6 million bpd.

“Oil prices are wilting amid fears that the new strain will derail the fuel demand recovery,” PVM Oil Associates analyst Stephen Brennock told Bloomberg on Monday when prices started falling on virus fears. “If anything, it reaffirms that the path toward demand normalization is anything but smooth.”

At the time of writing, Brent crude was trading at $50.81 a barrel, with West Texas Intermediate at $47.81

By Irina Slav for Oilprice.com

 

[Rob Kramer + 696]

HFI research called (crude draw) it after the API. Looking ahead demand will lower but also production heading into new year . Demand decline will outpace production decline. But that sets up a more bullish post covid with a larger production gap to demand. Art Berman is saying decline is going to pick up in Mar-April. He also says the lag time is 7 months from drilling to decline mitigation.  I don't know anymore id think most producers will go into very shallow decline in H1 and flat to recovery H2.

[Tom Nolan + 2,443]

Oil, Gas Rigs Increase For Fifth Week In A Row

By Julianne Geiger - Dec 23, 2020, 12:08 PM CST

https://oilprice.com/Energy/Energy-General/Oil-Gas-Rigs-Increase-For-Fifth-Week-In-A-Row.html

Baker Hughes reported on Wednesday that the number of oil and gas rigs in the United States rose by 2 to 348.

The oil and gas rig count has risen for five weeks in a row for a four-week gain of 38.

The oil rig count increased by 1 this week, while the gas rig count rose by 2. Miscellaneous rigs fell 1.

Total oil and gas rigs in the United States are now down by 457 compared to this time last year.

The EIA’s estimate for oil production in the United States fell during the week ending December 11 to 11.0 million barrels of oil per day, 2.1 million bpd off the all-time high reached earlier this year.

Canada’s overall rig count decreased this week, by 20. Oil and gas rigs in Canada are now at 82 active rigs, and down 17 year on year. 

The Permian basin saw a decrease in the number of rigs by 1 this week, bringing the total active rigs in the Permian to 173, or 232 below this time last year.

Check back later this week for the Frac Spread Count by Primary Vision.

WTI and Brent were both trading up on Wednesday after falling in the couple days prior over a new Covid-19 strain that has triggered multiple border crossing lockdowns around the world.  

At 11:37 a.m. EDT, WTI was trading up 2.51% on the day at $48.20 and down roughly $0.80 since last Friday. Brent was trading up 2.44% on the day, at $51.30, also down $.80 per barrel since last Friday.

At 1:05 p.m. ET, Brent had slipped, trading at $51.24, with WTI trading at $48.13.

By Julianne Geiger for Oilprice.com

 

[Enthalpic + 1,496]

On 12/19/2020 at 5:27 PM, Tom Nolan said:

Many times in the comments I have talked about and cited past articles (including OilPrice.com articles) which demonstrate that the commodity markets are often a rigged game, full of corruption. -Tom Nolan

Not sure "corruption" is the right word; but yes, markets are not run by actual supply and demand curves or intrinsic value as one might expect. It all about forecasting and greed.

https://en.wikipedia.org/wiki/Tulip_mania

 

Edited December 23, 2020 by Enthalpic

[Old-Ruffneck + 1,239]

37 minutes ago, Enthalpic said:

Not sure "corruption" is the right word;

Yes.......IT is the correct word!!!

[Tom Nolan + 2,443]

The Worst Performing Energy Stocks Of 2020

By Tsvetana Paraskova - Dec 27, 2020, 10:00 AM CST

With just a few trading days left in 2020, analysts are taking stock of the best and worst in stocks that this very unusual year has brought.  The pandemic and the resulting collapse in oil prices slammed the already weak energy sector that has been the worst performer of all sectors this year. Vaccine development and the rollout that followed shortly thereafter lifted the shares of companies in the oil and gas sector in the fourth quarter. Even so, the energy industry is still the biggest underperformer, with many companies losing billions of U.S. dollars from their market valuations.  

Some of the energy industry’s biggest names have been among the worst energy performers in 2020. And no single sector of the oil and gas industry was spared the 2020 bloodbath, from integrated oil and gas to exploration and production, pipeline transportation, refining, and oilfield services. 

Energy stocks did rally in November and most of December, fueled by hopes that vaccines will allow a return to some kind of normality next year. Nevertheless, the S&P 500 index’s energy sector plunged 38 percent this year as of December 22, data from Yardeni Research showed. 

This is compared to the overall performance of the S&P 500 index, which has gained 14.1 percent this year. The second-worst performer among sectors, financials, lost just 7.4 percent—making energy the biggest loser by a country mile.

Earlier this year, investors soured on energy stocks after oil prices collapsed and it became evident that global fuel demand would not return to pre-pandemic levels for at least another two years. 

The vaccine-supported oil and energy stocks rally showed that at least some investors believed energy would be a big (if not the biggest) beneficiary of a return to growth, whether that is economies returning to growth or simply oil demand returning to growth. 

Prior to the first vaccine breakthrough announcement from Pfizer and BioNTech on November 9, the oil and gas industry was not only the biggest market loser of 2020, but it had also become the worst performer on the market—ever. The energy sector had lost 52.5 percent between January and October, with losses the worst in any sector since 1928. 

Since the end of October, however, the energy sector has outperformed all others, as well as the S&P 500 index, surging by 27.1 percent versus a 12-percent rise of the broader index. 

Despite the rally in the fourth quarter, which sees U.S. energy stocks enjoying their best quarter since 1989, the energy sector is still the biggest underperformer, and some of the biggest names in the industry have significantly underperformed even the underperforming energy sector. 

