Oil Markets Face A 200 Million Barrel Glut In 2021 (30 November 2020): By Rystad Energy - As the world is aching to put an end to a devastating 2020, oil producers are now assessing the lasting effect of the pandemic into 2021 – and in particular, the consequences of oil demand destruction to global balances. The existing OPEC+ group deal saved the market from collapsing earlier this year, but then Covid-19 came back with a second-wave. If output increases as planned from January, the world will have to face a new 200-million-barrel surplus through May, Rystad Energy calculates. The OPEC+ group will be debating whether or not to maintain its currently curtailed oil production levels to 2021 or to increase them as planned by nearly 2 million barrels per day (bpd). The existing plan was drafted during the pandemic’s first wave and under a more optimistic forecast for end-year oil demand, which turned out to be too high as the pandemic’s second wave brought new lockdowns globally. (Source: Oil Price)
Five Energy Stocks To Buy Before Christmas (29 November 2020): By Alex Kimani - For many people, the Christmas season is a time for celebrating, traveling, and spending time with friends and family. Understandably, not many will have time to draw up investment strategies when preoccupied with tinsel and turkey. Nevertheless, the holiday season can provide some impressive stock market returns, especially now that the energy sector--renewables and fossil fuels alike--are showing strong momentum. The U.S. oil and gas favorite benchmark Energy Select Sector SPDR Fund (XLE) has recorded an impressive rebound, climbing 37% in November as oil prices climbed to the highest in eight months amid a flurry of potential Covid-19 vaccines as well as a surprise drop in crude inventory. (Source: Oil Price)
Can Hydrogen Energy Save Coal Country? (28 November 2020): By Haley Zaremba - Four years after then-presidential candidate Donald Trump promised to bring jobs back to coal country, the coal sector is worse-off than ever. Those shrinking communities that still do depend on coal for their and their towns’ livelihoods are finding it harder and harder to scrape by, and the future looks grim. “A harsh reality in coal country - with or without Trump”, a BBC headline read this week--and it’s true: politics can’t save coal. Nothing can. The reality is that the world is moving more and more quickly away from fossil fuels. On the eve of catastrophic climate change, ESG investing trends are making more headway than ever. Oil industry magnates are scrambling to diversify their portfolios and global leaders are currently drafting and implementing “green” stimulus packages that hinge their nations’ post-pandemic economic recovery on clean energy--a sector that promises a whole lot of sorely needed jobs creation. (Source: Oil price)
Gold Crashes Below $1,800 (27 November 2020): By Safehaven.com - This year has been proving to be a gold speculator and investor’s dream after the yellow metal rallied hard to hit historical highs thanks to a perfect storm of a global pandemic, massive government stimulus packages, weakening dollar, and a stock market bull run that had finally run out of gas. The torrid rally represented the sharpest gain the metal has mustered in more than a decade. Wall Street hedge funds have been extremely bullish on gold, with some eyeing prices of $3,000 and even $5,000 per ounce. To wit, Bank of America Merrill Lynch said that it expects gold to hit $3,000 by early 2022 while Citigroup and billionaire Thomas Kaplan, founder of New York-based asset management firm Electrum Group, believed that $5,000 was in the cross hairs. But now there’s growing evidence that the gold rally could be done for now, and those lofty targets will remain out of reach for gold punters. Gold prices have pulled back 13% after touching an all-time high of $2,075 in August, as a barrage of potential Covid-19 vaccine candidates continues to give the world hope that the worst could be in the rearview mirror. (Source: Oil Price)
Thanksgiving Thursday Brings An End To The Oil Rally (26 November 2020): By Julianne Geiger - Oil prices dipped on Thanksgiving Thursday, slipping from seven-month highs as Baker Hughes reported another increase in the number of available rigs. The price rally of the last few days pushed oil prices to seven-month highs, largely on the back of positive Covid-19 vaccine news that promises to hoist oil demand. Traders remain hopeful that the strong efficacy of several vaccine manufacturers will quickly increase oil demand, which has slumped since March as a direct result of the slump in activity due to lockdowns throughout the world. Along with the rise in WTI and Brent prices, oil stocks received a similar boost. US .o.il majors Exxon and Chevron both received a bump as the price of WTI rose. Shares in Exxon rose from sub-$37 to near $42 in just a matter of days. But the price rally here started to show signs of fatigue into Thursday. (Source: Oil Price)
COVID Forces Exxon To Slash Oil Price Forecast (25 November 2020): By Tsvetana Paraskova - In the wake of the pandemic, ExxonMobil has significantly lowered its expectations about oil prices for the next seven years, expecting Brent Crude to average between $50 and $55 a barrel until 2025, The Wall Street Journal reported on Wednesday, citing internal Exxon documents it had reviewed. Exxon, unlike its peers in Europe, does not publicly disclose its internal assumptions about oil prices. Both Exxon and the other U.S. supermajor, Chevron, continue to see their in-house oil price forecasts as proprietary information, despite increased shareholder pressure to report that information to give shareholders insights into the price assumptions on which they base their investment decisions. According to the internal Exxon documents from September reviewed by The Journal, last year Exxon expected Brent Crude to average $62 a barrel through 2025 and to then rise to $72 per barrel in 2026 and 2027. But this year, the supermajor sees Brent averaging up to $55 per barrel for the next five years, and $60 a barrel for 2026 and 2027. (Source: Oil Price)
