Tom Nolan + 2,443 TN January 24, 2021 RELATED ONGOING THREAD... Biden suspends oil and gas drilling on Federal Lands for 60 days for review. https://community.oilprice.com/topic/22412-biden-suspends-oil-and-gas-drilling-on-federal-lands-for-60-days-for-review/ Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 25, 2021 Goldman Sachs: Biden’s Federal Land Drilling Ban Is Bullish For Oil By Editorial Dept - Jan 24, 2021, 4:00 PM CST https://oilprice.com/Energy/Energy-General/Goldman-Sachs-Bidens-Federal-Land-Drilling-Ban-Is-Bullish-For-Oil.html Oil stocks tumbled following yesterday's one-two punch of Biden energy news, when first we learned that the Interior Department enacted a 60-day moratorium on issuing oil and gas leases that affects all federal lands, minerals, and waters, which was followed by news that Biden was set to fully suspend the sale of oil and gas leases on federal land, which accounts for about a tenth of U.S. supplies. Yet while E&P companies sold off sharply on the news, one can argue that the decision wasn't exactly a surprise for the drillers themselves, because as the following chart from BofA shows, federal drilling permits spiked into year-end as companies clearly anticipated a ban on drilling on federal lands. But it's not just speculation about what impact on drillers - and especially frackers will be - Biden's intervention will have: an just as important question is what to expect on the price of oil as a result. Well, overnight, Goldman's commodity team said that a lack of urgency from the US government to lift Iranian sanctions and a push for larger fiscal spending support the constructive view on oil and gas prices; at the same time it estimated that a 2 trillion stimulus over 2021-2022 would increase US demand by 200k bpd and stated that delays in a full return of Iran production would support the bullish oil outlook. Goldman's summary, which could say is obvious: "policies to support energy demand but restrict hydrocarbon production (or increase costs of drilling and financing) will prove inflationary in coming years given the still negligible share of transportation demand coming from EVs (and renewables)." In short, just what Putin and the Crown Prince ordered. Below we excerpt from Goldman's note: Initial orders by the Biden administration include restrictions on North American hydrocarbon leasing, drilling and pipelines. In turn, initial comments suggest no urgency in lifting sanctions with Iran. Combined with a push for greater fiscal spending - and hence higher energy demand - these initial actions reinforce our constructive view on oil and gas prices. As we have argued, policies to support energy demand but restrict hydrocarbon production (or increase costs of drilling and financing) will prove inflationary in coming years given the still negligible share of transportation demand coming from EVs (and renewables). The Interior Department imposed on Wednesday a 60-day moratorium on oil and gas leases and drilling permits on federal lands, minerals, and waters. This order is temporary and has no impact on near-term activity as producers had aggressively accumulated federal drilling permits. While temporary, this order nonetheless suggests that the new administration views its pledge to halt leasing on federal lands as a priority of its climate plan, with such a broader moratorium on federal leasing potentially scheduled for next week according to Bloomberg. As we argued ahead of the election, such actions point to both higher production and financing costs for shale producers in coming years as well as lower recoverable resources. The additional orders to impose a moratorium on leasing activity in Alaska’s Arctic National Wildlife Refuge and to revoke Keystone XL’s border permit point to a similar regulatory shift. On their own, these actions do not point to a faster tightening of the oil market. in 2021-22, as a ban on permitting would still leave a window of up to two years to drill from elevated outstanding permits. In fact, this would likely shift drilling activity away from private to federal land (for example from the Midland to the Delaware basin) for a couple years to minimize the loss of recoverable resources. While producers are focused on shareholder returns over production growth, investors may support more aggressive drilling to secure future cash flows, potentially creating a modest headwind to sharply higher oil prices in the next few years. The administration’s focus on fiscal spending and recent foreign policy comments are, however, likely to help tighten the oil market in 2021-22. The release of President Biden’s COVID-relief plan has led our economists to increase their assumption for additional fiscal measures from $750bn to $1.1tn. Larger boosts to disposable income and government spending will make this recovery energy intensive long before it hurts oil demand, in our view, especially as they come alongside those in China and the EU. On our estimates, a $2 trillion stimulus over 2021-22 would for example boost US demand by c. 200 kb/d. Such spending would further contribute to a weakening dollar which itself lends support to oil prices. A faster vaccination roll-out would in turn accelerate the rebound in jet fuel consumption, which still accounts for more than half of the remaining lost oil demand. Finally, the new administration’s focus on reaching bi-partisan policy support suggest a lessened incentive to quickly revisit the divisive Iran nuclear deal. While the US president has significant freedom to re-enter the JCPOA agreement (see Appendix),the confirmation hearing for the US Secretary of State and Treasury Secretary focused on the need for consultation with Congress and US allies, on Iran being non-compliant and on the goal of reaching a stronger and longer new deal. We view such statements as consistent with our assumption that the increase in Iran exports will remain moderate in 2021 (we assume 0.5 mb/d in 2H21) with in fact risks that our assumed full recovery in Iran production in 2Q22 proves optimistic. Delays in a full return of Iran production would reinforce our bullish oil outlook since we already forecast a tight 2022 crude market with low OPEC spare capacity. Stronger demand and a slower ramp-up in Iran production would create a larger call non shale production, which will face higher regulatory costs, leading to further increases in long-dated oil prices. The oil market experienced such an outcome in 2018, when the loss of Iran production and strong economic growth pushed oil prices sharply higher. As we argued at the time, the rally to $80/bbl Brent prices was necessary to bring high-cost Bakken barrels to the global market by rail. Notably, the potential halt to Dakota Access Pipeline flows could recreate such conditions incoming years (the pipeline may need a new Environmental Impact Study from the Army Corps of Engineers, which is led by a presidential appointee which could stay its operations). Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 25, 2021 Iraq Slashes Oil Output To Compensate For Overproduction By Irina Slav - Jan 25, 2021, 9:00 AM CST https://oilprice.com/Energy/Crude-Oil/Iraq-Slashes-Oil-Output-To-Compensate-For-Overproduction.html Iraq will pump less oil this month and next to make up for excess production last year, the deputy chief of SOMO, the oil marketing company of Baghdad. For both January and February, Iraq plans average daily output of 3.6 million barrels, Ali Nizar told Bloomberg in an interview. This would compare with 3.85 million barrels daily for December. Exports will also fall, to some 3 million bpd from 3.3 million bpd for December, as long as the Kurdistan Regional Government agrees to cut its oil output as well, Nizar said. The December export figure significantly exceeded Iraq’s own forecast for the month, which saw exports at 2.8 million bpd. Separately, Iraq reportedly plans to cut exports of crude to India, one of the world’s top three oil importers, to stay within its OPEC+ production quota. The news was unexpected, according to industry sources who spoke to Reuters last week, and involved supply cuts of between 10 and 20 percent to some Indian refiners. Iraq is OPEC’s second-largest producer and exporter and the biggest supplier of oil to India. However, the country has consistently failed to meet its production quota as agreed under the OPEC+ deal to control oil supply amid the pandemic. As a result, OPEC’s number-one, Saudi Arabia, threatened the laggard and its fellow quota violator Nigeria that it would start pumping more oil unless they got in line. Since then, the two have been trying, committing to deeper cuts than initially agreed to make up for the overproduction. With production capped, Iraq is struggling to maximize what it can export. Recently, the country struck a deal with a Chinese company to supply it with crude in exchange for an advance payment of $2 billion. Baghdad needs the money now to prop up its ailing economy that has yet to recover from the effects of the war with the Islamic State. By Irina Slav for Oilprice.com Irina Slav has a BA in English and American literature. She is an energy journalist by trade, and a writer of everything from horror to romance. https://pennyslayne.com/2019/02/13/author-interview-irina-slav/ 2020: The Year in Snapshots https://notbravenewworld.com/2020/12/29/2020-the-year-in-snapshots/#more-2376 Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 25, 2021 Oil Major BP Significantly Downsizes Oil Exploration Division By Tsvetana Paraskova - Jan 25, 2021, 10:00 AM CST https://oilprice.com/Energy/Crude-Oil/Oil-Major-BP-Significantly-Downsizes-Oil-Exploration-Division.html As part of its ambition to reduce oil and gas production and raise investments in clean energy, BP has been cutting staffing levels at its oil and gas exploration division since Bernard Looney became chief executive at the UK-based supermajor a year ago. The upstream division has seen the number of scientists, geologists, and engineers drop to fewer than 100 from 700 just a few years ago, after Looney—who was chief executive of BP’s Upstream before taking over as group CEO in February 2020—announced a new direction for the company, Reuters reported on Monday, quoting former and current employees at BP. According to those sources, hundreds of people from the oil and gas exploration teams from Houston to London have left the division in recent months. Some of them have been transferred to other divisions focused on clean energy, but others have been laid off. Looney announced a major restructuring drive at BP after taking over as CEO, becoming one of the first executives to say that the oil corporation he leads plans to become a net-zero company by 2050 and sooner. In support of that plan, and in the wake of the oil demand and oil price collapse in the pandemic, BP said last June that it would cut 10,000 jobs, or around 15 percent of its workforce, as it looks to cut costs and reinvent itself as an integrated energy company from an international oil company. A few months later, BP said it would boost its investment in low-carbon energy ten times to US$5 billion a year and reduce oil and gas production by 40 percent by 2030. Around three-quarters of the 10,000 job cuts BP announced will be layoffs, Reuters reported in October 2020, citing an internal memo and sources in the supermajor. Some 2,500 employees at BP have applied for voluntary redundancies, including 500 staff in senior roles, the memo seen by Reuters showed. The other three-quarters will be layoffs, many from office-based positions and from the oil and gas division, according to Reuters’ sources By Tsvetana Paraskova for Oilprice.com Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 25, 2021 Barclays: WTI To Average $52 In 2021 By Tsvetana Paraskova - Jan 25, 2021, 11:00 AM CST https://oilprice.com/Energy/Oil-Prices/Barclays-WTI-To-Average-52-In-2021.html Barclays expects the U.S. oil benchmark, WTI Crude, to average $52 per barrel in 2021, raising its outlook by $2 a barrel due to a weaker U.S. dollar and expected higher demand for winter fuels because of the cold snap in the northern hemisphere. The bank also lifted its view on the average Brent Crude price for this year by $2 per barrel, expecting it at $55, Reuters reported on Monday. The new forecasts are roughly the levels at which both benchmarks traded early on Monday, with WTI Crude at just above $52, and Brent Crude at $55.50. Barclays is more bullish on oil prices in the second half of this year, while for the first half, it still sees downside risks such as expanding Chinese lockdowns to fight resurging COVID cases. Nevertheless, “the COVID-19 shock, despite its acute effects on mobility demand, does not appear, at least for now, to have materially affected the oil supply-demand continuum,” Barclays said, as carried by Reuters. Transportation demand for oil is set to normalize by the end of this year, thanks to vaccinations and freight demand with fiscal stimuli around the world, according to the bank. The OPEC+ group is forecast to ease the cuts by 1.5 million barrels per day (bpd) in total during the second quarter of the year, while the alliance is also expected to release another 1.5 million bpd of oil on the market in the second half of 2021, Barclays says. Goldman Sachs is also bullish on oil this year, seeing oil prices supported by the upcoming massive economic stimulus package in the United States and the low probability of much Iranian oil returning to the global market. Goldman Sachs has been bullish on oil since the end of last year, seeing Brent Crude averaging $65 in 2021. Apart from a stronger economy in the United States this year, the U.S. investment bank expects that the issue with the Iranian nuclear deal will not be resolved soon. By Tsvetana Paraskova for Oilprice.com 1 Quote Share this post Link to post Share on other sites
Gerry Maddoux + 3,627 GM January 25, 2021 ^ Commerce has to resume at some point. If we keep going on this trajectory, shutting down every time someone sneezes, we're headed for another Great Depression. I think even California will eventually get the memo. Vaccination should be completed about June. By July we should see this virus truly descend to influenza status. The Roaring Twenties is coming. The consumption of aviation fuel is going to be phenomenal. And war is likely coming too. It just smells like it. I suspect we'll see oil prices a lot closer to $70 than $50 by the end of 2021. 1 2 1 Quote Share this post Link to post Share on other sites
Eyes Wide Open + 3,554 January 25, 2021 (edited) 3 hours ago, Gerry Maddoux said: ^ Commerce has to resume at some point. If we keep going on this trajectory, shutting down every time someone sneezes, we're headed for another Great Depression. I think even California will eventually get the memo. Vaccination should be completed about June. By July we should see this virus truly descend to influenza status. The Roaring Twenties is coming. The consumption of aviation fuel is going to be phenomenal. And war is likely coming too. It just smells like it. I suspect we'll see oil prices a lot closer to $70 than $50 by the end of 2021. Yes war is coming that I concur with, concur what a word. Biden is going back to the original formula Obama used. The End of BIG OIL. How he sells it this time the green revolution... Before one can have a green revolution in the US the demand needs to be created. Gas prices need to above $4.00 a gallon it is just that simple. When it does reach that level EV/HYBRID sales explode. DEMAND CREATION. For whatever reason the buying public does not go eco friendly until that bench mark is reached. While Telsa is enjoying a bubble market make no mistakes, Tesla is not main stream by any stretch of the imagination. How does that overly simple dynamic roll uphill? It is apparent US oil production will not enjoy the benefits, so who is left, there in lies the war. How will Iran fit into this picture, their nation is in dire straits, it would seem it is a matter of survival for them. Edited January 25, 2021 by Eyes Wide Open 3 Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 25, 2021 All Eyes Are On This Crucial Pipeline After KeystoneXL Got Axed By Tsvetana Paraskova - Jan 25, 2021, 12:00 PM CST https://oilprice.com/Energy/Energy-General/All-Eyes-Are-On-This-Crucial-Pipeline-After-KeystoneXL-Got-Axed.html The Trans Mountain expansion project has just become the most important oil pipeline project in Canada after U.S. President Joe Biden stopped the U.S.