Ryan Downie of The Motley Fool has compiled a list of some of the worst performers. 

The world’s top oilfield services provider, Schlumberger, has rallied 23 percent in Q4. Nevertheless, the oilfield service provider has lost nearly half of its market valuation year to date, its shares are down 47 percent this year, and its market capitalization is down by more than US$20 billion to just below US$30 billion as of December 22. 

Schlumberger and other oilfield services and equipment providers have felt the oil price and oil demand crash the worst as upstream companies slashed their drilling budgets. 

U.S. shale firm EOG Resources has been another big underperformer this year, losing 42 percent of its value, or nearly US$20 billion. 

Supermajor ExxonMobil is also down 42 percent year to date, and it has lost more than US$110 billion in market value, which stood at US$174 billion as of the end of trade on December 22. This year, Exxon was even kicked out of the Dow Jones Industrial Average index, where it had sat comfortably since 1928. 

Refining giant Phillips 66 has also had a tough year, losing 40 percent, or around US$20 billion of its value. Shares in pipeline giant Kinder Morgan have also slumped by 40 percent year to date. 

Despite these dramatic declines in market performance, the energy sector could be headed toward recovery next year, building on the fourth-quarter rally as value investors are likely to be chasing undervalued stocks, analysts say. 

“This underperformance combined with low equity valuation could make energy stocks the best segment in global equities in 2021,” Peter Garnry, Head of Equity Strategy at Saxo Bank, said at the end of November. 

“Growth investors no longer exist in the sector because there’s terminal demand risk in the future, and value investors are ruling the day,” Matt Portillo, an analyst at investment bank Tudor, Pickering, Holt & Company, told the Financial Times this month. 

By Tsvetana Paraskova for Oilprice.com

[KilonBerlin + 9]

Did the maximum capacity of the SPR change in last years?! When was the last increase? I found an official number from a *.gov site with a number of "714 million (barrels)". When I just checked the SPR weekly data this seems outdated?! The 700 million barrel were reached in the 1st April Week of 2008, at very high prices stocks rose to 700.372 million barrels until the Oil Price collapsed later because the US/Global economy was already in a crisis, markets oversupplied but as long as the prices were that extrem a very slow and small growth continued, with prices for late 2008-oil collapsing even the SPR reduced a bit until in March/April 2009 a larger filling programm started:

1. January-Week 2009: 701.824 million barrels, 

1. March-Week 2009: 705.695, 1. April-Week 2009: 712.887, 5. Weekly Report from 29th May & 1. Weekly June 2009 Report: 721.700 mln bbl. Than over 1.5 years with only extreme small movements, never going below 721.700 and not above 726.129 (First 2 December Reports) for the rest of 2009. In 2010 for the complete year only extreme small changes were reported, 2010 started with 726.617 million barrels, in all but 4 reports for 2010 the reports were not below 726.511 million barrels, the whole year was in the 726 millions. In 2011 I think the Arab Spring brought Oil Prices under Pressure? US new methods were tested first in the Bakken Formation after prices recovered a bit in later 2010 and first months of 2011? For the first half of 2011 the SPR stocks were changing by a single thousand barrel or 2 per week, the year started with 726.545 million barrels and after 2nd June report was at 726.542 mln bbl, I guess here oil prices maybe recovered or the oil was a bit too old, after the 3rd July Report 2011 the reserves went down to ~695.950 and than this value with almost no changes remained the standard value for ~2.5 years, strange this SPR policy isn't it?! 

This US production rising steadily, Canadian imports growing to an average of more than 3mbpd the reserves were almost untouched until in March 2017 it was started to put a bit oil on the markets? Didn't the Saudis (or even OPEC+) had a price war against the US shale producers and one between Saudis and Russia? One started in 2016, however 2017 SPR started with 695.082 mln bbl and ended with 663.748 mln bbl. 2018 continued to sell oil, start 663.747 and ended with 649.139 mln bbl, most sales happened in the last 10 weeks of 2018. 

The US should like China build an giant SPR, Experts already thought long before the 2nd corona wave here or even before I heard about "partial lockdown" that China buys 1 - 1.2 mln bbl/day more than it consumes and small tankers transporting oil on the waterways in front of important facilities wait up to 6 weeks before the oil is being taken, deeper inside new storage place was being build and producers like Iran but also China used old tankers as swimming storage points, a few weeks later chinese demand recovered a bit but china bought more oil, the recovering demand and only partial increase in purchases reduced the daily stocks build up and reduced the "tanker traffic jam", its something like an (heavy) oversupply if multiple ships needs more than 3 weeks before being unloaded as refineries need to refine and sell products and/or other ships have to come and transport products somewhere else. 

Venezuela was running danger to become the first ultra giant reserves country which could expierence a more or less zero net exports of crude oil level as US sanctions are making it for most companies very dangerous to import from there. Columbia is working hard for years to increase its crude oil production and exports to the US and Brazil is also a major oil exporter with a very special Gasoline-Ethanol mix to keep the heavy populated states private consumption during the last ~20 years low, in the 2000's some Ultra Deep Offshore Fields were found, with large reserves but also a real challenge in production with one giant I think less than 200 nautic miles from Rio-states coast away, in 5km depth a 1km salt-layer was covering the huge reserves. So much to "Peak Oil", the field was found during the time when prices were rising...Kazakhstan a few years earlier made first discoveries of giants in the Caspian Sea and in the years to come more or less great ones, Tengiz, I think the so far largest was in a area which was(/is?) frozen during a while of the year, other fields like Kashagan were found close and other fields, one extreme large gas field (Karatschaganak) is for years now kazakhstans 3rd most effective oil producing field, but oil is only a "byproduct" as it is a gas field with estimates which were at least 1.35 trillion cubic meters of Natural Gas but also at least 200 million tons of oil.