The Real Reason Oil Prices Went Negative In April (24 November 2020): By Charles Kennedy - Unusually high open interest in West Texas Intermediate was one of the two causes for the benchmark plunging into negative territory in late April, according to a report by the U.S. Commodity Futures Trading Commission. The high open interest, the report said, coincided with a shortage in storage space and the unprecedented destruction of demand resulting from the coronavirus pandemic. The report added that open interest in WTI reached 634,727 contracts on April 2. This compared to a 12-month average peaking at 430,000 contracts. The price of West Texas Intermediate tumbled below zero and reached -$37 per barrel in late April as traders rushed to offload their positions on the May contract as the storage space shortage and the consumption slump combined to make physical delivery of the commodity undesirable, to put it mildly. (Source: Oil Price)
Qatar Energy Exports Crash By 39% (23 November 3030): By Tsvetana Paraskova - Qatar’s total exports dropped by 35.5 percent year over year in the third quarter, dragged down by a 38.5-percent slump in exports of energy commodities and products, one of the biggest exporters of liquefied natural gas (LNG) in the world said on Sunday. The value of total Qatari exports in Q3 declined to US$11.3 billion (41.1 billion Qatari rial), down by 35.5 percent compared to the third quarter of 2019, the country’s Planning and Statistics Authority said in a statement. The main reason for the drop in exports was the decline in exports of mineral fuels, lubricants, and related materials. Those exports fell by US$5.8 billion (21 billion Qatari rial), or by 38.5 percent year over year, Qatar’s statistics authority said. All major oil and gas exporters in the Middle East have been suffering from a slump in energy-related revenues this year after the pandemic led to decreased demand for oil and gas and low oil and gas prices. (Source: Oil Price)
The IMO Will Ban Heavy Fuel Oil Use In The Arctic (22 November 2020): By Josh Owens - The International Maritime Organization (IMO) approved on Friday a ban on the use of heavy fuel oil for ships in the Arctic, but environmental organizations slammed the new regulation as “riddled with loopholes” that would continue to exonerate some polluters well into the end of 2020s. The Marine Environment Protection Committee (MEPC) of the UN’s organization IMO moved to ban the use of heavy fuel oil (HFO) and its carriage for use by ships in Arctic waters after July 1, 2024. The controversy in the new regulation arises from several provisions. One exempts ships with oil fuel tanks inside their double hull, while another gives countries in Arctic waters the right to issue waivers from the HFO ban for vessels flying their respective flags in the Arctic until July 1, 2029. The Clean Arctic Alliance slammed on Friday the approval of “a ban ridden with loopholes on the use and carriage of heavy fuel oil in the Arctic (HFO), saying that it would leave the Arctic, its Indigenous communities and its wildlife facing the risk of a HFO spill for another decade.” (Source: Oil Price)
Warmer forecasts end a natural gas bull run before it begins (20 November 2020): By CHRISTINE BUURMA AND SERGIO CHAPA - (Bloomberg) --Winter hasn’t begun yet, but the bullish trade in U.S. natural gas is already starting to fall apart. Gas futures tumbled Thursday as U.S. forecasts shifted warmer through early December, leaving bullish traders flat-footed after the previous day’s modest gain stoked speculation that the recent rout had run out of steam. Government data showed an unusually big gain in stockpiles for this time of year, adding to a glut of the fuel in underground storage. Traders had been betting big on higher gas prices this winter, with hedge funds’ bullish wagers climbing to the highest in more than six years last month. Shale producers have curbed output on lower oil prices, while gas exports to Mexico and overseas buyers soared to a record. But with frigid weather failing to show up in the forecasts, cracks are emerging in the bullish thesis. (Source: World Oil)
Renewed Lockdowns Threaten More Refinery Closures In Europe (20 November 2020): By Tsvetana Paraskova - More refineries in Europe are at risk of permanent closures, with fuel demand on the continent falling again as major economies re-imposed lockdowns to fight the spike in coronavirus cases. Gasoline demand in Europe is expected to be between 15 and 20 percent lower in November and December compared to the same months of 2019, Argus reported, citing market participants. The new lockdowns, partial lockdowns, and curfews in the biggest economies in Europe, including the UK, Germany, France, Italy, and Spain, are dragging down oil demand again while a double-dip recession in the Eurozone and wider Europe now looks almost inevitable. (Source: Oil Price)
