“Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova

[Tom Nolan + 2,443]

Oil Prices Drop On Stronger Dollar, COVID Resurgence

By Tsvetana Paraskova - Jan 18, 2021, 10:00 AM CST

https://oilprice.com/Energy/Oil-Prices/Oil-Prices-Drop-On-Stronger-Dollar-COVID-Resurgence.html

Oil prices dropped early on Monday as a stronger U.S. dollar and many countries still battling rising daily COVID-19 cases weighed on market sentiment at the start of the week.

As of 9:14 a.m. ET on Monday, WTI Crude prices were down by 0.15 percent at $52.30 and Brent Crude was trading down 0.29 percent at $54.97, with prices down by around $2 a barrel from the middle of last week.

The lockdowns in Europe and the fairly slow start to vaccination programs in many countries outweighed early on Monday good economic data out of China, which beat analyst estimates to post 6.5-percent annual growth in its economy in the fourth quarter, compared to 6.1-percent growth expected by economists in a Reuters poll. China is also the only major economy to have posted economic growth last year, of 2.3 percent. All other major economies in the world are expected to have contracted in 2020, hit by the pandemic.

Still, China’s economic data wasn’t enough to wipe out a cautious approach to the oil market at the start of this week, as participants are still concerned that the spreading of the virus and the lockdowns will significantly weigh on oil demand in the first quarter. At the same time, vaccination programs are likely to take months before allowing a critical mass of economically active people to contribute to global economic recovery.  

“Hopes about a speedy recovery in fuel demand continues to be challenged by lockdowns and the continued rapid spreading of Covid-19,” Saxo Bank said on Monday.

Moreover, the upcoming presidential inauguration in the United States on January 20 also makes investors more cautious, PVM Oil analyst Tamas Varga told Reuters.

Saxo Bank sees President-elect Joe Biden’s inauguration as another factor to watch in oil this week, as well as how soon he could roll out the stimulus package announced last week. 

By Tsvetana Paraskova for Oilprice.com

 

[Tom Nolan + 2,443]

Buffett Wins: Biden Set To Cancel Keystone Pipeline Permit On First Day Of Office

Monday, Jan 18, 2021 - 12:44

https://www.zerohedge.com/energy/buffett-wins-biden-set-cancel-keystone-pipeline-permit-first-day-office

For a decade TransCanada’s management said that the Keystone XL pipeline would be built because it makes too much economic sense for America. But, as @Greekfire23 points out this morning, "that’s not how we operate down here" because according to Reuters, "Joe Biden is planning to cancel the permit for the $9 billion Keystone XL pipeline project as one of his first acts in office, and perhaps as soon as his first day."

The words "Rescind Keystone XL pipeline permit" appear on a list of executive actions likely scheduled for the first day of Biden's presidency, according to an earlier report by the Canadian Broadcasting Corp.

Biden - who was vice president in the Obama administration when it rejected the project as contrary to its efforts to combat climate change -  had earlier vowed to scrap the oil pipeline’s presidential permit if he became president. In 2015, Barack Obama axed the project saying Canada would reap most of the economic benefits, while the project would add to greenhouse gas emissions.

The project, which would move oil from the province of Alberta to Nebraska, had been slowed by legal issues in the United States. It also faced opposition from environmentalists seeking to check the expansion of Canada’s oil sands by opposing new pipelines to move its crude to refineries.

Canada’s ambassador to the United States said she would continue to promote a project that she said fit with both countries’ environmental plans. “There is no better partner for the U.S. on climate action than Canada as we work together for green transition,” Ambassador Kirsten Hillman said in a statement.

Others were less diplomatic: Alberta Premier Jason Kenney said on Twitter that cancellation would eliminate jobs, weaken U.S.-Canada relations and undermine American national security by making the United States more dependent on OPEC oil imports.

TC Energy Corp., which operates the pipeline, said it would achieve net zero emissions by 2023 when it enters service. The company also pledged to use only renewable energy sources by 2030 in a bid to win Biden’s support. None of that mattered, however, and TC Energy shares fell as much as 5.9% at the open, the most since April 1. Peer Enbridge was down about 2.2% even though analysts have said Keystone's cancelation would be positive for ENB.

The permit cancellation will come as construction is well under way in Canada, with the international border crossing complete. In the United States, TC has started construction on pump stations in each of the states the line will pass through, but legal setbacks cost it much of the 2020 construction season.

Biden's executive order would follow almost exactly 4 years to the day since outgoing president Trump did the opposite, when he signed an executive order that advanced construction of the Keystone XL and Daokta access pipelines, putting a spoke, so to say, in the train wheels of Warren Buffett's train-based oil transportation quasi-monopoly.

But now that a democrat is back in the White House, it's time for all that generous lobby spending by Buffett and Berkshire to be put to political use, and as cynics have been quick to point out, "Warren Buffet getting paid right away. His trains will now transport the oil. Not about the environment. But hey believe what you want."

TWITTER QUOTE:

Warren Buffet getting paid right away. His trains will now transport the oil. Not about the environment. But hey believe what you want.

Calgary

Biden indicates plans to cancel Keystone XL pipeline permit on 1st day in office, sources confirm

https://www.cbc.ca/news/canada/calgary/biden-keystone-xl-1.5877038

 

[Tom Nolan + 2,443]

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Lots of GRAPHS and INFO here...

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[Tom Nolan + 2,443]

Investors Growing More Bullish On Oil

By Irina Slav - Jan 19, 2021, 8:00 AM CST

Investors are becoming increasingly bullish on crude oil, with trading activity on the most popular crude and fuels contracts off to a strong start of the year.

Reuters’s John Kemp reported yesterday that hedge funds had increased their purchases of crude oil and fuels by the equivalent of 51 million barrels in the week to January 12. This, Kemp noted, was the biggest weekly buying spree for the past seven weeks, bringing the total to 540 million barrels of oil equivalent since mid-November.

Bloomberg also notes a sharp uptick in buying on the oil futures market as the outlook on the commodity brightened, and banks started revising their price forecasts for this year upwards.

“People are reconsidering the investment case for the commodities asset class,” Bloomberg quoted Harry Tchilinguirian, oil strategist at BNP Paribas, as saying. “Open interest in oil is rising again as macro-oriented funds look at the case for commodities.”

There is also considerable hedging activity, the Bloomberg report noted. West Texas Intermediate has been rising as strongly as Brent crude, with 2022 futures close to hitting $50 a barrel—a level at which a “big chunk” of U.S. shale oil is profitable, according to the head of the International Energy Agency, Fatih Birol.

As a result, embattled shale drillers are hedging their future production at these higher prices thanks to the rollout of Covid-19 vaccines and continued OPEC+ cuts with an additional gift of a 1-million-bpd cut in Saudi production.

Some have started to wonder if shale producers would be able to resist the siren call of production growth. In the meantime, sentiment among traders has almost recovered to pre-pandemic levels. Kemp reports the ratio of long to short positions in the week to January 13 stood at more than 5:1, which compared to below 2:1 in November.

A year ago, the Reuters analyst noted, the long:short position ratio stood at between 6:1 and 7:1.

By Irina Slav for Oilprice.com

 

TWITTER

https://twitter.com/IrinaSlav1

 

 

Edited January 19, 2021 by Tom Nolan

[Tom Nolan + 2,443]

IEA Slashes Oil Demand Outlook For 2021

By Irina Slav - Jan 19, 2021, 9:00 AM CST

The International Energy Agency cut its crude oil demand recovery outlook for this year by 300,000 bpd to 5.5 million bpd in its latest Oil Market Report, out today.

The authority said it expected demand to average 96.6 million bpd in 2021, after crashing by an all-time high of 8.8 million bpd in 2020 under the weight of the Covid-19 pandemic.

On the supply side, the IEA forecast a recovery of over 1 million bpd, most of it to come from OPEC members after last year supply fell by 6.6 million bpd. It also sounded a positive note, leaving space for further improvement in supply during the second half of the year, with the rate of improvement reaching 1.2 million bpd.

The IEA attributed its expectations for demand and supply growth to the rollout of Covid-19 vaccines across much of the world. However, the agency noted demand rebound will be slow because of the renewed or extended lockdowns in some countries, which are weighing on fuel demand.