As Kazakhstan accepted the help of foreign western companies for Tengiz, also for Karatschaganak and Kaschagan western oil companies got parts, even LUKOil, the only remaining large private oil company, had a 5% stake as LukAcro in one of the fields, fields are often operated by 3-4 companies and KazMunayGas. Hardliners in Russia think that these ressources, like all in the Caspian Sea except the small Iranian part, and the large Azerbaijan oil/gas reserves and very large Turkmenistan Gas reserves belong to something like a "Greater Russia" (de facto the Soviet Union without the baltic states and a few other areas, but important areas like the Crimea and parts of the Caucasus belong to it). The Donbass area being Ukraine's only area with large ressources and working factories to produce steel, Luhansk area is being held by a "militia", some drunken volunteers resist an professional army, not that their equipment is the best, but a few seperatists with some AK-47, some RPG-7, a few radios, the simple bulletproof vests hold the area,

but without intervention from the russian state... of course, maybe the help comes from Putins oligarch friends and everyone who thanks to Putin has a nice life now, but than they would have an exact list and also goods they would deliver to them, not to modern, like that 1 anti-air weapon which shot down an civil jet, modern RPG's and mines against tanks and some high-caliber MG against most drones which as "spy"-versions are pretty light, the world is so sick if we look at wars for ressources, areas with ressources...oil because you can't make war without oil -.- than political wars to avoid direct meetings but each side had its "puppet" and some pros and contras... Putin dreams of a stronger russia but Russia had its chance, China is on the move now, 2049 will be an extreme important Year for "Red" China... until than everything will work to improve economy/budget/army and goals like "One China", 

 

[Tom Nolan + 2,443]

What Big Oil’s $145 Billion Write-Downs Mean For The Industry

By Tsvetana Paraskova - Dec 28, 2020, 12:00 PM CST

The 2020 oil price collapse provided a reality check for the global oil and gas industry, which reassessed its price assumptions for the years ahead and readjusted the value of its assets.  Expectations that oil demand will not see a V-shaped recovery in 2020 and longer-term industry challenges, including the rise of renewables and electric vehicles (EVs), had nearly every oil and gas company in the world write down, significantly, the value of its assets this year. The 2020 write-downs of Big Oil and independent producers in the U.S. and Canada have reached their highest level in at least a decade, various analyses show. And the latest available financials for Q3 were not the end of asset impairments, announcements for which continued in the fourth quarter. 

The reassessment of oil and gas assets was so widespread that even U.S. supermajor ExxonMobil—which until a month ago hadn’t really adjusted the value of its assets in many years—warned of massive write-downs of between $17 billion and $20 billion after-tax in Q4 in its gas assets in the United States, Canada, and Argentina, due to the pandemic and its effect on the industry. Even without Exxon’s massive write-down announced in Q4, the oil industry in the U.S., Canada, and Europe wrote down a combined $145 billion in oil and gas assets in the first nine months of 2020 alone—the highest since at least 2010 and representing around 10 percent of the companies’ combined market capitalizations, an analysis by The Wall Street Journal showed. 

The analysis of oil firms with over $1 billion of market capitalization in North America and Europe found that the write-downs during the first three quarters of 2020 were much higher than the ones the companies incurred during the previous downturn in 2015-2016. 

This year, dozens of billions of U.S. dollars in asset impairments at some of the biggest oil and gas companies came not only from the price collapse but also from significantly lowered expectations of oil prices in the long term. 

Since the end of September, more write-downs have been announced, taking the total 2020 tally well beyond $150 billion. Exxon’s asset impairment of up to $20 billion for Q4 and Shell’s latest warning of another up to $4.5 billion write-down for Q4 would add to the Journal’s estimated $145 billion charges the oil industry will have booked for 2020. 

Shortly after the price crash in March, Big Oil started announcing hefty asset impairments, which most European majors explained with lowered oil price assumptions for the coming years and an “enduring impact” of the pandemic. 

BP, Shell, Eni, and Total all took major write-downs, with the French supermajor even qualifying Canadian oil sands projects Fort Hills and Surmont as “stranded” assets— meaning with reserves beyond 20 years and high production costs, whose overall reserves may not be produced by 2050. 

“Beyond 2030, given technological developments, particularly in the transportation sector, Total anticipates oil demand will have reached its peak and Brent prices should tend toward the long-term price of 50$/b, in line with the IEA SDS scenario,” Total said in July. 

BP’s asset write-down of $17.5 billion for Q2 has significant short and long-term implications, Luke Parker, vice president, corporate analysis, at Wood Mackenzie said in June. 

“In the longer term, this is about BP’s strategic shift away from oil and gas. While that will be a multi-decade affair, BP is already getting to grips with the idea that its upstream assets are worth less than it believed as recently as six months ago. Indeed, some of them are worth nothing,” Parker noted. 

It’s not only Big Oil that has revised down the value of their assets in the wake of the price crash. 

Forty publicly-traded U.S. oil producers wrote down a collective $48 billion worth of the value of their assets in the first quarter of 2020 alone, data analyzed by the Energy Information Administration (EIA) showed in July. The 40 companies—including Occidental, Apache, Concho Resources, ConocoPhillips, EOG Resources, Marathon Oil, Noble Energy, and Parsley Energy—representing around 30 percent of U.S. liquids production made the largest asset impairments in Q1 2020 since at least 2015, according to EIA estimates.  