-Canada cross-border link Keystone XL. The expansion of Trans Mountain, which is set to nearly triple to 890,000 bpd the pipeline capacity from Alberta to the Vancouver coast, is currently expected to come online in December 2022. With Keystone XL dead, Trans Mountain—a project now owned by the federal government of Canada—is Alberta’s best chance to get its landlocked oil to major markets, including the fast-growing markets in Asia Pacific. While Alberta is still reeling from President Biden’s decision to revoke Keystone XL’s Presidential permit, analysts and stakeholders see the Trans Mountain oil project as the crucial project that could boost the fortunes of Canada’s oil industry in the medium term. The renewed attention on Trans Mountain, which Canada’s government bought from Kinder Morgan in 2018, would likely make the completion of the Alberta-British Columbia link more urgent for the federal government, analysts say. Other experts warn that the Keystone XL demise would embolden protests and opposition to Trans Mountain. So the Trans Mountain project is now the focus of both the pro-pipeline and anti-pipeline camps in Canada. The Trans Mountain expansion project is “really the only practical option left for increasing pipeline takeaway capacity and there should be a clear statement from the federal government that they’re committed to its completion,” Dennis McConaghy, a former executive vice-president of Keystone developer TC Energy, told Bloomberg in an interview last week. The Canadian government doesn’t plan to hold onto its ownership of Trans Mountain and is set to divest it once there are few risks to its completion. Indigenous groups are interested in buying stakes in the project and are holding consultations with the federal government. “This pipeline is even more valuable now,” Joe Dion, chief executive of Western Indigenous Pipeline Group, one of the First Nations groups that could buy into Trans Mountain, told Reuters. The killing of Keystone XL could make the business case of the proponents of Trans Mountain stronger. Trans Mountain has secured committed 20-year contracts of up to 80 percent of the pipeline capacity. Contract utilization and spot utilization are expected at full capacity in the initial years of the pipeline’s operations, Canada’s Parliamentary Budget Officer Yves Giroux said in a report last month. The report was still considering that Keystone could go ahead, although it acknowledged the possibility of President Biden scrapping the project. Without Keystone XL, Trans Mountain could receive more commitments for crude oil shipment, analysts say. “The Government’s decision to acquire, expand, operate, and eventually divest of the Trans Mountain Pipeline System continues to be profitable,” Giroux said in the December report. In the reference case, the net present value (NPV) of the Trans Mountain system is now US$473 million (C$600 million), the PBO analysis shows. But if the pipeline utilization were to increase by 5.0 percentage points, then the NPV rises to US$709 million (C$900 million). “However, the profitability of the assets is highly contingent on the climate policy stance of the federal government and on the future utilization rate of the pipeline,” the Parliamentary Budget Officer said. Right now, the pipeline is profitable with the current climate policy of the federal government, the officer says. The end of Keystone may not be all bad news for Canada, energy expert Werner Antweiler told Canadian media after reports emerged that President Biden would kill the cross-border pipeline on his first day in office. “It may be positive news as there’s some competition between these two routes, and if it increases the value of the trans mountain line that’s probably actually not bad news for the federal government,” Antweiler said. Some analysts question the rationale for Keystone XL, after oil demand collapsed, prices crashed, and Canadian pipelines ended up with more capacity for crude oil than producers were actually shipping. “If Keystone XL had gone ahead as TC had hoped, there might have been excess pipeline capacity for exports out of Alberta by 2023,” Ed Crooks, Vice-Chair Americas at Wood Mackenzie, wrote last week. Yet, even after Keystone’s demise, no one expects Trans Mountain to be smooth sailing. As much as it could become a priority for the federal government to get it completed, the project could end up being the focus of more anti-pipeline campaigns, protests, and lawsuits. By Tsvetana Paraskova for Oilprice.com Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 25, 2021 U.S. Shale Industry Accelerates As Oil Prices Rise https://oilprice.com/Energy/Crude-Oil/US-Shale-Industry-Accelerates-As-Oil-Prices-Rise.html [Article gives information on DUCs and the relevance] Ending paragraphs If a fracking increase materializes, DUC wells from 4Q19-1Q20 will be completed faster, but it will also require the industry to increase rig counts quicker to achieve a smoother transition from a DUC-driven activity phase to a normal operational mode. In other words, this scenario is possible, but it will require an increase in the reinvestment rates from what operators have currently budgeted for 2021. Given the current environment of capital discipline and focus on free cash flow generation, we expect the industry to largely stick with its original fracking programs in the first half of the year, but probably allocate some additional capex to a more significant increase in the rig count. This will result in an upside in frac activity from the second half of the year, and certain deviations from the maintenance program will be visible toward the end of the year, assuming that WTI holds above the $50 per barrel mark. By Rystad Energy Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 25, 2021 The Surprising Rise And Fall Of A Shale Superstar By Haley Zaremba - Jan 25, 2021, 4:00 PM CST https://oilprice.com/Energy/Energy-General/The-Surprising-Rise-And-Fall-Of-A-Shale-Superstar.html In many ways, the roller-coaster-like trajectory of Vicki Hollub’s shale CEO career is emblematic of the boom-and-bust, spectacularly dramatic history of the West Texas Permian basin as a whole. When Hollub took over Occidental in 2016, the unbridled enthusiasm for the shale revolution that catapulted the United States to the top of the global oil production food chain was already fading. In 2019, she had made her relatively small company one of the biggest and most buzzed-about oil firms in the country. Now, she’s a cautionary tale. While the Permian Basin was still producing absolutely jaw-dropping amounts of oil and gas when Hollub stepped into her CEO role at Occidental (in April 2019, the shale play generated a whopping 4.1 million barrels a day, surpassing even Saudi Arabia’s monster Ghawar field to become the largest producing area in the world), investors were already becoming wary of the financial aspects of the fracking boom. Fracking is expensive and depends on high oil prices to be profitable--something that’s far from guaranteed in a sector as volatile as oil and gas. What ensued was a major U.S. shale sector slump, accompanied by a flurry of mergers and acquisitions all around West Texas and New Mexico. For Occidental, this meant that they needed to either grow or get eaten by bigger fish. Hollub started eyeing