The authority credited OPEC+ with speeding up a drawdown in global oil stockpiles, noting that if the cartel achieved a compliance rate of 100 percent with its self-imposed production caps, the drawdown could reach 100 million barrels over the first quarter of the year alone.

If demand rebounds as strongly as the IEA expects during the second half of the year, it could even tip the market into a deficit if OPEC+ continues to restrain production.

The report noted, however, that “OPEC+ has taken a more flexible approach to market management and will meet monthly to decide on output levels.”

Earlier this month, the IEA’s Head of Division for Energy Supply Outlooks and Investment, Tim Gould, warned that the oil industry was facing major challenges from the continuing pandemic, which created massive uncertainty.

Oil producers, Gould told Reuters, now have to factor in many more variables in their plans, including economic forecasts and various speeds at which vaccines are being used in different countries.

By Irina Slav for Oilprice.com

 

[Tom Nolan + 2,443]

Oil Rises On Expectations Of ‘Big’ U.S. Stimulus Package

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

Oil prices shook off the risk-off trade on Monday and rose early on Tuesday, amid expectations that U.S. Treasury Secretary nominee Janet Yellen will push for a large relief package to support the U.S. economic recovery.

As of 10:39 a.m. ET on Tuesday, WTI Crude prices were up 0.92 percent at $52.80 and Brent Crude was trading up 1.92 percent at $55.80.

A weaker U.S. dollar also helped the rise in crude oil prices. The dollar slipped from a one-month high early on Tuesday, just before Yellen was expected to speak at the Senate Finance Committee at her confirmation hearing. According to Reuters, Yellen was expected to say that the U.S. must “act big” in the upcoming stimulus package.  

The weaker dollar, which makes crude cheaper for holders of other currencies, as well as expectations that a large stimulus package will bolster economic growth in the world’s largest economy later this year, pushed oil prices higher on Tuesday.

In addition, despite the fact that the International Energy Agency (IEA) cut its oil demand recovery outlook for this year by 300,000 bpd to 5.5 million bpd, the agency noted in its closely-watched Oil Market Report on Tuesday that “a widespread vaccination effort and an acceleration in economic activity is expected to spur stronger growth in the second half of the year.”

“Much more oil is likely to be required, given our forecast for a substantial improvement in demand in the second half of the year,” the IEA said.

Some small supply outages may have also supported oil prices. Kazakhstan, a key OPEC+ producer of the non-OPEC group led by Russia, has seen in recent days its oil production lower than average because of power outages in freezing winter. Libya is also reportedly pumping oil at a rate lower by 200,000 bpd compared to last week after a leak forced the shutdown of an oil pipeline.

Crude oil prices are holding up well and have yet to break any downside levels that could signal a deeper short-term correction, Saxo Bank said in a market commentary early on Tuesday.  

By Tsvetana Paraskova for Oilprice.com

 

[Tom Nolan + 2,443]

UAE’s Oil Giant Looks To Partner With U.S. Shale Companies

By Charles Kennedy - Jan 19, 2021, 12:00 PM CST

https://oilprice.com/Energy/Crude-Oil/UAEs-Oil-Giant-Looks-To-Partner-With-US-Shale-Companies.html

The Abu Dhabi National Oil Company (ADNOC) is looking to form partnerships with companies from the United States to develop unconventional oil resources in the United Arab Emirates (UAE), Reuters quoted ADNOC’s chief executive, Sultan Ahmed Al Jaber, as saying on Tuesday.  

The UAE, one of the large producers in OPEC, is looking to boost its production capacity and eventually, its crude oil production, when the OPEC+ output cuts end.

Last November, Abu Dhabi’s Supreme Petroleum Council said that the emirate had increased its total oil reserves by 2 billion barrels to 107 billion barrels thanks to new discoveries. The council also announced Abu Dhabi had 22 billion barrels of unconventional oil reserves to date, again thanks to new discoveries onshore. This amount is larger than the reserves contained in Abu Dhabi’s fields in development and, according to the Supreme Petroleum Council, could rival the U.S. shale boom.

“Today’s announcement by the SPC of the discovery of recoverable unconventional oil resources demonstrates how ADNOC is efficiently expediting the exploration and development of Abu Dhabi’s unconventional resources and marks a major milestone as the nation’s unconventional industry evolves,” Al Jaber said at the time.

A few days after that, ADNOC said it had awarded a contract worth up to US$519 million (AED 1.9 billion) to further expand the scope of what it says is the world’s largest combined three-dimensional (3D) onshore and offshore seismic survey, currently taking place in Abu Dhabi.

The award “further demonstrates ADNOC’s commitment to realizing the full potential of our conventional and unconventional oil and gas resources to ensure the UAE remains a long-term and reliable energy provider to the world,” Yaser Saeed Al Mazrouei, ADNOC Upstream Executive Director, said at the end of November.

Last month, ADNOC signed a collaboration agreement with U.S. supermajor ExxonMobil to explore joint technology research and development (R&D) partnership opportunities in upstream oil and gas, with initial areas including advanced non-metallic solutions, field testing and integrity management, smart reservoir management and well monitoring systems, and innovative emergency response systems.

By Charles Kennedy for Oilprice.com

[Tom Nolan + 2,443]

Oil Rallies Despite Growing Demand Concerns

By Tom Kool - Jan 19, 2021, 1:00 PM CST

https://oilprice.com/Energy/Energy-General/Oil-Rallies-Despite-Growing-Demand-Concerns.html

We hope you enjoy.

Chart of the Week

-    U.S. fossil fuel production declined by 6% in 2020.

-    The EIA projects that production will remain flat in 2021, with increased coal production offsetting declines in gas output.

-    Production will resume growth in 2022 but will remain below the 2019 peak.

Market Movers

-    ExxonMobil (NYSE: XOM) said that its latest well in offshore Guyana did not find commercial volumes of oil. That is the second setback the company has faced in Guyana in recent months.

-    ConocoPhillips (NYSE: COP) announced that it has completed its acquisition of Concho Resources. 

-    Tellurian (NASDAQ: TELL) co-founder Charif Souki said that the company is aiming to start construction on its $16.8 billion Driftwood LNG project this summer. 

Tuesday, January 19, 2021 

Oil prices fell more than 2% on Monday on rising concerns about oil demand. New lockdown restrictions in China spooked the market. “The COVID-19 pandemic’s spread is taking center stage again and traders are getting increasingly worried about the long duration of European lockdown and about the new restrictions (in) China,” Bjornar Tonnage from Rystad Energy said. However, oil regained lost ground in early trading on Tuesday.  Related: Rising LNG Prices Welcome News For U.S. Exporters

IEA: Demand to recover by 5.5 mb/d. In the IEA’s January Oil Market Report, the agency projects that oil demand will bounce back to 96.6 mb/d this year, an increase of 5.5 mb/d over 2020 levels. That erases some of the 8.8-mb/d decline from last year. However, the agency cut its forecast for first-quarter demand by 600,000 bpd compared to last month’s report. On the supply side, production will increase by 1 mb/d this year, after declining by 6.6 mb/d in 2020.

Biden may cancel Keystone XL. President Biden may cancel the permit for the Keystone XL, perhaps on his first day in office, according to Reuters. In an effort to stave off a death sentence for the project, TC Energy (NYSE: TRP) said it would make the pipeline have a net carbon zero emissions profile by spending $1.7 billion on renewable energy to power the pipeline and to use union labor. Bloomberg reports that materials and pipe could be sold for scrap. 

Biden executive orders planned for Day 1. A series of executive orders are expected on Wednesday from newly inaugurated President Biden. In addition to one on Keystone XL, Biden is expected to rejoin the Paris Climate Agreement, reimpose methane regulations on oil and gas operations, use the federal procurement power to make government buildings shift towards clean energy, and block new drilling permits in the Arctic National Wildlife Refuge.

Sky-high LNG prices may not last. The rally in LNG prices in Asia is likely temporary. While February JKM prices topped $21/MMBtu, April contracts are trading at around $7. And the long-term pricing outlook for LNG remains bearish, according to the Wall Street Journal. China stands at the center of long-term forecasts, and China’s domestic gas production is on the rise, increasing by 9% in the first 9 months of 2020.