In 2020, the major difference compared to 2015 is that a growing number of oil companies around the world have started to acknowledge not only the short-term price impact on their assets but also the long-term implications of the energy transition and socially responsible investing.  

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

IHS Markit: Oil Demand Won't Fully Recover Until 2022

By Tsvetana Paraskova - Dec 28, 2020, 9:00 AM CST

https://oilprice.com/Energy/Energy-General/IHS-Markit-Oil-Demand-Wont-Fully-Recover-Until-2022.html

Global oil demand will likely take another year or so to return to pre-pandemic levels—by late 2021 or early 2022, energy expert and IHS Markit vice chairman Daniel Yergin told Al Arabiya English in a video interview on Monday.

Yergin’s expectations for oil demand are roughly in line with the forecasts by the International Energy Agency (IEA) and OPEC, which don’t expect annual oil demand to return to the pre-COVID levels next year, despite the projected rise compared to this year’s slump.

Continued low demand for jet fuel will account for 80 percent of next year’s 3.1-million-bpd gap in oil demand compared to pre-pandemic levels, the IEA said in its monthly Oil Market Report earlier this month. OPEC also revised down its oil demand projections for this year and next in its Monthly Oil Market Report for December, expecting 2021 oil demand at 95.89 million bpd, down 410,000 bpd from its projection of 96.3 million bpd from November.

IHS Markit’s Yergin doesn’t see the biggest disruption on the oil market as either bringing forward or delaying peak oil demand.

“At the end of the day, it won’t have much impact on peak oil demand, which I still think will be around 2030 or so,” Yergin told Al Arabiya English.

The Pulitzer-Prize winning energy author also discussed the U.S. shale patch and the chances of it returning to the rapid growth in production in the years just before the 2020 price crash.

“Let me give you a very simple answer, the answer is no,” Yergin told Al Arabiya English when asked if U.S. oil production could return to 1.5-million-bpd annual growth.

According to IHS Markit, shale production will stay relatively unchanged at around 11 million bpd until late 2021, before it starts rising, but it will increase at a much more moderate pace.

“So that 1.5 million barrels per day, that two million barrels per day that was so disruptive for the oil market, that’s history,” Yergin told Al Arabiya English.

By Tsvetana Paraskova for Oilprice.com

[Gerry Maddoux + 3,627]

28 minutes ago, Tom Nolan said:

The Pulitzer-Prize winning energy author also discussed the U.S. shale patch and the chances of it returning to the rapid growth in production in the years just before the 2020 price crash.

“Let me give you a very simple answer, the answer is no,” Yergin told Al Arabiya English when asked if U.S. oil production could return to 1.5-million-bpd annual growth.

Joe Biden is on electronic and print record as saying he would ban fracking on federal lands the first day in office. A lot of people have poo-poo'd that. I take it on faith. The Green New Deal and the Sierra Club and a lot of very heavy hitters in the Democrat Party that engineered his rather unlikely ascent to the Oval are going to place immense pressure on him to fulfill those promises. He has, in return, chosen Deb Haaland as his Interior Secretary appointee. She is a Laguna Indian from New Mexico who has long decried the fact that "the recovery of fossil fuels has destroyed the land of my ancestors." She will be in charge of the BLM, which in turn is in charge of oil and gas leases on federal lands. Think she wasn't chosen to perform the task of eliminating those leases? Well, the following letter was just sent to the current Sec. of the Interior Department re' leases in the state of Utah:

December 21, 2020

Dear Secretary Bernhardt:

We are writing to call for the cancellation of hundreds of oil and gas leases across Utah that threaten our climate and, if developed, will further exacerbate the impacts of climate change. Due to successful litigation and administrative appeals, the Utah-Bureau of Land Management has been forced to reconsider decisions on more than five hundred leases, covering more than 700,000 acres of public lands in Utah.  We urge you to outright cancel these leases.

Fossil fuel leasing and development on public lands managed by the Department of the Interior is a primary contributor to climate change. In a recent report, the United States Geological Service concluded that the development and combustion of fossil fuels extracted from public lands account for nearly twenty-four percent of the nation’s annual carbon dioxide emissions. 

The leasing and development of Bureau-managed minerals is the primary source of the Interior Department’s significant greenhouse gas emissions. The development of the oil and gas leases in Utah currently under review by the Bureau will, by the agency’s own estimate, contribute significant amounts of new climate change-driving emissions. Confronted with the climate crises, the significant amount of greenhouse gas emissions that will result from development on these leases is unacceptable. 

The more than five hundred leases being reconsidered by the Bureau are located in some of the nation’s most wild, scenic, and culturally rich areas. Hundreds of them encompass Bureau-identified lands with wilderness characteristics proposed for wilderness designation in S. 3056, America’s Red Rock Wilderness Act. Due to the significant threat these leases pose to our climate and wild places, we ask you to cancel them and to reject the proposed development in the Labyrinth Canyon Wilderness.

One lease (UTU-93713) deserves particular mention because it is within Congressionally designated Wilderness: the Labyrinth Canyon Wilderness area. The Bureau issued this lease without allowing for public participation and without preparing analysis required by the National Environmental Policy Act. Federal courts have held that such actions violate the law. 