acquisition options, setting her sights on a major purchase: Woodlands, Texas-based Anadarko Petroleum, beating out the much bigger and much deeper pockets of Chevron to do so. “On paper, merging with Anadarko made sense: with the addition of its assets in Colorado, New Mexico, and Texas, Occidental could become the largest operator in the Permian and the third-largest U.S. oil company,” recalls Texas Monthly. Hollub was hailed for her assertive acquisition as a maverick. Occidental was celebrating the “deal of the century” and the company’s overnight transformation from second-tier to the same echelon as Exxon. But the celebratory headlines were short lived and premature. Whether the result of hubris on the part of Hollub and Occidental or simply bad luck and worse timing, the ill-fated $38 billion takeover was a disaster almost as soon as the deal was inked. The novel coronavirus had already begun to spread, Saudi Arabia and Russia were feuding, oil supply was becoming dangerously bloated, and oil demand was under major stress. For a business model that relies on oil prices around $50 or $60 a barrel, it was a recipe for disaster. In the space of a year, she went from superhero to supervillain for her missteps and miscalculations. “She destroyed tens of billions of dollars of shareholder value,” Matrix’s David Katz told Texas Monthly. “She destroyed more value in oil and gas than any CEO out there.” But while Occidental’s story is particularly grim, Hollub is nothing if not a microcosm of a much larger death rattle emanating from the Permian Basin. It turns out that, back in 2016, investors were right to get spooked by the high overhead and low margin of error for the Permian Basin. While few if any could have anticipated a global disaster the magnitude of the COVID-19 pandemic, it’s been clear for a long time now that the shale revolution is in decline. Whether due to supply or demand, peak oil has been a very real spectre on the horizon. It’s here a little sooner than expected, but it was always expected. While shale CEOs are counting on the world relying on their product for another 30 years or so, a spectacular decline is inevitable. In the meantime, they might consider investing in the wind farms springing up all around them.By Haley Zaremba for Oilprice.com Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN January 26, 2021 Saudi Arabia Is On The Brink Of Losing Control Of Oil Markets By Irina Slav - Jan 25, 2021, 7:00 PM CST https://oilprice.com/Energy/Energy-General/Saudi-Arabia-Is-On-The-Brink-Of-Losing-Control-Of-Oil-Markets.html When earlier this month Saudi Arabia served “a wonderful surprise” to oil markets in the words of its energy minister, oil prices jumped up. After all, the Kingdom said it would cut an additional 1 million bpd from its oil output to keep prices higher. But then Iran started ramping up its production, eyeing a rebound in exports to more than 2 million bpd. Prices were quick to fall. What’s next for OPEC’s leader? The outlook for oil demand remains pessimistic, according to the International Energy Agency. In that sense, Saudi Arabia’s decision to further cut production was the right thing to do. However, lower production means lower exports, and lower exports mean lower oil revenues. The latest data, for November, shows that Saudi exports took a dive of more than 25 percent, to some $15.5 billion from $21.54 billion a year ago. But oil exports specifically did a lot worse, dropping by almost 40 percent on the year in November. To be fair, the oil demand outlook has somewhat improved since November, what with all the vaccines against Covid-19 that are being rolled out. These lent support to prices and consequently to Saudi Arabia’s budget. The optimism, however, began to fade as it became clear the rollout will not happen as quickly as hoped. But just as benchmarks began to retreat, the wonderful surprise came from Riyadh to reverse the fall. As is often the case whenever Saudi Arabia and OPEC cut production, there has been talk that U.S. shale producers might take advantage of this to boost their own output, undermining the cartel effort. For now, it seems U.S. shale drillers are too cautious to start boosting production at pre-pandemic rates. Prices are higher, but nobody knows how long they will remain higher. So, shale drillers are hedging their future production at current prices rather than rushing to add rigs. And yet this may change and before too long. Earlier this month, the head of the IEA, Fatih Birol, remarked that a lot of shale oil is profitable at current prices. Cautiousness may be in order, but shale drillers have debts to pay down, which might force some to boost production as it did after the last price crisis. Meanwhile, one of the world’s largest importers of oil is complaining about the “whatever it takes” approach employed by OPEC. India does not want higher oil prices, not when it imports more than 80 percent of the oil it consumes. A lot of it comes from Iraq, but Saudi Arabia is the country’s second-largest supplier of crude, which makes it a key market. And yet, the Kingdom recently lifted its official selling prices for this key market and others in Asia. The “whatever it takes” approach has worked well in the past, up to a point. After that point, it starts working against its originator. Saudi Arabia is tackling a deepening deficit, an international green transition drive that seeks to make its main export commodity obsolete, and it faces a potential full return of its archenemy Iran on the international oil scene. There aren’t many options. Economic diversification is still on the table, of course. The Vision 2030 plan of Crown Prince Mohammed is still active, with the latest update on it regarding the futuristic NEOM project, worth $500 billion, that will feature a smart city that is emissions-free. The price tag of the city: $100-200 billion. Meanwhile, however, Saudi Arabia commissioned zero solar projects last year. Plans were to commission over 1 GW in new capacity as the Kingdom works to hit its own ambitious renewable energy targets. Yet none was actually built because Riyadh tried to renegotiate the price tag of the project with its developer, leaning on dropping solar tariffs in the region, PV Magazine’s Max Hall reported earlier this month. At the same time, the Kingdom’s sovereign wealth fund, the PIF, has plans to invest $40 billion annually in domestic projects in a bid to prop up the ailing economy. That would compare with $15.5 billion invested in 2019, according to the Financial Times. The PIF has some $400 billion in reserves. Its governor, Yasir a-Rumayyan, told the FT that the fund will rely on a mixture of its own equity, loans, and bonds to finance all the projects it has in mind. The official narrative is that there is money for all the projects. Analysts, however, doubt that. “It’s very difficult to see how the money stretches out, not only to go into Neom but into all the other megaprojects and ambitions they have,” one analyst told the FT. “If they get to half of what they are expecting, great. But at the moment, there’s a credibility gap between what is being said and what is being done.” So, demand for Saudi Arabia’s main export product remains weak, and this may become a long-term trend if green transition efforts are successful. Competition is intensifying, meanwhile, and economic diversification is proving to be more challenging than the architect of Vision 2030 may have initially thought. There isn’t a whole lot the Kingdom could do in these circumstances. In fact, the only sensible thing it can do is keep the restraints on its production. A reversal of the restrain approach will certainly hurt Saudi Arabia’s rivals in the oil market, but it may just hurt it more. By Irina Slav for Oilprice.com Quote Share this post Link to post Share on other sites