Oil majors benefit from LNG  price spike. Majors such as Royal Dutch Shell (NYSE: RDS.A) and Total (NYSE: TOT) might benefit more from the LNG price spike than trading houses due to their access to multiple sources of gas, allowing them to reroute cargoes, according to Reuters.

Total buys $2.5 billion stake in Indian renewables company. Total (NYSE: TOT) is investing $2.5 billion to acquire a 20% stake in Adani Green Energy Ltd., an India-based renewable energy company.

IEA: New methane report warns cuts needed. Oil and gas operations emitted 70 million metric tons of methane in 2020, a 10% reduction from the year before due to the pandemic, according to the IEA’s new report on methane. “The task now for the oil and gas industry is to make sure that there is no resurgence in methane emissions, even as the world economy recovers, and that 2019 becomes their historical peak,” said IEA executive director Fatih Birol. The IEA said that methane emissions need to decline by 70% over the next decade.

Enbridge defies Michigan, attempts to keep Line 5 open. In November, Michigan ordered the Line 5 pipeline shut down. On January 12, Enbridge (NYSE: ENB) wrote a letter arguing that the state didn’t have the authority to shut down the aging pipeline. 

China’s economy picked up speed in the fourth quarter. China’s GDP grew 2.3% in 2020, making China the only major economy that did not suffer economic contraction last year. China grew 6.3% in the fourth quarter, year-on-year.

$501 billion in decarbonization. The world invested $501 billion into cleantech and decarbonization efforts in 2020, beating the previous record by 9%, according toBloombergNEF. That included more than $300 billion on renewable energy and nearly $140 billion one electric vehicles.

Pipeline issue hits Libyan production. A leak that forced the shutdown of an oil pipeline in Libya has reduced its recovering oil production by as much as 200,000 bpd.

SEC to increase scrutiny on oil and gas. The Biden administration is likely via the SEC to increase disclosure requirements related to climate risk for oil and gas companies. In fact, a more aggressive push on ESG standards and requirements could be in the offing. The Wall Street Journal looks at the SEC’s potential agenda. Bloomberg also looks at the SEC, although from the angle of financial fraud in the oil and gas industry. 

Court strikes a fatal blow to Trump carbon rule. The U.S. Court of Appeals for the District of Columbia Circuit killed the Trump administration’s rule on power plant emissions. The court said that the Affordable Clean Energy (ACE) rule, a watered-down replacement for the Obama-era Clean Power Plan, did not adequately protect health and the environment. The decision gives the Biden administration something of a clean slate to start over.  Related: Iran Expands Its Sphere Of Influence With Iraqi Energy Deals

Russia starts work on its Arctic mega project. Russia is aiming to develop the massive Vostok project. Rosneft expects the operation to cost $170 billion over a decade that will employ 400,000 workers, create 15 new industrial towns, and build 800 km of new pipelines. The Vostok projects should already produce 30 million tonnes of oil by 2024 which rounds up to 600,000 barrels per day. Eventually, it could produce as much as 2 mb/d.

Biden to face question on Venezuela fuel swaps. Representatives of fuel suppliers in Venezuela are expected to press the Biden administration to loosen the ban on fuel swaps for the impoverished country.  

Axis Capital rules out Arctic projects. Axis Capital Holdings Ltd. said it wouldn't ensure oil and gas projects in the Arctic National Wildlife Refuge, the first underwriter to rule out insurance for the Arctic.

Money pouring into offshore green investments. The Wall Street Journal reports that investors are pouring money into retrofitting deep-sea vessels that once serviced offshore oil projects to now handle offshore wind installations.  

By Tom Kool for Oilprice.com

 

[Tomasz + 1,608]

According to the IEA in today's report, in the fourth quarter, oil inventories in OECD countries fell at a rate of 2.58 million barrels per day. They currently exceed the 5-year standard by 160 million barrels.

It's nice that the IEA has confirmed some of my previous posts on this topic.

https://www.iea.org/reports/oil-market-report-january-2021

Quote

Global oil demand is expected to recover by 5.5 mb/d to 96.6 mb/d in 2021, following an unprecedented collapse of 8.8 mb/d in 2020. For now, a resurgence in Covid-19 cases is slowing the rebound, but a widespread vaccination effort and an acceleration in economic activity is expected to spur stronger growth in the second half of the year.
After falling by a record 6.6 mb/d in 2020, world oil supply is set to rise by over 1 mb/d this year, with OPEC+ adding more than those outside the bloc. There may be scope for higher growth given our expectations for further improvement in demand in 2H21. After holding flat at 92.8 mb/d in December, global supply is rising this month with OPEC+ due to ramp up during January.
Global refinery throughput is expected to rebound by 4.5 mb/d in 2021, after a 7.3 mb/d drop in 2020. Runs rose by 2.6 mb/d in November, the largest monthly gain in seven years, as refiners returned from peak maintenance. A cold snap in Europe and Asia boosted diesel and kerosene, but higher crude oil prices led fuel oil cracks lower, with an overall negative impact on refinery margins.
Observed global oil stocks fell by 2.58 mb/d in 4Q20 after preliminary data showed hefty draw downs towards year-end. In November, OECD industry stocks fell for a fourth consecutive month. A monthly decline of 23.6 mb (0.79 mb/d) left inventories at 3 108 mb, 166.7 mb above their five-year average. Products led the fall, with OECD industry crude stocks only 48.9 mb below a May-peak.
Oil’s rally accelerated, with Brent reaching $57/bbl on 12 January, a level not seen since February 2020. Despite rising Covid cases, crude prices are well supported by financial, economic and market fundamentals. Crude prices flipped into backwardation in December, and the 12 month time spread deepened to $2.50/bbl by mid-January. Freight rates fell after OPEC+ agreed cuts on 5 January. 

 

Edited January 19, 2021 by Tomasz

[Tom Nolan + 2,443]

Wednesday -

Oil Rises On Inauguration Day As Markets Eye Big Stimulus Act

By Tsvetana Paraskova - Jan 20, 2021, 9:00 AM CST

https://oilprice.com/Energy/Oil-Prices/Oil-Rises-On-Inauguration-Day-As-Markets-Eye-Big-Stimulus-Act.html

Oil prices rose for a second consecutive day on Wednesday, as the market expects the incoming U.S. Administration to “act big” in the next COVID relief package.  

As of 9:17 a.m. ET on Wednesday, which is Inauguration Day for President-elect Joe Biden, WTI Crude was up 1.53 percent at $53.77, and Brent Crude prices were trading above $56 a barrel—up by 1.16 percent at $56.52, very close to the 11-month high prices hit last week.

The U.S. dollar dropped after Treasury Secretary nominee Janet Yellen told the Senate Finance Committee on Tuesday that the U.S. should “act big” in the upcoming stimulus package. The weaker dollar makes crude cheaper for holders of other currencies, while the overall bullish market sentiment also sent investors and speculators to riskier assets, such as shares and commodities.

On Wednesday, the market was looking beyond the near-term oil demand scares, stoked by the continued lockdowns in many parts of Europe and now returning in parts of China, too. On Tuesday, Germany extended its lockdown until the middle of February.

But market participants were looking beyond the first quarter, hopeful that a large stimulus package in the U.S. would result in a rebound in the world’s biggest economy, and relief packages in other economies will also help growth, and by extension, oil demand, later this year.  

Although it cut oil demand forecasts for Q1 and 2021, the International Energy Agency (IEA) said in its closely-watched Oil Market Report on Tuesday that “Much more oil is likely to be required, given our forecast for a substantial improvement in demand in the second half of the year.”

“The market shrugged off another downgrade to global demand growth from the International Energy Agency who said that renewed lockdowns to contain the pandemic would weigh on consumption during the current quarter,” Saxo Bank said early on Wednesday.  

“The market remains bid on a combination of Saudi production cuts and the prospect for more fiscal stimulus, increased mobility and continued monetary easing eventually supporting demand. The biggest short-term risk is whether these have been fully priced into the current price level,” the bank’s analysts said.  