The Bureau rushed to issue this lease in February 2019 with full knowledge that the public lands it encompassed were set to be designated as Wilderness in the John D. Dingell, Jr. Conservation, Management, and Recreation Act, which was signed into law on March 12, 2019. This historic, bipartisan law created 1.3 million acres of Wilderness across the nation, including the Labyrinth Canyon Wilderness. It also added the Green River, which flows through Labyrinth Canyon, to the National Wild and Scenic Rivers System. This remote stretch of desert river is one of the most famous in our nation due to its solitude, rich cultural history, and unmatched scenic beauty—values enjoyed by thousands of Americans every year. The proposed development will destroy Congress sought to protect when it created the Labyrinth Canyon Wilderness. 

These oil leases threaten environmentally sensitive and culturally rich lands throughout Utah that Congress has worked to protect.  Given the significance of these lands, we request that you cancel these leases.   Thank you for considering our request.

Sincerely,

(Signatorees: Dick Durbin, D-Il; Martin Heinrich, D-NM; Dianne Feinstein, D-Ca; Debbie Stabenow, D-Mi; Tammy Baldwin, D-Wi; Jeff Merkly, D-Or; Cory Booker, D-NJ). 

When Sec. Deb Haaland is instated, there will be no more new leases on federal lands, period, and those leases that were hungrily gobbled up just prior to the election will likely be negated--the Utah thing is the precedent. 

If and when fracking on federal lands is banned, that removes ~40% of shale basin activity. Prices are going to rise significantly, and maybe all of this is a good thing. However, the world is in chaos. It's a damn good thing that the US is energy-independent.  

 

[Tom Nolan + 2,443]

4 minutes ago, Gerry Maddoux said:

Joe Biden is on electronic and print record as saying he would ban fracking on federal lands the first day in office. A lot of people have poo-poo'd that. I take it on faith.

I agree completely.  This "Great Reset" shit they are pulling is destroying the fabric of America.  We all are in deep shit.

[Tomasz + 1,608]

Some good summary from Twitter for current situation on global oil market from couple of tweets

Quote

 

What are real time global oil inventories telling us about the health of the oil market???

Both onshore and offshore inventories are continuing to normalize...now down 43% from peak levels at a rate of 2MM Bbl/d.

U.S. oil production is 2 mmb/d (-16%) less than November 2019 maximum. Offshore Gulf of Mexico (-26%) & Oklahoma (-27%) have fallen the most. New Mexico (-8%) and Texas (-15%) have fallen the least. "By year-end 2021...the US will have lost...about 3.5 mmb/d of production...the largest collapse in world history." --Adam Waterous, Waterous Energy Fund

Oil has been on a slow but progressive drive toward balance since April. While that may not get fans cheering in the stands, it does win games.

 

 

[Rob Kramer + 696]

So their only drilling the best of the best land if that the above is true. Or they have throttled production and are adjusting to mitigate decline plus using up a few ducs . All the above probably.  Can't remember who was telling me water disposal was an issue that throttled speed in his area of us royalties. Some flight has been added and some lockdowns have increased also shipping should be up stocking and re stocking black Friday to boxing day. So demand will be messy to judge.

:also looks like refiners are dialed in as spreads for fuel are looking up. So oil cant crash

Edited December 29, 2020 by Rob Kramer

[Tom Nolan + 2,443]

Oil Jumps On Significant Crude Inventory Draw

By Irina Slav - Dec 30, 2020, 9:38 AM CST

https://oilprice.com/Energy/Crude-Oil/Oil-Jumps-On-Significant-Crude-Inventory-Draw.html

Crude oil prices rose further today after the Energy Information Administration reported an oil inventory draw of 6.1 million barrels for the week to December 25.

A day earlier, the American Petroleum Institute also helped boost prices by estimating a crude oil inventory decline of 4.785 million barrels for the same week.

Last week, the EIA had estimated a modest inventory decline, to the tune of 600,000 barrels, which nevertheless helped prices continue higher as it coincided with positive vaccine updates that traders linked to an anticipated demand improvement next year.

Even news that vaccination in the United States is going much slower than expected, with just over a million people vaccinated as of December 23, compared with a planned 20 million for the month of December, did not affect oil’s rally. This was probably because Congress last week finally agreed on a pandemic stimulus bill that many expect will boost both consumer spending and oil demand.

EIA’s report is now likely to intensify this rally. The authority also reported a gasoline inventory draw of 1.2 million barrels for the last full week of December, which compared with a 1.1-million-barrel decline a week earlier. Gasoline production averaged 9.2 million bpd last week, compared with 8.8 million bpd a week earlier.

In distillate fuels, the EIA reported an inventory increase of 3.1 million barrels for the week to December 25, with production averaging 4.6 million bpd. This compared with an inventory decline of 2.3 million barrels for the prior week, and production averaging 4.6 million bpd.

Refineries processed 14.3 million bpd of crude oil last week, compared with 14 million bpd a week earlier, operating at 79.4 percent of their capacity, compared with 78 percent for the previous week.

The report suggests that despite recent sizeable inventory draws, there is still a way to go before demand for oil and fuels improves more strongly. There was also worrying news from the OPEC+ camp this week: Deputy Prime Minister Alexander Novak said Russia will argue for a further production increase at the January meeting of the extended cartel as prices were within optimal range at the moment.

By Irina Slav for Oilprice.com

 

[Rob Kramer + 696]

Tom i can't like your stuff so just know I do. 

Also weekly eia production was 11mm bd 

[Tom Nolan + 2,443]

Oil Up Despite Another Rig Count Increase

By Julianne Geiger - Dec 30, 2020, 3:15 PM CST

https://oilprice.com/Energy/Energy-General/Oil-Up-Despite-Another-Rig-Count-Increase.html

Baker Hughes reported on Friday that the number of oil and gas rigs in the United States rose by 3 to 351.