Tomasz + 1,608 January 26, 2021 Quote If you went into a coma on this day in 2020, you would wake up to a world different, but quite similar, except you don’t see a lot of teeth everyday. For our 100th episode, we invited Art Berman back to refresh our views with his outlook on oil and natural gas prices. Things have changed a lot since the vaccine news in November and prices have moved from a low of $1.74 and $35 to where we sit today at $2.50 and $52. Art is a fundamentalist who looks at comparative inventory to take a view. He walks us through his thinking and I’ll leave it to you to make the bet: Up, down or sideways from here? Only time will tell, but it certainly looks more bullish. Now, if only US producers can stay disciplined… #hottakeoftheday podcast Episode 100 w/Art Berman Quote Interview 1 Quote Share this post Link to post Share on other sites
Rob Kramer + 696 R January 26, 2021 crAPI oil -5.3MM barrels EIA better tm? Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 2, 2021 WTI Breaks $55 For The First Time Since January 2020 By ZeroHedge - Feb 02, 2021, 11:00 AM CST https://oilprice.com/Energy/Crude-Oil/WTI-Breaks-55-For-The-First-Time-Since-January-2020.html Join Our Community Did the 'Reddit-Raiders' suddenly shift their crosshairs onto the energy complex? The last few days have seen WTI Crude surge over 6%... ...topping $55 this morning for the first time since Jan 2020. Source: Bloomberg The catalysts for the move is uncertain amid mixed data from OPEC - on the bullish side, compliance with planned cuts was extremely high; on the bearish side, the cartel cuts its oil demand growth outlook to 5.6mm b/d (down from previous 5.9mm b/d), but back on the bullish side, the Saudis and their friends see the oil market in deficit by Q2. Related: Tesla’s 20 Million EV Ambition Faces Huge Mining Challenge Citing an internal OPEC document, Reuters reported on Tuesday that the organization lowered its oil demand growth forecast to 5.6 million barrels per day (bpd) for 2021 from 5.9 million bpd in January's report. Additional takeaways: "OPEC+ panel sees global oil demand at 97.9 million bpd in December 2021 under the base scenario." "Under the base case scenario, the oil market deficit is expected to reach a peak of 2 mln bpd in May." "Under the alternate, lower demand scenario, market is expected to flip into 600,000 bpd surplus in April 2021 and 100,000 bpd surplus in December 2021." And on the other side of the ledger, OilPrice.com's Irina Slav notes that OPEC+ members complied almost completely with their production cut quotas last month, an unnamed source from the extended cartel told Bloomberg. At 99 percent, according to the source, the compliance level was based on preliminary estimated, to be reviewed tomorrow by the Joint Technical Committee of the group. OPEC+ agreed to cut 7.2 million bpd in combined production in January, in what was widely seen as a compromise decision for aggressive cutters like Saudi Arabia and more reluctant ones like Russia, which proposed adding 500,000 bpd to the group’s production each month between January and April. For February and March, the cartel agreed to keep production cuts at 7.2 million bpd. This may change after tomorrow’s meeting but is not very likely. Global demand has been on the mend but so has supply. Therefore, chances are that OPEC+ will stick to its current production cut levels, with Saudi Arabia unilaterally cutting an additional 1 million bpd to keep prices higher. Meanwhile, however, OPEC’s overall oil production rose in January, according to a Reuters survey, for the seventh month in a row. That’s despite Saudi Arabia’s deep cuts and Iraq’s compensatory output reductions that the country said it would implement in January and February to make up for its non-compliance last year. “The increase is natural with the higher production ceiling from January,” one OPEC delegate told Reuters. Interestingly enough, the biggest additions to OPEC’s total for January came from Saudi Arabia and Iraq despite their commitments, the survey found. The third-largest output growth came from Iran, which is ramping up both production and exports in anticipation of the Biden administration lifting sanctions. Meanwhile, U.S. producers are being cautious. Production is still around 11 million bpd as drillers wait for higher prices for longer before they start ramping up. A set of Biden executive orders, meanwhile, have restricted new drilling, which would eventually have a positive effect on prices, and we may see the start of a production ramp-up later this year. All in all, slowly but surely, the oil market is crawling towards rebalancing. It won’t happen quickly, and there will almost certainly be setbacks amid the emergence of new coronavirus variants that medical experts warn appear to be more highly contagious and possibly more deadly than the original strain. Yet if OPEC+ sticks with its cuts and vaccinations progress, despite the challenges, the world—and oil demand—will start to return to normal before this year’s end. By Zerohedge.com Quote Share this post Link to post Share on other sites
El Nikko + 2,145 nb February 2, 2021 On 11/25/2020 at 2:00 AM, Dan Clemmensen said: Yep, that looks strange. I assume its some sort of technical issue such as a short squeeze. NO The dollar has been devalued significantly over the last year or is everyone still asleep at the wheel? This is the time when commodities increase, it's happened before but because oil was so depressed due to other reasons it didn't make the same kind of gains as metals etc. 2 2 Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 3, 2021 Oil Rebounds On Bullish API Inventory Data By Julianne Geiger - Feb 02, 2021, 3:43 PM CST https://oilprice.com/Latest-Energy-News/World-News/Oil-Rebounds-On-Bullish-API-Inventory-Data.html The American Petroleum Institute (API) reported on Tuesday a draw in crude oil inventories of 4.261 million barrels for the week ending January 29, along with gasoline, distillate, and Cushing draws as well. Analysts had predicted an inventory build of 446,000 barrels for the week. In the previous week, the API reported a draw in oil inventories of 5.272-million barrels, after analysts had predicted a small build of 430,000 barrels. Oil prices were trading up on Tuesday ahead of the data release as the market heads further in backwardation territory and as traders view OPEC's adherence to its promised production quotas with renewed optimism. A half-hour before Tuesday's data release, WTI had risen by $1.20 on the day (+2.24%) to $54.75, up $2.25 since this time last week. The Brent crude benchmark had risen on the day $1.17 at that time (+2.08%) to $57.52—up $1.70 on the week. U.S. oil dipped 100,000 bpd a day, to 10.9 million bpd, according to the Energy Information Administration, ending a six-week streak of 11 million barrels daily. Despite some views that the market fundamentals are looking up for oil, few are expecting a quick rebound in U.S. oil production. The API reported a draw in gasoline inventories of 240,000 barrels for the week ending January 29—compared to the previous week's 3.058-million-barrel build. Analysts had expected a 1.134-million-barrel build for the week. Distillate stocks saw a decrease of 1.622 million barrels for the week, adding onto last week's 1.398-million-barrel increase, while Cushing inventories fell by 1.885 million barrels. Post data release, at 4:33 p.m. EDT, the WTI benchmark was trading at $54.86, while Brent crude was trading at $57.62. By Julianne Geiger for Oilprice.com Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 3, 2021 Oil Prices Inch Lower On EIA Crude Inventory Report By Irina Slav - Feb 03, 2021, 9:36 AM CST https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Rise-On-EIA-Inventory-Report.html Crude oil prices fell slightly today after the Energy Information Administration reported a crude oil inventory draw of 1 million barrels for the last week of January. Fuel inventories were mixed. A day earlier, the American Petroleum Institute estimated crude oil inventories had