By Tsvetana Paraskova for Oilprice.com

 

[Tom Nolan + 2,443]

Biden To Kill Keystone XL Pipeline, Rejoin Paris Agreement

By Tsvetana Paraskova - Jan 20, 2021, 10:00 AM CST

https://oilprice.com/Energy/Energy-General/Biden-To-Kill-Keystone-XL-Pipeline-Rejoin-Paris-Agreement.html

On his first day in office on Wednesday, incoming U.S. President Joe Biden will sign executive orders to reverse decisions of the previous administration and will rejoin the Paris Agreement, revoke a Presidential permit for the Keystone XL pipeline, and issue a temporary moratorium on all oil and natural gas leasing activities in the Arctic National Wildlife Refuge in Alaska.

Biden’s Day One Executive Actions will include an executive order under which the United States will rejoin the Paris Agreement. The instrument Biden will sign will be deposited with the United Nations today. The United States will officially become a Party again 30 days after that, the Biden-Harris transition website says.   

“The United States will be back in position to exercise global leadership in advancing the objectives of the Agreement,” the transition team notes.

The U.S. officially left the Paris Agreement in early November 2020. Although President Trump said in 2017 that he would withdraw the United States from what he called “the terrible, one-sided Paris Climate Accord,” the U.S. had to wait for three years after the agreement entered into force on November 4, 2016, to give the 12-month notice for officially exiting the pact.

The day-one executive actions also includes “Revoking, revising, or replacing additional Executive Orders, Presidential Proclamations, Memoranda, and Permits signed over the past 4 years that do not serve the U.S. national interest, including revoking the Presidential permit granted to the Keystone XL pipeline,” the transition team says.

In another executive order concerning the oil industry, Biden will direct the Department of Interior to place a temporary moratorium on all oil and natural gas leasing activities in the Arctic National Wildlife Refuge, which the Trump Administration had just opened to development. The first lease sale was a flop, with oil companies largely steering clear of the auction earlier this month.

Last week, API President and CEO Mike Sommers said in the State of American Energy Keynote that “energy affordability is more important than ever as we recover from the pandemic…And that’s the case we’re making and approach we’ll take in working with President Joe Biden and his administration.”  

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

Tom Nolan here - I hate "virtue mandates" which suffer from no CS. (Common Sense)

Welcome to the New World Order Technocracy of "The Great Reset".  The Technocrats will mandate the rules to live by. 

Don't breathe...your CO2 causes Climate Change (during this Grand Solar Minimum of 11 years where the planet will be cooler no matter what you do.)

Bloomberg - Wednesday January 20th

Big Oil Takes Unsteady Steps to Cut Transition Risk

Tim Quinson

Wed, January 20, 2021, 5:00 AM·4 min read

https://finance.yahoo.com/news/big-oil-takes-unsteady-steps-110016535.html

 

Of the biggest U.S. oil and gas companies, EOG Resources Inc. is the least prepared for a low-carbon economy, according to BloombergNEF. (BNEF)

That’s based on an analysis of the company’s business-model transition risk. The overall research focuses on which companies are developing low-carbon revenue streams by investing in renewables; whether (or not) they’re expanding their fossil-fuel operations; and how threatened their current business is to the potential decline in oil demand.

EOG, the largest shale-focused independent oil company, scored the worst, partly because pure exploration and production companies face more transition risk, according to BNEF. Integrated companies tend to have stronger financial positions and a greater variety of skills that enable them to invest in and develop low-carbon businesses.

Investment in scalable, low-carbon business models is the most important part of BNEF’s score, said Jonas Rooze, BNEF’s head of sustainability research.

“EOG is doing nothing in areas like clean energy, hydrogen or carbon capture, as far as we can tell,” Rooze said. The company has poor scores on all its transition activities, he said.

In response to the BNEF assessment, Houston-based EOG said its long-term strategic planning process involves an analysis of “market forces that present risks and opportunities to our business plans and strategy.” The company said it has set up the EOG Sustainable Power Group to identify and implement low-emissions electricity generation to reduce its “carbon footprint with favorable economics,” including the recent startup of an eight-megawatt solar and natural gas hybrid electric power station.

Chevron Corp. is in the best position relative to its biggest U.S. competitors, such as Exxon Mobil Corp., ConocoPhillips and Occidental Petroleum Corp., according to the study. The company is exploring renewables, electric-vehicle charging and battery systems, and making some clean-energy acquisitions. Its activities in carbon capture and storage in particular rival the best in the world, Rooze said. Last week, Chevron said it’s investing in a California startup that captures carbon dioxide from factories and then converts the greenhouse gas into gravel and other building materials.

Chevron still lags far behind European rivals, including Royal Dutch Shell Plc, Total SE and Equinor ASA, in most other investment areas, Rooze said. Where Chevron is installing dozens of megawatts of renewables or EV charging points, the European companies are installing hundreds or even thousands in some cases, he said.

BloombergNEF is working with Bloomberg Intelligence (BI), both of which are research centers within Bloomberg LP, on climate transition scores for 39 major oil and gas companies. The scores are designed for investors to identify companies most threatened by accelerating global climate action and technological transformation, and to understand the material transition factors affecting the industry.

BI is focused on the companies’ current carbon performance and future targets, while BNEF examines transition risks posed by current business models and how companies are adapting their models.

It’s not all about whether a company is engaging with low-carbon technologies. For example, in the face of declining oil demand, companies are more likely to be forced to write down the value of their reserves if they’re unable to produce it competitively, or if it will take them many years to produce all of it. Meanwhile, companies like EOG that devote significant funds to high-carbon activities rather than transition to cleaner energy are actively increasing their transition risk, Rooze said.

“Setting up low-carbon businesses represents the opportunity side of the equation,” he said. “But these are still oil and gas companies and you can't measure the risks without getting to grips with that.”

Sustainable Finance in Brief

Investors managing more than $2 trillion of assets are calling on world leaders to address the “unfolding humanitarian crisis at sea” where marine workers are stranded due to border closures and restrictions on movement imposed to contain Covid-19. Fidelity Investments and Capital Group ranked the worst of the world’s 10 biggest asset managers last year on pushing high-carbon emitters to curb their role in global warming. China is set to post the fastest growth in Asia for environmental, social and governance investments after the country boosted exchange-traded fund assets 18-fold in the past two years. Total SE became the first oil major to quit the influential American Petroleum Institute due to a clash on climate change policy. Allianz SE may cut investments in stocks and bonds issued by emissions-intensive companies as it steers away from businesses that foment global warming.

Bloomberg Green publishes the Good Business newsletter every Wednesday, providing unique insights on climate-conscious investing and the frontiers of sustainability.

For more BULLSHIT like this, please visit us at Bumberg Elite Davos Club for the Technocratic New World Order of "The Great Reset".  Our motto is "We got rules for you.  We're your Rulers."

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Visit "Real Climate Science" here...

Real Climate Science  

https://realclimatescience.com/corruption-of-the-us-temperature-record/

 

Edited January 23, 2021 by Tom Nolan

[Tom Nolan + 2,443]

Biden Plans To Kill Keystone XL Oil Pipeline

By Tsvetana Paraskova - Jan 20, 2021, 5:00 PM CST

https://oilprice.com/Energy/Energy-General/Biden-Plans-To-Kill-Keystone-XL-Oil-Pipeline.html

U.S. President Joe Biden is rescinding the Presidential permit for the Keystone XL oil pipeline project on his first day in office, raising concerns about Alberta’s oil industry and the potential increased dependence of U.S. Gulf Coast refineries on crude imports from OPEC nations.

The day-one executive actions for President Biden include “Revoking, revising, or replacing additional Executive Orders, Presidential Proclamations, Memoranda, and Permits signed over the past 4 years that do not serve the U.S. national interest, including revoking the Presidential permit granted to the Keystone XL pipeline,” the Biden-Harris transition team says.

Since reports surfaced a few days ago that the new U.S. Administration would kill the cross-border Keystone XL project on day one, top Canadian officials have said the move would weaken the existing U.S.-Canada relationship.

Analysts, as well as Alberta’s Premier Jason Kenney, say that killing Keystone XL would not diminish demand for heavy crude oil at U.S. refineries in the future. It could, however, raise America’s dependence on crude oil imports from OPEC, instead of imports from Canada, for the U.S. Gulf Coast.