The oil and gas rig count has risen for six weeks in a row for a total gain of 41.

The oil rig count increased by 3 this week, while the number of gas rigs remained unchanged. The number of miscellaneous rigs were also unchanged.

Total oil and gas rigs in the United States are now down by 445 compared to this time last year.

The EIA’s estimate for oil production in the United States stayed the same during the week ending December 25, at 11.0 million barrels of oil per day, 2.1 million bpd off the all-time high reached earlier this year.

Canada’s overall rig count decreased this week, by 23. Oil and gas rigs in Canada are now at 59 active rigs, and down 26 year on year.

The Permian basin saw an increase in the number of rigs by 2 this week, bringing the total active rigs in the Permian to 175, or 228 below this time last year.

The Frac Spread Count by Primary Vision fell 10 this week to 136, from 146 in the week prior.

WTI and Brent were both trading up on Wednesday after falling in the couple of days prior over a new Covid-19 strain that has triggered multiple border crossing lockdowns around the world.

At 4:00 p.m. EDT, WTI was trading up 0.56% on the day at $48.27, essentially flat on the week, while Brent was trading up 0.49% on the day, at $51.34, also flat on the week.

By Julianne Geiger for Oilprice.com

[Tom Nolan + 2,443]

Analysts See Oil Prices Averaging Just Above $50 In 2021

By Tsvetana Paraskova - Dec 31, 2020, 9:00 AM CST

https://oilprice.com/Energy/Energy-General/Analysts-See-Oil-Prices-Averaging-Just-Above-50-In-2021.html

Brent Crude prices are set to average $50.67 a barrel in 2021, slightly down from the price at which they traded early on the last trading day of 2020, the monthly Reuters poll of analysts and economists showed on Thursday.

The key downside risk for oil prices in 2021 will be the mutating strains of the coronavirus that threaten economic and oil demand recovery with lockdowns and travel restrictions, according to the 39 experts polled by Reuters.

In the December survey, the analysts raised their average expectations for Brent Crude prices for 2021 to $50.67 per barrel, up from the forecast of $49.35 a barrel in the November Reuters poll, but below the price at which Brent Crude traded at 7:35 a.m. ET on Thursday, $51.13.

The analysts also raised their forecast for the average price of West Texas Intermediate (WTI), expecting the U.S. benchmark to average $47.45 a barrel in 2021, compared to $46.40 in the November poll. Early on Thursday, WTI Crude prices were down by 1 percent at $47.91.

The new COVID-19 strain—first identified in the UK—and the soaring cases across the UK, other parts of Europe, and the United States are likely to cap oil price gains in the early months of 2021, while positive news on the vaccine front is set to put upward pressure on prices. Until critical masses of economically active people get vaccinated, oil prices are likely to remain under pressure.  

Another factor to watch in 2021 will be the OPEC+ oil production policy and whether the cartel and its Russia-led allies will ease the cuts before demand can absorb the additional supply.

The market will get the first glimpse into the OPEC+ thinking as early as on the first trading day of 2021. The ministers of the group are meeting on January 4 to discuss production from February.

Despite renewed fears about oil demand due to the new coronavirus strain, Russia is reportedly still in favor of another 500,000 bpd increase in the alliance’s oil production from February.

By Tsvetana Paraskova for Oilprice.com

 

[Tom Nolan + 2,443]

Oilfield Service Giants Are Expanding Beyond Oil Tech

By Irina Slav - Dec 30, 2020, 6:00 PM CST

The oilfield services sector is usually the one to suffer the most during an oil and gas industry downturn. This last crisis has been no exception in most respects. Drilling fell sharply this year in response to the demand slump in both oil and gas, budgets were cut and exploration plans shrunk. There was talk we might have already seen peak oil demand. The situation begged the question what happens to oilfield services beyond oil?

To be fair, the world will need tens of millions of barrels of oil for decades to come, so “beyond oil” is a bit misleading. Yet peak oil demand may well be over, which means a shrinking market for these companies. And the largest among them are already preparing for this shrinking market.

Baker Hughes, for instance, is no longer a purely oilfield services provider and hasn’t been for a while now. OFS is just one of four product companies under the parent’s umbrella, which also include thinks like machinery—for the energy industry—hydrogen technology, geothermal, and carbon capture and utilization, not to mention digital tech. Baker Hughes is also pursuing a lead role in additive manufacturing—the technology that could transform the supply chains of a lot of industries.

Baker Hughes is not alone. The other two Big Three majors are also pursuing a digital future as well as a transfer of their expertise in other fields. Schlumberger recently restructured its business to streamline it and while most of its focus is still on oil and gas, the company is making a big bet on cloud and edge computing, and automation. According to chief executive Olivier Le Peuch, the growth of this business will outpace the growth of Schlumberger’s oilfield services business in the next few years.

Halliburton is also going digital at a fast pace: the company recently sealed a deal with Accenture to digitize its manufacturing operations, stating as its goal to provide better services for its clients while also driving higher returns for shareholders.

The pivot to technology is a smart decision for the Big Three at a time when there is also growing pressure on the energy industry—as well as other industries—to cut their carbon footprint. A post-oil era is still far in the future and will require a number of major breakthroughs, as Tyler Fowler, marketing manager for Baseline Energy Services, told Oilprice. But, he added the oilfield services industry is changing and it will continue to change in response to the changing environment within and outside the industry.