fallen by 4.26 million barrels in the reporting period. The EIA estimate compared with a build of 4.4 million barrels reported for the third week of January and analyst expectations for a modest build of 367,000 barrels. In gasoline, the EIA reported a build of 4.5 million barrels for the seven-day period, with production averaging 8.4 million bpd. This compared with a decline of 300,000 bpd a week earlier and production averaging 8.9 million bpd. In middle distillates, the EIA reported inventories remained virtually unchanged on the week, with production averaging 4.6 million bpd. Distillate inventories are about 8 percent above the five-year average. This compared with an inventory build of half a million barrels for the previous week and production averaging 4.5 million bpd. Oil prices have been on a steady rise recently, with West Texas Intermediate topping $55 per barrel for the first time in about a year and Bent climbing close to $60 a barrel. The immediate reason for the rally was a high compliance rate with production cuts in OPEC+, a wide stock market rally, and a weaker dollar, which made commodities cheaper for international buyers. Shell, for one, made headlines this week by buying the most Brent cargoes on Monday in a decade, according to Bloomberg. The company also bid for another seven cargoes in the latest sign of improving oil demand. The outlook is also bullish, with the futures price trend suggesting tighter oil supply on global markets. Forecasts are also getting increasingly optimistic, with Goldman Sachs analysts recently saying they expected oil demand to rebound to 100 million bpd as soon as this year. At the time of writing, Brent crude was trading at $58.49 a barrel, and West Texas Intermediate was changing hands at $55.93, both up from opening, but below session highs. By Irina Slav for Oilprice.com Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 3, 2021 Big Oil Books One Of Worst Years On Record By Charles Kennedy - Feb 03, 2021, 11:00 AM CST https://oilprice.com/Energy/Energy-General/Big-Oil-Books-One-Of-Worst-Years-On-Record.html Big Oil recorded one of its worst years in history because of the coronavirus pandemic that pushed their financial results deep into negative territory. Earlier this week, BP reported a net loss of $5.7 billion for 2020, citing oil and gas price weaknesses and demand destruction by the pandemic. Exxon, for its part, booked the biggest loss in its modern history, at $20 billion, including an impairment charge of $19.3 billion. “The past year presented the most challenging market conditions Exxon Mobil has ever experienced,” Exxon’s chief executive Darren Woods said, as quoted by the Wall Street Journal. Indeed, things must have been tough for the biggest U.S. oil companies—reports emerged earlier this week that Exxon had discussed a merger with peer Chevron. Meanwhile, everyone was cutting costs by shedding non-core assets and tightening capital spending plans. The energy industry was among those hardest hit by the pandemic, along with real estate and financial services. However, unlike other industries, the oil and gas sector also faces growing pressure from regulators and shareholders to make bigger commitments to a lower-carbon future. BP, for instance, has pledged to cut its oil and gas production by 40 percent by 2030, and Exxon just announced it would set up a Low Carbon Solutions unit to commercialize plans for more than 20 new carbon capture and sequestration (CCS) opportunities around the world. All Big Oil majors have made commitments, the European ones generally more ambitious than their U.S. peers. “An unprecedented demand collapse has forced the hand of Big Oil to right-size their dividends and capital frames; meanwhile plans for energy transition have been accelerated,” said JP Morgan analyst Christyan Malek, as quoted by the Wall Street Journal. On the flip side, demand for oil is beginning to improve, and some expect it to rebound to pre-pandemic levels before this year’s end thanks to mass vaccination and the consequent—albeit gradual—return to a semblance of pre-pandemic normal. By Charles Kennedy for Oilprice.com Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 3, 2021 China’s Oil Storage Levels Are Falling In Early 2021 By Tsvetana Paraskova - Feb 03, 2021, 9:00 AM CST https://oilprice.com/Energy/Energy-General/Chinas-Oil-Storage-Levels-Are-Falling-In-Early-2021.html Crude oil inventories in China have accelerated their decline in recent weeks, Bloomberg reported on Wednesday, quoting data analytics company Kayrros. At this time last year, Chinese stocks stood at 856 million barrels, according to Kayrros, which compiles and analyzes satellite data. At the start of this month, inventories stood at around 990 million barrels, down from a peak of 1 billion barrels last September, the data cited by Bloomberg showed. The decline in crude oil stocks in recent weeks is bullish for oil prices as it suggests that the market has accelerated the inventory drawdown. According to Kayrros, “COVID-19 has accelerated a rebasing of Chinese stocks also led by new storage capacity, new refining capacity, and a renewed focus on import independence and energy security,” co-founder Antoine Halff said. China’s inventory build last year was initially led by demand after the Chinese lockdowns ended, and then stocks increased because of soaring crude oil imports, Kayrros said in a report. “China effectively served as a sink for the world’s excess production at a time when other consumers cut back on imports and started drawing down inflated inventories,” the company said. The expansion of China’s storage capacity and the efforts to have more stocks to ensure energy security has likely reset China’s baseline for inventories at a higher level, said Kayrros, noting that a drop from the current levels—albeit still high—would “likely be more bullish for prices than would have been the case in the past.” Alongside faster onshore stock drawdowns in China and elsewhere in the world, floating storage has also started to shrink at a faster pace. Global floating oil storage declined at a fast pace in December as traders sold crude held on tankers in the absence of price incentives to store it, and in order to meet peak winter demand in Asia, analysts and sources at trading firms told Reuters last month. By Tsvetana Paraskova for Oilprice.com Quote Share this post Link to post Share on other sites
Tomasz + 1,608 February 3, 2021 Quote The OPEC + technical committee predicts that commercial oil reserves in the world in 2021 will decline by an average of 1.1 million barrels per day and will fall below the five-year average in June, Bloomberg reported, citing the committee's report. "The OPEC + Technical Committee predicts that the commercial oil reserves of the OECD countries will fall below the five-year average in June, according to the report compiled by the experts. The Joint Technical Committee (JTC) of OPEC + estimates that in 2021 world oil reserves will decrease by an average of 1.1 million barrels per day. The technical committee proceeds from the assumption that OPEC production will increase by 0.5 million barrels per day per month from April to June, "- said in a statemeBringing commercial reserves of oil and petroleum products in the world to the average five-year level was designated as the goal of the OPEC + deal. Of all the reserves, the parties to the agreement are most actively tracking stocks in the countries of the Organization for Economic Cooperation and Development (OECD). The technical committee is assessing the market situation ahead of the ministerial monitoring committee meeting on Wednesday. In January, the OPEC + countries agreed on production agreements for February and March - production, and only Russia and Kazakhstan will slightly increase, as a result, the overall reduction in the deal will soften to 7.125 million barrels per day in February and 7.05 million in March. The baseline for these reductions is October 2018, and for Russia and Saudi Arabia - 11 million barrels per day. At the same time, Saudi Arabia in these months on a voluntary basis is additionally reducing production by 1 million barrels per day compared to January. A number of OPEC + countries will also cut their production, and taking into account their participation, the total reduction by January is 1.425 million barrels per day. And if we compare it with the baseline of the OPEC + transaction, then in February we get a reduction of 8.55 million barrels per day (from May 2020 it was by 9.7 million, from August - 7.7 million, from January - 7.2 million ). 2 Quote Share this post Link to post Share on other sites