The United States has reduced its dependence on OPEC oil over the last few years, and is now a net oil importer. What crude oil the U.S. does import today mostly comes from Canada, to the tune of nearly 4 million barrels per day. Only 686,000 barrels per day come from OPEC nations.

But all that could change now.

Richard Masson, an executive fellow and energy expert at the University of Calgary’s School of Public Policy, told The Canadian Press earlier this week that killing Keystone XL could force U.S. Gulf Coast refineries to import more oil from countries like Saudi Arabia and Iraq, instead of from Canada. Related: U.S. Oil Product Demand Is Set For A Biden Boost In 2021

U.S. crude oil imports fell to just 280,000 bpd in October 2020, and just 121,000 bpd from Iraq, according to the Energy Information Administration.

Scrapping the project will also kill jobs—both in Canada and the United States.

According to Kenney, scrapping the Presidential permit for Keystone “would kill jobs on both sides of the border, weaken the critically important Canada-U.S. relationship, and undermine U.S. national security by making the United States more dependent on OPEC oil imports in the future.”   

“As president-elect Biden’s green jobs plan acknowledges, Americans will consume millions of barrels of oil per day for years to come. It is in perfect keeping with his plan that the United States energy needs should be met by a country that takes the challenges of climate change seriously,” Kenney added.

On Tuesday, Kenney said he had urged the federal government of Canada “to do everything possible to convey a clear message to President-elect Biden that rescinding the #KXL border crossing permit would damage the Canada-US bilateral relationship.”

“Should the incoming US administration abrogate the Keystone-XL permit, Alberta will work with TC Energy to use all legal avenues available to protect its interest in the project,” Alberta’s premier said in his Sunday statement on the pipeline development.

According to Politico, TC Energy could react to the scrapping of the Presidential permit by challenging the move in court or through the new North American trade deal.  

If Keystone XL is terminated, Alberta could also sell the pipes from the project to offset some of the funds it had invested in the project, Kenney said at a news conference earlier this week, as carried by Bloomberg.

Tsvetana Paraskova for Oilprice.com

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The following IMAGE taken from Zero Hedge article...  (It should be pointed out that a national mask mandate is not a LAW.  Laws can only come via Congress.)

Biden Signs First 17 Executive Actions Starting With Mask Mandate, "Racial Equality" & Rejoining Paris Accord

https://www.zerohedge.com/markets/biden-issues-barrage-15-executive-orders-border-climate-immigration-100-day-masking

IMAGE LINK for higher resolution...

https://cms.zerohedge.com/s3/files/inline-images/CNNEA.png?itok=sMLGjDks

[Tom Nolan + 2,443]

Can Shale Resist The Lure Of Another Output Surge?

By Irina Slav - Jan 20, 2021, 7:00 PM CST

https://oilprice.com/Energy/Crude-Oil/Can-Shale-Resist-The-Lure-Of-Another-Output-Surge.html

U.S. shale changed global oil markets. It shook the foundations of OPEC as the one single swing producer group. And last year, it crumbled under the weight of the pandemic that sent oil prices to all-time lows, including a short dip of WTI below zero. Now, shale is getting back on its feet, facing the temptation of production as prices rebound above $50.

Wood Mackenzie’s Vice Chair for the Americas, Ed Crooks, called it a siren song in a recent analysis. The shale boom happened because producers were chasing constant growth. It was this chase that catapulted the United States to the spot of the world’s largest oil producer, but it was also this chase that made the pandemic-caused slump in the shale patch quite spectacular.

Until about a month ago, most of U.S. shale was unprofitable, so producers stayed put—and probably wondered how they were going to keep paying the debts they’d accumulated while going for broke during the second shale boom. Now, at over $50 a barrel, a lot of shale oil is profitable again, at least according to the head of the International Energy Agency Fatih Birol.

But it’s not just him. Reuters earlier this week reported shale drillers have started hedging their future production at the current futures prices—another sign more shale oil is profitable at $53-54 a barrel.

Production remains subdued, for now. The national total averaged 11 million barrels daily as of the first week of January, unchanged on the previous week and down 2 million from a year earlier, according to the latest EIA weekly petroleum report. But the call of the siren could prove too tempting to resist.

The large producers are sticking to their cautious stance. As Pioneer’s president, Richard Dealy, told The Wall Street Journal last week, there is little motivation for production growth. The world does not seem to need more oil right now, he noted, so there is no reason to ramp up output.

Related: Big Oil Is Buying Into The Solar Boom

The company’s CEO, Scott Sheffield, went further, saying during a webcast earlier this month that he did not expect U.S. shale to return to growth over the next few years.

“I never anticipate growing above 5% under any conditions,” Sheffield also said. “Even if oil went to $100 a barrel and the world was short of supply.” The shale major CEO explained this was because the service costs associated with adding more drilling rigs would undermine profit margins.

But these are the big operators. They can more easily afford to continue restraining production just like OPEC+ is doing. This might be more challenging for smaller companies with higher production costs and a lot of debt that needs to be repaid as banks grow cold to the fossil fuels industry and shale specifically due to its cash-burning habits.

OPEC recently said that it expected U.S. shale to rebound in the second half of this year, not least as a result of OPEC’s own efforts to control production amid the demand destruction wrought on the industry by the pandemic. Industry insiders also note the growing optimism among sector players.

Yet this optimism remains, on the whole, guarded. It may be a signal of a permanent change to how things are done in the shale patch: earlier this month, Concho Resources’ chief executive Tim Leach suggested the pandemic had changed the game for shale oil.

“For most of my career, we would reinvest all our cash flow and then show our success by how much we could grow our production,” he told Bloomberg. “Well, that’s not how it’s going to work in the future.”

There is more than one reason for sticking up to a more disciplined approach to production control: shareholders want returns on their investments, not more barrels of oil, and banks want their loans repaid.

Related: Canada Is Cleaning Up Its Oil Sands

“Almost all the E&Ps would take more than 2.5 years to bring their debts down to a healthy level of about 20% gearing,” Wood Mac’s Ed Crooks said in his analysis, noting this would be true even if shale drillers kept production unchanged rather than growing it.

Indeed, there is very little motivation for production growth except the allure of higher prices. Yet this may vanish soon: forecasters are revising down their price projections for the medium term, expecting current price levels to linger. And while they may have made a big chunk of U.S. shale profitable, a lot of this chunk would be barely profitable and vulnerable to a drop below profitability that could happen at any moment.

There are simply too many factors that could weigh on prices, and that’s without even counting in Saudi Arabia’s trigger-happy habit of threatening to flood the market every time someone angers it.

The Biden administration could strike a new nuclear deal with Iran, for instance, which would automatically result in a flood of Iranian oil into the market. Or Libya could fix its pipelines and continue raising production. Or, for all we know about the coronavirus, there could be a resurgence of cases in China with the expected negative effect on demand. A guarded approach to production would be best for U.S. shale producers for now, regardless of how tempting the idea of ramping up may be.

By Irina Slav for Oilprice.com

 

[Tom Nolan + 2,443]

EIA Sees WTI at $56 For Q1 2021

By Julianne Geiger - Jan 21, 2021, 9:00 AM CST

The U.S. crude oil benchmark WTI will average $56 per barrel across the first quarter of this year, the Energy Information Administration has estimated in its Short-Term Energy Outlook (STEO) on Thursday.

This is a $6 increase from the December 2020 average of $50 per barrel, mainly due to expectations that the global demand for petroleum liquids will be greater this year—especially in the first quarter.

This reality should lead to inventory draws, although yesterday’s estimated crude oil by the API did not deliver results consistent with this expectation. On Wednesday, the API estimated that U.S. crude oil stocks had gained an additional 2.562 million barrels.

While the EIA expects oil demand to rise in Q1, “the recent rise in COVID-19 cases will continue to limit global oil demand in the first half of 2021.”

Nevertheless, the EIA is expects U.S. GDP by 5.4% in 2021, “leading to energy consumption growth.” Global consumption of liquid fuels in 2021 are expected to average 97.8 million barrels per day this year.

For comparison, U.S. consumption was 101.2 million barrels per day in 2019 before the pandemic began.

WTI spot prices were hovering slightly above $53 per barrel on early Thursday, down after the API’s reported inventory build on Wednesday, and increased lockdowns in China on an increased number of coronavirus cases there.