“The OFS companies that survive and thrive in markets like onshore U.S. will be those that likewise adopt new technology and are already moving forward with a cost-competitive, more eco-friendly business model built-in,” Fowler said.

Digital is the way forward for OFS companies, according to Marcus Wagner, CEO of finance and accounting firm AccTwo. Cloud computing, automation, outsourcing of services are, or should be, priorities for this segment for the industry to reduce inherent volatility that makes it vulnerable to market shocks, which we saw this year again. The above will help companies streamline their business operations, making them more nimble in the next crisis.

“Beyond these operational changes, we see service diversification, geographic dispersal, the movement toward subscription revenue models, and a prioritization of services that achieve ongoing cost reductions for upstream operators as key attributes of the successful OFS companies in a post-oil future,” Wagner told Oilprice.

But it’s not just digital technology that will provide oilfield service companies with a future. Because of their expertise in energy production technology, they may become indispensable in the world’s drive to reduce greenhouse gas emissions.

In fact, the oil and gas industry is already doing a lot of good work in this respect, according to Richard Leaper, VP Sales and Marketing at Milestone Environmental Services, an oilfield waste disposal services provider.

“As an example, slurry injection is widely used as a waste disposal method in the oilfield, and is a profoundly carbon-negative activity,” Leaper told Oilprice. “Slurry injection involves blending oil-bearing waste from drilling, completion, and production streams, and sequestering it roughly a mile below the water table. This has a major advantage in terms of reducing emissions (of volatilized oil compounds) over other common disposal methods like burying waste in shallow reserve pits or landfarming it.”

There is also flaring reduction, methane leak detection—an area of growing interest for environmental monitors and reporters—as well as water recycling and fuel substitution, among others, according to Leaper, who noted the future will bring more opportunities than challenges for the oilfield services industry as the world moves towards a less emission-intensive future.

Basically, what oilfield service providers need to do to ensure their business sustainability is the use their core competencies and expertise, acquired and developed in oil and gas to move away from oil and gas, and into new business areas.

Carbon capture, hydrogen production, and natural gas emissions are among these areas, according to Atul Prasad Gupta and Pankaj Bukalsaria from Acuity Knowledge Partners.

“These companies could also look at other energy-related businesses such as e-mobility and bio and clean fuels, or at frontier businesses such as recycling, water management and robotics," they told Oilprice.

Indeed, the future looks pretty packed with new opportunities for oilfield service providers—at least those that have the resources to diversify into new business areas.

By Irina Slav for Oilprice.com

[Tom Nolan + 2,443]

European Boosts Imports Of Russian Fuel Oil

By Viktor Katona - Jan 04, 2021, 1:00 PM CST

https://oilprice.com/Energy/Heating-Oil/European-Boosts-Imports-Of-Russian-Fuel-Oil.html

We have already written about one of the most paradoxical developments of the US-Russia energy relationship, namely that American refiners have become the number one buyer of Russia’s fuel oil production. With Venezuelan crude squeezed out from the American market, Iranian exports kept at bay by means of a similar set of sanctions, Mexico remaining in decline and even acquiescing to a OPEC+ production cut, Russian fuel oil remains one of the very few USGC feedstocks that is still not too pricey and available in sufficient volumes. However, the winter months of the 2020/2021 season have so far witnessed a sharp decline in Russian fuel oil exports towards the United States and a quite tangible hike in their supplies towards Europe. Could that put the peculiar US-Russia HSFO love story to an end? ....

[Article continues...]

[Tom Nolan + 2,443]

Oil Prices Plunge After Russia Seeks Output Hike In February

by Tyler Durden

Monday, Jan 04, 2021 - 11:26

https://www.zerohedge.com/energy/oil-prices-plunge-after-russia-seeks-output-hike-february

Exaggerated by equity weakness, oil prices have plunged from hope-filled overnight exuberance as OPEC+ meets (virtually) and Russia proposes a 500k b/d output hike for February.

WTI tested up near $50 overnight before plunging back below $47.50 on the Russia headlines...

Bloomberg reports that the opening remarks from Prince Abdulaziz Bin Salman suggest very strongly that Saudi Arabia will oppose any increase in production in February. That could make for another very fraught meeting, if Alexander Novak decides to dig his heels in over the Russian proposal for an increase.

However, as OilPrice's Irina Slav notes, OPEC has signaled it is concerned about oil demand despite its production control efforts as Covid-19 cases continue to surge in key markets, and the global total is still on the rise.

It seems vaccine optimism has begun to wear off, too, as it has become clear mass vaccinations will take months rather than weeks, so demand will be subdued for longer than some optimists in the trading community may have hoped.

“The outlook for the first half of 2021 is very mixed,” OPEC Secretary-General Mohammad Barkindo said on Sunday, ahead of an OPEC+ meeting later today. “There are still many downside risks to juggle,” Bloomberg quoted the official as saying.

In December, the extended cartel agreed to Russia’s proposal to start adding 500,000 bpd to their daily total from January based on the improved demand outlook and some members’ unwillingness to continue cutting deep. Yet this may change at today’s meeting. Russian Deputy Prime Minister and OPEC coordinator Alexander Novak suggested at the end of last year that the new deal could be tweaked if demand were to recover faster than previously expected.

While this looks unlikely at the moment, prices have improved, which would lend weight to Russia’s support for another 500,000 bpd increase in production in February. It was in its original proposal, which covered the period from January to April, but OPEC+ also agreed in December to meet every month to keep its hand on the pulse of the oil market, which basically means surprises are always possible whatever the original plans were.