El Nikko + 2,145 nb February 4, 2021 (edited) Does anyone know where to find historical Saudi oil inventories, I had a chart somewhere but can't find it. Historically Saudi has never produced more than 10 million bbl per day until the war on Shale/Russia (which ever take you want...or both) in 2015 and I'm sure the chart I had showed that their inventories had been falling since then which indicates they are not able to produce much more over 10 million bbl/day and were just selling off inventories to depress prices. Since the 90s they've generally produced 8-10 million bbl/day. When I worked there roughly a decade ago they were drilling a lot of wells in the ZULF field which were channel sand deposits and quite hit and miss because the oil bearing sands would just pinch out and disappear due to the geology. That indicates they were targeting more complex reservoirs probably because they'd exhausted some of the easy to drill stuff. Edited to show Saudi's production of the decades, you would think they had the best production capability 10-30 years back...maybe more. Edited February 4, 2021 by El Nikko 2 1 Quote Share this post Link to post Share on other sites
Tomasz + 1,608 February 4, 2021 Quote Big Oil recorded one of its worst years in history because of the coronavirus pandemic that pushed their financial results deep into negative territory. Earlier this week, BP reported a net loss of $5.7 billion for 2020, citing oil and gas price weaknesses and demand destruction by the pandemic. Exxon, for its part, booked the biggest loss in its modern history, at $20 billion, including an impairment charge of $19.3 billion. “The past year presented the most challenging market conditions Exxon Mobil has ever experienced,” Exxon’s chief executive Darren Woods said, as quoted by the Wall Street Journal. Indeed, things must have been tough for the biggest US oil companies—reports emerged earlier this week that Exxon had discussed a merger with peer Chevron. Meanwhile, everyone was cutting costs by shedding non-core assets and tightening capital spending plans. The energy industry was among those hardest hit by the pandemic, along with real estate and financial services. However, unlike other industries, the oil and gas sector also faces growing pressure from regulators and shareholders to make bigger commitments to a lower-carbon future. BP, for instance, has pledged to cut its oil and gas production by 40 percent by 2030, and Exxon just announced it would set up a Low Carbon Solutions unit to commercialize plans for more than 20 new carbon capture and sequestration (CCS) opportunities around the world. All Big Oil majors have made commitments, the European ones generally more ambitious than their U.S. peers.An unprecedented demand collapse has forced the hand of Big Oil to right-size their dividends and capital frames; meanwhile plans for energy transition have been accelerated,” said JP Morgan analyst Christyan Malek, as quoted by the Wall Street Journal. On the flip side, demand for oil is beginning to improve, and some expect it to rebound to pre-pandemic levels before this year’s end thanks to mass vaccination and the consequent—albeit gradual—return to a semblance of pre-pandemic normal Crude prices continued to rally after hitting their highest level in over a year, as production cuts by Russia and Saudi Arabia in an effort to boost the pandemic-hit market were bolstered by a global drawdown in inventories. Both international benchmark Brent and West Texas Intermediate (WTI) advanced over one percent on Wednesday, trading at $58.18 per barrel and $55.44 per barrel respectively. The increase paves the way for another highest-closing record since the start of 2020. Brent and WTI have climbed sharply since last year's historic lows triggered by the coronavirus pandemic. In one month alone, oil prices jumped by more than 10 percent. The recent rally comes on the heels of bullish data from the American Petroleum Institute (API). US crude oil inventories shed some 4.3 million barrels last week, marking a seventh decline in eight weeks. Meanwhile, crude stockpiles in one of the biggest global oil importers, China, tumbled to their lowest level since last February, Bloomberg reports, citing market intelligence firm Kayrros.Global energy markets were also supported by the latest supply cuts by Saudi Arabia, which came into force in February. Last month the kingdom announced its intention to slash oil output by one million barrels a day until the end of March. Riyadh’s cuts came on top of the existing production restrictions agreed by the Organization of the Petroleum Exporting Countries (OPEC) and allied producers led by Russia, together known as OPEC+. “With the crude oil market currently switching into backwardation, we are hopeful that 2021 will be a good year for overall demand,” OPEC Secretary General Mohammad Sanusi Barkindo said, as the OPEC+ technical panel met on Tuesday. I allowed myself to emphasize why oil prices cannot be as low as in 2020 - emphasize first. And the second emphasis is about China - rare information about Chinese stocks is very important, so it's worth branding it why oil prices will be higher in 2021 than 2020. 1 Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 6, 2021 (edited) Energy Commodities Rally: Oil Nears $60, Natural Gas Jumps Above $3 By Tsvetana Paraskova - Feb 05, 2021, 11:30 AM CST Oil prices were closing in toward $60 a barrel early on Friday, set for the biggest weekly gain since October, while the U.S. natural gas price jumped above $3 per million British thermal units (MMBtu) as a cold snap sweeps across the United States. As of 9:14 a.m. ET on Friday, WTI Crude prices were up 1.30 percent at $57.02, while Brent Crude was trading at $59.60 per barrel, up 1.22 percent on the day and nearing the $60 threshold. Supported by a tightening market and increased risk appetite, oil prices were on track on Friday to post their third consecutive weekly gain. This week’s gain would also be the largest weekly increase in oil prices since October last year. The price of oil has rallied by more than 50 percent since October after vaccine approvals and rollouts began in November. Commenting on this week’s oil price rally, ING strategists Warren Patterson and Wenyu Yao said on Friday: “With Covid-19 cases now declining in certain regions, including the US and the UK, there will be a glimmer of hope that the worst is now behind us, particularly as the rolling out of vaccinations picks up.” Natural gas prices are also having a bullish week, as frigid cold is starting to grip the United States and as the latest EIA natural gas inventory report showed a larger-than-expected weekly withdrawal from working gas in storage. The U.S. Henry Hub price broke above $3/MMBtu on Thursday and continued to gain on Friday, rising 3.00 percent at $3.019 at 9:14 a.m., as natural gas demand in the U.S. is expected to be very high in coming days. Gas prices sank in the afternoon, however, trading at 0.02% down on the day around noon. “A frigid cold shot will push into the Rockies and Plains today, then spread across the rest of the northern and eastern US this weekend w/ lows of -20s to 20s for strong national demand. A more impressive Arctic blast will follow late