But the EIA is bullish for oil prices. “EIA expects global inventory draws will contribute to forecast rising crude oil prices in the first quarter of 2021. Despite rising forecast crude oil prices in early 2021, EIA expects upward price pressure will be limited through the forecast period because of high global oil inventory, surplus crude oil production capacity, and stock draws decreasing after the first quarter of 2021.”

By Julianne Geiger for Oilprice.com

 

[Tom Nolan + 2,443]

Oil Price Fundamental Daily Forecast – COVID-Related Issues in China Encouraging Longs to Trim Positions

James Hyerczyk

1 hour ago (Jan 22, 2021 1:36 PM GMT) - Friday   James Hyerczyk has over 36 years experience with commodities / trading.

https://www.fxempire.com/forecasts/article/oil-price-fundamental-daily-forecast-covid-related-issues-in-china-encouraging-longs-to-trim-positions-695694

 

U.S. West Texas intermediate and international benchmark Brent crude oil futures are trading sharply lower shortly after the regular session opening on Friday on fresh worries that new pandemic restrictions in China will drive down fuel demand by the world’s biggest oil importer.

At 13:13 GMT, March WTI crude oil futures are trading $51.57, down $1.56 or -2.94% and March Brent crude oil is at $54.65, down $1.45 or -2.58%.

Traders also continue to react to Wednesday’s bearish American Petroleum Institute’s (API) weekly inventories report that showed an unexpected build. Analysts had predicted a drawdown. Later today at 16:00 GMT, the Energy Information Administration’s weekly inventories report is expected to show a 1.2 million barrel drawdown.

China’s Capital Initiates Mass Virus Testing

Beijing launched mass COVID-19 testing in some areas on Friday and Shanghai was testing all hospital staff as China battles its worst outbreak of the disease since March, with families fretting over Lunar New Year Reunion plans amid new curbs.

Mainland China reported a slight decline in new daily COVID-19 cases on Friday – 103 from 144 infections a day earlier.

Of the new cases, 94 were local transmissions, Heilongjiang province in the northeast reported 47 new cases, while Shanghai reported six new cases and the capital, Beijing, reported three new cases.

Long queues formed in some districts in Beijing, where mass testing was launched following several consecutive days of new cases. City officials said there were some “leaks” in epidemic control in some rural areas, with inadequate adherence to rules on wearing masks, social distancing and temperature checks.

Tens of millions of people have been under some kind of lockdown in northern cities amid worries that undetected infections could spread quickly during the Lunar New Year holiday in mid-February.

Daily Forecast

OPEC+ may be able to manipulate supply, but it can’t help create demand. Speculators were fully aware that the coronavirus pandemic was worsening, but they felt a sense of immunity with the rollout of the vaccines. Today’s price action suggests investors are lightening up on the long side as an out-of-control breakout in China could bring the global economic recovery to a standstill.

Although the markets are likely to remain supported by the OPEC+ production cuts and Saudi Arabia’s voluntary cuts, prices were too far ahead of demand, which means they have to come down over the short-run.

Traders are now awaiting official oil inventory data from the EIA. We could see the selling extend further if the government report shows a build instead of a 1.2 million barrel draw.

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

 

[Tomasz + 1,608]

 

Let me point out that this week's crude oil, gasoline and distillate stocks have increased significantly in total.

For some time, however, I personally have been paying most attention to the statistics of total  crude oil and all petroleum products stocks - another probably already 7th week of drops this time by symbolically 0.7 million barrels.

It does not change the fact that the total crude oil and oil products stocks are now only 47 million barrels higher than this time in the previous year.

Simply since last June, the crude oil market has gradually returned to balance in terms of US oil stocks.

[Tom Nolan + 2,443]

Bearish EIA Inventory Report Sends Oil Prices Lower

By Irina Slav - Jan 22, 2021, 10:00 AM CST - Friday morning

https://oilprice.com/Energy/Energy-General/Bearish-EIA-Inventory-Report-Sends-Oil-Prices-Lower.html

Crude oil prices fell further today after the Energy Information Administration reported a crude oil inventory build of 4.4 million barrels for the week to January 15.

This compared with an inventory decline of 3.2 million barrels estimated by the EIA for the previous week.

In gasoline, the EIA reported an inventory fall of 300,000 barrels for the week to January 15, which compared with a 4.4-million-barrel build for the previous week.

Gasoline production averaged 8.9 million bpd last week, which compared with 7.5 million bpd in the first week of January.

In middle distillates, the EIA reported an inventory increase of 500,000 barrels for last week, compared with a 4.8-million-barrel build for the previous week.

Middle distillates production averaged 4.5 million bpd in the week to January 15. This compared with 4.7 million bpd a week earlier.

U.S. refineries processed 14.8 million bpd last week, which compared with 14.7 million bpd a week earlier. Facilities operated at an average 82 percent of their capacity.

Oil prices have been extra volatile this week as expectations of a fatter U.S. stimulus plan from the Biden administration clashed with concerns about the continuing pandemic and extended or renewed lockdowns.

News that Iran was ramping up its oil production in anticipation of the U.S. lifting sanctions, at the same time, made for a strong downward pressure on benchmarks, with both Brent crude and WTI down by more than 1 percent at the time of writing. Reports of new lockdowns in China added to the pressure. Related: Can Shale Resist The Lure Of Another Output Surge?

The International Energy Agency earlier this week added fuel to the concerns, revising down its oil demand outlook for this year by 300,000 bpd. The authority said it expected demand to average 96.6 million bpd in 2021, after crashing by an all-time high of 8.8 million bpd in 2020 under the weight of the Covid-19 pandemic.

The agency was upbeat about the second half of the year, however, noting that mass vaccination should spur economic recovery, which will in turn boost oil prices. Nothing is certain, however, as the WHO has meanwhile warned that vaccinations are not a silver bullet solution to the pandemic problem with is chief suggesting social distancing measures will likely stay in place despite vaccinations.

By Irina Slav for Oilprice.com

 

[Tom Nolan + 2,443]

Iran Begins Boosting Oil Production

By Irina Slav - Jan 22, 2021, 11:00 AM CST

https://oilprice.com/Energy/Crude-Oil/Iran-Begins-Boosting-Oil-Production.html

Iran has started ramping up its crude oil production eyeing a return to pre-sanction levels in a month or two, Deputy Oil Minister Amir Hossein Zamaninia told media, as quoted by Bloomberg.

Zamaninia added that the market would be able to swallow the additional volumes, which could bring Iran's total to somewhere between 3.9 million and 4 million bpd.

The news comes as Tehran hopes the new U.S. administration would lift sanctions imposed by the Trump administration on the country after it pulled the U.S. out of the so-called Iran nuclear deal. Hopes are President Biden would be willing to renegotiate the deal in a mutually beneficial way.

Higher Iranian oil production would not be welcome by the country's fellow OPEC members who have been cutting their own production to prop up prices. Indeed, the report immediately pressured international benchmarks, with Brent crude and West Texas Intermediate dropping by more than 2 percent at the time of writing.

Meanwhile, to add insult to injury, Oil Minister Bijan Zanganeh said Iran's oil exports were also on the rise, despite the sanctions.

"We set the highest record of exports of refined products in the history of the oil industry during the embargo period," Zanganeh said, as quoted by news agency Shana via Reuters.

Zanganeh added, in response to media questions, "I am not worried about regaining Iran's lost oil market share, and oil buyers do not limit themselves to one or two sellers." If the U.S. sanctions were lifted, he said, "We will return to the market stronger than before, sooner than you might think."

Zanganeh said last month that Iran aimed to boost oil exports to 2.3 million bpd once sanctions were lifted, from less than 1 million bpd right now, according to official data. The situation remains tricky, however, as both sides want the other one to make the first move.

President Biden's nominee for the Treasury Janet Yellen recently said the U.S. will only remove the sanctions if Iran returns to its commitments under the nuclear deal, while Tehran insists that Washington first lifts the sanctions before it re-commits to the deal.