According to the Bloomberg report from the preliminary meeting of OPEC yesterday, oil consumption was about to “shift from reverse to forward gear,” soon, thanks to vaccines, Barkindo said.

[footeab@yahoo.com + 2,190]

On 12/31/2020 at 9:11 AM, Tom Nolan said:

Oilfield Service Giants Are Expanding Beyond Oil Tech

By Irina Slav - Dec 30, 2020, 6:00 PM CST

The oilfield services sector is usually the one to suffer the most during an oil and gas industry downturn. This last crisis has been no exception in most respects. Drilling fell sharply this year in response to the demand slump in both oil and gas, budgets were cut and exploration plans shrunk. There was talk we might have already seen peak oil demand. The situation begged the question what happens to oilfield services beyond oil?

 

Yea no kidding, my tiny oil services which was down already went to zero.  Ah, good times. 

[Tom Nolan + 2,443]

Should Oil Markets Brace for A U.S. Shale Comeback?

By Tsvetana Paraskova - Jan 04, 2021, 7:00 PM CST

https://oilprice.com/Energy/Energy-General/Should-Oil-Markets-Brace-for-A-US-Shale-Comeback.html

The 2020 crisis put an abrupt end to the growth in U.S. crude oil production, which had just hit 13 million barrels per day (bpd) before oil prices and demand collapsed with the spread of the pandemic.   Between March and May 2020, U.S. oil production plunged by over 2.5 million bpd as companies slashed spending on drilling and curtailed output in response to the low oil prices. In May, U.S. oil production hit 10 million bpd—its lowest monthly level since late 2017. 

After the trough in May, oil output in the United States has been gradually growing as producers restore curtailed volumes and oil prices recover part of the losses from earlier in 2020, due to encouraging news about vaccines, which gave the market hopes that the long-awaited oil demand recovery was finally in sight.   

EIA estimates point to U.S. oil production staying at around 11 million bpd for at least another year, as production rates from existing wells in the U.S. shale patch will fall faster than production gains from fewer newly drilled wells.

But some analysts say that the market has been too quick to write off U.S. shale again, and will be surprised by the rebound in American oil production in 2021. 

Some even suggest that the U.S. shale patch and the EIA are deliberately painting a gloomier picture than reality in order to ‘fool’ the OPEC+ alliance to continue withholding large volumes from the market and sustain oil prices at levels around $50 a barrel that would help U.S. production to jump this year. 

According to energy economist Philip K. Verleger, the EIA is under-reporting U.S. crude oil production in recent months, thus helping the narrative of some U.S. oil executives—such as Pioneer Resources’ chief executive Scott Sheffield—that American production will only see modest gains this year and next. 

Verleger’s energy consultancy PKVerleger estimates that U.S. oil production was 12.4 million bpd at the end of November, while the EIA has estimated it at 11 million bpd. 

“One might say EIA officials are deliberately underestimating the rise in US production to boost prices and facilitate hedging by US producers, thereby helping to strengthen and perpetuate the industry,” PKVerleger said in the ‘Fracking Comeback’ note in early December. 

“Oil-exporting countries have been fooled. Their agreement to limit output increases to support oil prices has laid the foundation for a renewed boost in US production. Once again, OPEC and other oil-exporting nations have wasted the gains of a price war,” the note says. 

In its latest Short-Term Energy Outlook (STEO), the EIA sees U.S. crude oil production declining on an average annual basis from 12.2 million bpd in 2019 to 11.3 million bpd in 2020 and 11.1 million bpd in 2021. Rising drilling activity in response to higher oil prices is set to push monthly output to 11.4 million in December 2021, according to EIA estimates.

The outlook of the U.S. oil industry itself has considerably improved in recent months, the Dallas Fed Energy Survey for Q4 showed. The business activity index moved into positive territory, rising from -6.6 in Q3 to 18.5 in Q4. This was the first positive reading for the business activity index since the first quarter of 2019, with the increase driven by both E&P and oilfield services firms, according to the survey. Moreover, most E&P executives—72 percent—expect their firm will have access to capital from nonbank sources over the next 12 months. 

“E&P and supplier consolidation needs to increase to reduce substantial costs from the system,” one E&P executive said in the Dallas Fed survey. 

Pressured by plunging oil prices and the need to adjust to the lower oil demand, U.S. oil producers have slashed costs and managed to bring down their average breakeven costs over the past year by nearly 20 percent to $45 a barrel on average, BloombergNEF (BNEF) said in a report last month. 

Declining costs could additionally help the U.S. shale rebound this year, Dan Eberhart, chief executive at privately held U.S. oilfield services company Canary, writes in Forbes.

“Don’t write off the great shale story just yet. The final chapter — maybe its best — is still being written,” Eberhart says. 

Not everyone is so optimistic about U.S. shale, with bankruptcy filings still rising and consolidation deferring smaller-scale developments. 

“It’s going to be hard for the shale development in the U.S. to get U.S. production back to 13 MMbd. Now, especially as consolidation occurs and as people really focus on full-cycle returns and net present value of their developments, the economics is going to drive a lot of decisions to not do these smaller-scale developments,” Occidental CEO Vicki Hollub told IHS Markit Vice Chairman Daniel Yergin in mid-November. 

The worst for U.S. oil production is over. Still, the fate of the shale patch in 2021 and 2022 will depend on access to capital, cost reductions, and spending discipline, as much as it will hinge on global oil demand and the OPEC+ policies to support oil prices. 

By Tsvetana Paraskova for Oilprice.com