next week across the northern and central US w/lows of -30s to 20s,” NatGasWeather.com said on Friday. “Overall, national demand will be HIGH into early next week, then VERY HIGH late next week,” according to the forecast. By Tsvetana Paraskova for Oilprice.com Edited February 6, 2021 by Tom Nolan Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 6, 2021 U.S. Rig Count Jumps Amid Rising Oil Prices By Julianne Geiger - Feb 05, 2021, 12:12 PM CST https://oilprice.com/Energy/Energy-General/US-Rig-Count-Jumps-Amid-Rising-Oil-Prices.html Join Our Community Baker Hughes reported on Friday that the number of oil and gas rigs in the United States rose by 8 last week. The total number of active oil and gas rigs in the U.S. is now 392—or 398 less than this time last year. The oil and gas rig count has risen for eleven weeks in a row for a total gain of 82. The oil rig count increased by 4 this week, and the number of gas rigs also rose by 4. The number of miscellaneous rigs remained unchanged. The EIA’s estimate for oil production in the United States for the week ending January 29 was 10.9 million barrels—still 2.2 million bpd off the all-time high reached last March, but above the 2020 low reached on August 28 last year of 9.7 million bpd. Canada’s overall rig count decreased this week by 3. Oil and gas rigs in Canada are now at 171 active rigs and down 86 year on year. The Permian basin saw an increase in the number of rigs by 6 this week, bringing the total active rigs in the Permian to 198, or 207 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 up on Friday due to the tightening market and are on track to record its third weekly gain. At 12:31 p.m. EDT, WTI was trading up 1.01% on the day at $56.80—up more than $4 per barrel on the week. Brent was trading up 0.93% on the day, at $59.39 $55.96, up nearly $3.50 for the week. At a few minutes post-data release, WTI was trading at $56.80, while Brent was trading at $59.36. By Julianne Geiger for Oilprice.com Quote Share this post Link to post Share on other sites
Tom Nolan + 2,443 TN February 6, 2021 Oil Surges Towards $60 https://oilprice.com/Energy/Energy-General/Oil-Surges-Towards-60.html By Tom Kool - Feb 05, 2021, 1:00 PM CST Join Our Community Brent is closing in on $60 per barrel for the first time since January 2020, fueled by declining inventories in the U.S. and China and production constraints Friday, 5 February, 2021 Brent is closing in on $60 per barrel for the first time since January 2020. Crude inventories in both China and the U.S. declined this week, offering more evidence of a tightening market. “The physical market is also looking increasingly tight,” said Eugen Weinberg, head of commodities research at Commerzbank AG. Shell profits drop, but boosts dividend. Royal Dutch Shell (NYSE: RDS.A) reported a $4.8 billion profit for 2020, down 71% from the year before. The oil major hiked its dividend for the first quarter, following a sharp cut last year. “We are coming out of 2020 with a stronger balance sheet,” Chief Executive Ben van Beurden said in a statement. Shell sees oil demand back to “normal” in 2022. “I believe 2022 is going to be sort of back to normal” regarding global oil demand, CEO Ben van Beurden said. However, that depends on the aviation sector experiencing a full recovery. Oil surges as OPEC+ keep cuts in place. Saudi Arabia kept oil shipments to Asia unchanged even as the market has tightened, sending oil prices higher this week. “It looks like, at every turn, Saudi seems to want to support the market,” Michael Hiley, energy trader with LPS Futures, told Bloomberg. “If demand really picks up, we could be short oil pretty quickly, because U.S. production isn’t going to come back fast.” At the same time, division may increase between OPEC+ members as prices continue to rise. Engine No. 1 pans Exxon strategy. Engine No. 1, an investment firm that has taken a large stake in ExxonMobil (NYSE: XOM) and has sought changes to the board and to corporate strategy, criticized the oil giant’s leadership and issued a statement lambasting the company’s latest moves as insufficient. “A Board that has underperformed this dramatically and defied shareholder sentiment for this long has not earned the right to choose its own new members or pack itself in the face of calls for change,” Engine No. 1 said. The firm said that Exxon’s current course ensures “continued value destruction.” Related: South Korea To Build World’s Largest Offshore Wind Farm Supreme Court to hear pipeline case. The U.S. Supreme Court will hear a high-profile case involving the use of eminent domain. The PennEast Pipeline Co. LLC is looking to condemn land in Pennsylvania from private citizens in order to build the project that would carry shale gas to refineries on the east coast. The case could have broad repercussions over how energy companies can use eminent domain. Biden restarts Vineyard wind. The Biden administration said on Wednesday it would restart permitting for the first major U.S. offshore wind farm, after the Trump administration froze the process. Biden DOE nominee advances. Jennifer Granholm, nominated to head the Department of Energy, easily cleared a committee vote, suggesting she will have little trouble earning confirmation. She voiced support for U.S. LNG exports even as she championed climate action. Ford to double EV investment. Ford (NYSE: F) said it would spend $22 billion on EVs through 2025, twice its earlier plan. Apple to invest $3.6 billion into Kia Motors. Kia Motors (KRX: 000270) surged nearly 15% after local media reported that Apple (NASDAQ: AAPL) would invest $3.6 billion in the company to build out EVs. Chesapeake Energy cuts 15% of staff. Chesapeake Energy (NYSE: CHK) said it would cut 15% of its staff as it prepares to exit bankruptcy. China’s coal plants 3x more than rest of world. China added 38.4 GW of new coal capacity in 2020, more than three times built in all of the rest of the world. The COVID-19 pandemic has upended global energy investment trends. The pandemic has not broken but intensified global energy trends that emerged on the eve of COVID-19, whether it be the collapse of coal-fired power generation, the growing surplus of oil production, or the booming interest in renewables. Related: Trading Giant Gunvor: $60 Could Be The Ceiling For Oil Prices The green industries minting billionaires. Want to get rich quick while playing a part in fighting climate change? Here are the clean energy sectors that have been creating billionaires. $1 trillion in stranded assets for pipelines. A new report from Global Energy Monitor finds that 212,000 kilometers worth of pipeline is under construction or on the drawing board, roughly equivalent to the entire length of the U.S. highway system. The report says that could result in $1 trillion getting stranded as the energy transition accelerates. Chevron bids $1.13 billion for Noble Midstream Partners. Chevron (NYSE: CVX) said on Friday it had offered to buy Noble Midstream Partners LP in a deal valuing the company at $1.13 billion. The decision comes just a few months after Chevron bought the upstream operator, Noble Energy. Interior cancels offshore Alaska lease sale. The U.S. Department of Interior canceled work on a propose lease sale off Alaska’s southcentral coast, following President Biden’s executive order pausing leasing on federal lands. South Korea to build $43 billion offshore wind. South Korea unveiled $43.2 billion plan to build the world’s largest wind power plant by 2030. Canada oil and gas deals surge 468%. M&A transactions in Canada in the fourth quarter last year were worth US$10.01 billion, up by 468.3 percent from the previous quarter and a surge of 504.2 percent compared to the last four quarter average of US$1.66 billion, according to data from GlobalData cited by World Pipelines. By Tom Kool for Oilprice.com Quote Share this post Link to post Share on other sites
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