By Irina Slav for Oilprice.com

 

[Tom Nolan + 2,443]

U.S. Rig Count Increases As Oil Rally Takes A Breather

By Julianne Geiger - Jan 22, 2021, 12:12 PM CST

https://oilprice.com/Energy/Energy-General/US-Rig-Count-Increases-As-Oil-Rally-Takes-A-Breather.html

Baker Hughes reported on Friday that the number of oil and gas rigs in the United States rose by 5 to 378.

The oil and gas rig count has risen for nine weeks in a row for a total gain of 68.

The oil rig count increased by 2 this week, while the number of gas rigs increased by 3. The number of miscellaneous rigs was unchanged.

Total oil and gas rigs in the United States are now 416 less than this time last year as we reach the one year mark since the coronavirus madness took hold.

The EIA’s estimate for oil production in the United States stayed the same for the ending January 15, at 11.0 million barrels of oil per day for the sixth week in a row—still 2.1 million bpd off the all-time high reached earlier this year.

Canada’s overall rig count increased this week by 11. Oil and gas rigs in Canada are now at 172 active rigs, and down 72 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 188, or 217 below this time last year.

Check back here later for an exclusive early peek at the Frac Spread by Primary Vision.

WTI and Brent were both trading sharply down on Friday on increased Covid-19 cases in China and the UK, and persistent lockdowns that are continuing to stymie oil demand growth.  

At 1:04 p.m. EDT, WTI was trading down 1.26% on the day at $52.46, though still up $0.20 per barrel on the week, while Brent was trading down 1.05% on the day, at $55.51, up $0.50 for the week.

By Julianne Geiger for Oilprice.com

 

Edited January 23, 2021 by Tom Nolan

[Tom Nolan + 2,443]

Oil Tumbles As Chinese COVID Cases Rise

By Tsvetana Paraskova - Jan 22, 2021, 1:00 PM CST

https://oilprice.com/Energy/Energy-General/Oil-Tumbles-As-Chinese-COVID-Cases-Rise.html

Oil prices tumbled more than 2.5 percent early on Friday, dragged down by concerns that oil demand in the world’s top oil importer, China, could falter amid rising COVID-19 cases and expanding lockdowns.

As of 9:35 a.m. ET on Friday, WTI Crude prices had slipped below $52 a barrel, and were trading down 2.60 percent at $51.73. The international benchmark, Brent Crude, had fallen below $55, with the price down 2.28 percent at $54.79.

Oil prices lost further ground on Friday from the 11-month high they had hit last week, when the Saudi surprise cut was still supporting gains.

This week, the price of oil rose on Tuesday and Wednesday, as the market expected the new U.S. Administration to “act big” in the next COVID relief package.  The U.S. dollar dropped after Treasury Secretary nominee Janet Yellen told the Senate Finance Committee on Tuesday that the U.S. should “act big” in the upcoming stimulus package. The weaker dollar made crude cheaper for holders of other currencies, while the overall bullish market sentiment also sent investors and speculators to riskier assets, such as shares and commodities.

However, oil prices slipped on Thursday, after the American Petroleum Institute (API) reported a build in crude oil inventories of 2.562 million barrels for the week ending January 15. Official EIA inventory data is expected later on Friday.

Before the EIA inventory report on Friday, oil prices were pressured by a stronger U.S. dollar, which makes buying crude more expensive for holders of other currencies.

The expanding lockdowns in China as COVID infections rise turned the sentiment bearish for the near term, as the market fears global oil demand this quarter could be weaker than anticipated just a week ago. Authorities in China are discouraging travel during the upcoming Lunar New Year holiday, while UK Prime Minister Boris Johnson said on Thursday it was too early to say how the situation in the UK would evolve, and suggested that some lockdowns and restrictions could remain in place until the summer.

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

Energy Shares Plunge As Oil Rally Stalls

By Tom Kool - Jan 22, 2021, 2:00 PM CST

https://oilprice.com/Energy/Energy-General/Energy-Shares-Plunge-As-Oil-Rally-Stalls.html

Energy shares were hit hard as the oil rally came to a halt, with new lockdowns reigniting oil demand fears

With 2021 shaping up to be one of the most important years for the energy sector in modern history, there is no better time to become an Oilprice.com premium member. Sign up today to get breaking news, expert analysis, and trading tips.

Friday, January 22nd, 2021

Oil posted some losses at the close of the week, with Brent dipping back below $55 per barrel and WTI down below $52. More travel restrictions in Hong Kong, Shanghai, and the UK led to demand pessimism, and a temporary jump in the dollar also weighed on crude. 

Biden’s first actions on energy. As expected, President Biden signed a litany of executive orders related to energy and climate, including canceling Keystone XL, rejoining the Paris Climate Agreement and beginning the process of undoing a long list of regulatory actions under the Trump administration. 

Chamber, API open to methane regulations. The Chamber of Commerce and the American Petroleum Institute (API), the most powerful business and oil lobbies in the U.S., respectively, said that they were open to the reimplementation of methane regulations on oil and gas operations, after supporting a rollback in the Trump era. The industry has long supported voluntary actions only. “This is a new position for API, but we think given where the industry is at this time and the continued importance of reducing methane, it was critical we update this position as the administration changes,” API CEO Mike Sommers told the Washington Examiner.

OPEC looks to build ties with Biden. OPEC’s secretary-general said that the group will seek to strengthen its relationship with the Biden administration, although thorny questions over the Iran nuclear deal and climate change loom.

Biden makes Glick FERC chairman. President Biden announced that Richard Glick would take over as chairman of the powerful Federal Energy Regulatory Commission (FERC), which regulates the electric grid and interstate oil and gas pipelines. Glick is expected to chart a new course with greater emphasis on clean energy and integrating renewables into the grid. 

Biden places 60-day moratorium on drilling on federal land. The Biden administration halted new leasing on federal lands for drilling for 60 days. The move may have little practical impact as the industry has stockpiled leases ahead of expected restrictions. Reuters says companies have enough permits to last for years. 

Energy shares plunge. Stocks of oil and gas companies fell sharply on Thursday in response to a drop in crude oil prices. EOG Resources (NYSE: EOG) fell by more than 8%.

Goldman bullish on oil. Oil prices will be supported this year by the upcoming massive economic stimulus package in the United States and the low probability of much Iranian oil returning to the global market, according to Goldman Sachs.

China’s electric grid still stretched. The cold spell that left Asian countries scrambling to buy enough natural gas for heating and electricity generation earlier this month made headlines and spurred a massive rally in spot gas prices on the regional market. It also highlighted a problem with China’s electricity consumption: it grew too much, too fast.

Suriname could be the last big oil boom. Majors are eying Suriname as the next big oil player. With recent success in neighboring Guyana, Suriname offers hope for low-cost oil exploration and production going into 2021. The NYT looks at what could be the world’s last big oil boom.

Oil spending outside of U.S. to rebound. Non-North American oil spending will rebound later this year, according to Schlumberger (NYSE: SLB). The oilfield services giant posted better-than-expected earnings for the fourth quarter and said markets outside of North America could see double-digit growth in spending in the second half of 2021. 

Former coal plant turned to hydrogen hub. Vattenfall AB plans to turn the site of its recently shuttered Moorburg coal power plant in northern Germany into a hub for turning wind and solar power into hydrogen.

China’s wind power surges. China added 72 GW of new wind capacity last year, more than double its previous record. China also added 48 GW of new solar. The country’s previous record for all renewable installations combined in a single year was 83 GW.

EU Bank chief: “Gas is over.” The president of the European Investment Bank, Werner Hoyer, said that Europe needs to move on from fossil fuels. “To put it mildly, gas is over,” he said. The EIB will phase out all funding for fossil fuels by the end of the year, essentially transforming itself into “Europe’s climate bank.”

Libya shuts down leaking pipeline. Libya’s state-owned National Oil Corp. was forced to shut down a leaking pipeline on Saturday, which cut oil production by around 200,000 barrels a day.

EV batteries with 5-minute charging times. Batteries capable of fully charging in five minutes have been produced in a factory for the first time.

U.S. Supreme Court hears climate arguments. The U.S. Supreme Court heard oral arguments on a highly-anticipated case in which the city of Baltimore is seeking damages from the oil industry related to climate change. The Court is only looking at a narrow procedural question about whether the case should belong in state or federal courts. If the Court decides in Baltimore’s favor, sending the case to state court, it could vastly increase the oil industry’s legal exposure as other states could sue. A decision is expected later this year. 

Musk to donate $100 million to carbon capture. Elon Musk said that he would donate $100 million to a prize for the best carbon capture technology.

By Tom Kool for Oilprice.com

 

[Tom Nolan + 2,443]

U.S. Proved Oil Reserves Remain Flat, Natural Gas Reserves Decline

By Charles Kennedy - Jan 22, 2021, 4:30 PM CST

https://oilprice.com/Latest-Energy-News/World-News/US-Proved-Oil-Reserves-Remain-Flat-Natural-Gas-Reserves-Decline.html

Lower crude oil and natural gas prices reversed in 2019 a two-year trend of record high proved reserves in the United States as operators revised down their total proved reserves estimates, the Energy Information Administration (EIA) said on Friday.

The annual report from the EIA showed that proved reserves of crude oil and lease condensate remained basically the same in 2019 as in 2018, with a very slight increase of 0.1 percent. Proved reserves of natural gas, on the other hand, dropped by 1.9 percent, according to EIA’s data through the end of 2019.

In that year, crude oil prices were generally lower than oil prices in 2018, with the price of the U.S. benchmark, West Texas Intermediate (WTI) crude oil, averaging $57 per barrel, down by $7 a barrel compared to 2018.

“Lower crude oil prices in 2019 caused many operators to revise their total proved reserves estimates downward even though proved reserves from extensions and discoveries increased slightly,” the EIA said.

To compare, higher oil and natural gas prices in 2018 raised the proved reserves of oil and gas in the United States to new all-time highs. Oil and natural gas proved reserves beat the previous record from the previous year, when rising prices and continued shale resource development in 2017 helped push U.S. reserves to what was then record-high volumes. In 2018, U.S. proved reserves of crude oil jumped by 12 percent.

In 2019, U.S. proved reserves of oil, at 47.1 billion barrels, remain at the record level set in 2018, the EIA said in its report. Producers in Alaska added 259 million barrels of proved reserves of crude oil and lease condensate in 2019, the largest net increase in all states.

In natural gas reserves, proved reserves recorded in 2019 the first annual decrease in the United States since 2015, with Texas posting the biggest decline with drops in large shale gas areas like the Eagle Ford, Barnett, and Bossier. 

Yet, total U.S. gas reserves remain at their second-highest level ever, the EIA said.

By Charles Kennedy for Oilprice.com

 

[Tom Nolan + 2,443]

World’s Top Oilfield Services Provider Optimistic About Oil Demand

By Charles Kennedy - Jan 22, 2021, 2:30 PM CST

https://oilprice.com/Latest-Energy-News/World-News/Worlds-Top-Oilfield-Services-Provider-Optimistic-About-Oil-Demand.html

The largest oilfield services provider, Schlumberger (NYSE: SLB), reported on Friday better-than-expected earnings for the fourth quarter and, like its rivals Halliburton and Baker Hughes, expects spending and activity levels to gain momentum this year.  

Schlumberger’s earnings per share (EPS), excluding charges and credits, rose by 37 percent sequentially to $0.22, beating estimates of $0.17 of Refinitiv IBES. 

Schlumberger’s revenue also rose, by 5 percent sequentially, driven by strong activity and solid execution both in North America and in the international markets. Revenue in North America increased by 13 percent in Q4 compared to Q3.   

 

The three largest oilfield services providers in the world—Schlumberger, Halliburton, and Baker Hughes—all reported losses for the third quarter. Yet, those losses were significantly lower than the ones seen in the second quarter, “the most challenging quarter in past decades,” as Schlumberger’s chief executive Olivier Le Peuch had said. The losses were lower between July and September also because of massive cuts in expenses after oilfield services companies laid off tens of thousands of workers.

For Q4, all three oilfield services providers reported this week revenues rising from Q3, and expressed optimism that oil demand, as well as drilling activity, will pick up this year. Baker Hughes booked its first quarterly net profit since oil prices crashed in March, while Halliburton reported adjusted net income, with North America revenue rising by 26 percent sequentially to $1.2 billion.  

Schlumberger expects oil demand to recover to 2019 levels no later than 2023 or earlier, Le Peuch said in the Q4 earnings release today.  

“In North America, spending and activity momentum will continue in the first half of 2021 towards maintenance levels, albeit moderated by capital discipline and industry consolidation. Internationally, following the seasonal effects of the first quarter of 2021, and as OPEC+ responds to strengthening oil demand, higher spending is expected from the second quarter of 2021 onwards. Accelerated activity will extend beyond the short-cycle markets and will be broad, including offshore, as witnessed during the fourth quarter,” Le Peuch said.

By Charles Kennedy for Oilprice.com

 

[Tom Nolan + 2,443]

Reuters - Sunday January 24th

Canada's Trans Mountain pipeline sees fortunes shine after KXL's demise

https://finance.yahoo.com/news/canadas-trans-mountain-pipeline-sees-121408529.html

By Rod Nickel and Steve Scherer

WINNIPEG/OTTAWA (Reuters) - The expansion of Canada's government-owned Trans Mountain pipeline assumes greater importance for the oil sector after the cancellation of rival Keystone XL reduced future options to carry crude, potential buyers say.

Trans Mountain Corp, a government corporation, is spending C$12.6 billion ($9.9 billion) to nearly triple capacity to 890,000 barrels per day (bpd), a 14% increase from current total Canadian capacity.

Prime Minister Justin Trudeau's government bought the 68-year-old pipeline in 2018 when previous owner Kinder Morgan faced legal hurdles to expand the 1,150-kilometre (715-mile) line running from Alberta to the British Columbia coast. Ottawa has always said it would find new owners.

This week, U.S. President Joe Biden revoked the presidential permit for TC Energy's Keystone XL pipeline (KXL), undoing efforts by former President Donald Trump to build the line that would have supplied U.S. refiners with 830,000 bpd of Canadian oil.

That decision has made the case for completing Trans Mountain's expansion stronger.

"This pipeline is even more valuable now," said Joe Dion, chief executive of Western Indigenous Pipeline Group, one of several First Nations groups interested in buying Trans Mountain.

"Everybody thought Trudeau wasn't going to get things done in Canada, and he's the one who successfully got a pipeline over Trump."

Trans Mountain takes on more strategic importance with KXL cancelled, but it does not mean his group would pay more for it, Dion said.

Trans Mountain has completed 22% of the expansion project, called TMX, which is scheduled for service in December 2022. Suncor Energy Inc, Canadian Natural Resources Ltd and BP PLC are among the committed shippers who have secured 80% of its additional capacity long-term.

"All eyes are on TMX," said Delbert Wapass, executive chair of Project Reconciliation, a First Nations coalition that hopes to buy 51% this year.

Sharing Trans Mountain's profits would help improve living conditions on First Nations, he said.

Canadian companies have long struggled to secure top price for their crude as pipeline congestion forced them to sell at a discount.

However reduced fuel demand due to pandemic travel lockdowns and advancing pipeline expansions have eased the flow. Even without KXL, Canada may have surplus export pipeline capacity once TMX enters service, said Matt Taylor, director of infrastructure research at investment bank Tudor Pickering Holt, who expects modest oil production growth to 2025.

Ottawa plans to sell the pipeline once there are fewer risks to completion and consultations wrap up with First Nations, said Finance Ministry spokeswoman Katherine Cuplinskas. TMX has faced stiff opposition over spill concerns.

A second government source said it bought Trans Mountain for its strategic importance, as its Pacific Ocean connection enables shippers to move oil to Asia, as well as the United States, which buys most Canadian crude.

Now its importance is even greater, the source said.

Enbridge Inc, which runs North America's Mainline oil network, also stands to gain from KXL's demise. It intends to sell long-term contracts for most of the Mainline's capacity, pending regulator approval, rather than continue to ration it on the spot market.

KXL's cancellation frees up long-term commitments by shippers who may now sign Mainline contracts, Taylor said.

($1 = 1.2710 Canadian dollars)

(Reporting by Rod Nickel in Winnipeg and Steve Scherer and Julie Gordon in Ottawa; Editing by Marguerita Choy)

 

Edited January 24, 2021 by Tom Nolan