Why The Energy Transition Will Be Fantastic For Small Oil Companies (19 November 2020): By Felicity Bradstock - Small, independent oil producers are seeing the potential for growth over the next decade as major energy companies look to invest in renewables. As big companies are being forced to introduce greener policies, independent producers could profit from this change. Paul Blakeley, chief executive of Jadestone Energy told the Financial Times on Monday., “It won’t be a Shell or BP that will be the last man standing in the oil and gas space… It will be the small independents.” This comes in response to the uncertainty surrounding oil, following a drop in demand in 2020. The Covid-19 pandemic has driven major oil producers to invest in new technologies and renewable alternatives sooner than anticipated to keep up with market trends. However, Jadestone Energy, which employs 220 staff and produces 10,000 bpd expects this shift to open-up greater opportunities for small producers. Blakeley hopes to be producing between 50,000 to 75,000 bpd in the next five to ten years. (Source: Oil Price)
Trump Administration Holds Its Last Offshore Oil Auction (18 November 2020): By Tsvetana Paraskova - The Bureau of Ocean Energy Management (BOEM) is holding on Wednesday the last offshore lease sale for the year and the last such lease sale under the current U.S. Administration of President Donald Trump, before Joe Biden, who has promised to ban new lease sales on federal lands and waters, takes office. The outcome of Wednesday’s lease sale in the U.S. Gulf of Mexico will give analysts insights into whether the oil and gas industry will rush to secure new offshore leases before Biden moves to ban new lease developments as part of his energy plan geared toward support for renewables, emissions reduction, and the creation of green energy jobs. The Trump Administration resumed in August lease sales with auctions for leases on federal lands, after having postponed several land lease sales earlier this year in the aftermath of the pandemic and the crash in oil prices. (Source: Oil Price)
How Fast Will The Electric Industry Exit Coal? (17 November 2020): By Leonard Hyman & William Tilles - What do Siemens, General Electric and Toshiba have in common— other than the obvious: they are global manufacturers of electrical equipment? The answer is that this year all three announced they would no longer construct coal-fired electric power generating projects. Regardless of how managements describe this action, we believe their reasoning is simple: they see little future in the coal business. Think of the impact of this decision as akin to what happens when a computer firm no longer wants to support a software program or operating system. Customers can keep using it but who will spend money to develop process improvements? How long with these manufacturers wholeheartedly support their legacy products? No doubt they will assure existing customers of their enduring fealty to old coal but we suspect users familiar with the problems caused by unsupported legacy products might start thinking about accelerating timelines for coal plant shutdowns. (Source: Oil Price)
The EV Revolution Could Create 20 Million New Jobs (14 November 2020): By Haley Zaremba - In the not-so-distant past, renewable energy and fossil fuel divestment were part of an idealistic, pie in the sky approach to transforming the energy sector which, for all of its positive attributes, simply didn’t make a lot of financial sense. In a world awash with cheap shale and natural gas after the United States’ shale revolution, moving away from fossil fuels seemed like a pipe dream. And then a pandemic hit. The novel coronavirus has completely changed the way that we consume energy around the world, and took a huge bite out of global energy demand. In what some are already referring to as “Black April,” crude oil prices did the unthinkable and plummeted below zero, with the West Texas Intermediate benchmark ending April 20th at nearly $40 in the negative. The shale sector still has not recovered. (Source: Oil Price)
Why A COVID Vaccine Won’t Invigorate The Oil Market (12 November 2020): By Julianne Geiger - For those who have been transfixed on oil demand forecasts over the last eight months, the recent news that Pfizer’s Covid-19 vaccine is 92% successful likely came with a renewed hope that oil demand will finally tick up and bring the industry out of the doldrums in which it has been languishing since the start of the pandemic. The lockdowns are to blame for the loss in oil demand. And now, invigorated with the possibility that this new vaccine will allow people to resume their normal way of life - air travel, dining out, and shopping - the price of crude oil is rising. They are expecting oil demand to recover - and fast - and not even the news of a slew of additional lockdowns that go into effect this week is dampening the bullish oil spirit. (Source: Oil Price)
U.S. Wind Capacity Additions Set To Surge To Record In 2020 (12 November 2020): By Charles Kennedy - The United States is on course to see record-breaking 23 gigawatts (GW) of wind turbine capacity additions this year, smashing the previous record from 2012 by nearly 10 GW, the U.S. Energy Information Administration (EIA) said on Thursday. This year wind capacity additions are set to be higher than in previous years because of the impending phase-out of the full value of the U.S. production tax credit (PTC) at the end of 2020. Between January and August, a total of 5 GW of wind turbine generation capacity was installed in the United States, according to data EIA has collected from power plant owners and developers. Another 18.5 GW are coming online between September and December, as it is typical for wind installations to come online at the end of each year, the EIA noted. December is typically the month with the most wind turbine capacity additions, and this year 9.6 GW are planned to come online in the last month of the year. In the previous 10 years, a total of 41 percent of the annual wind capacity additions came online in December. (Source: Oil Price)
Will Biden Be As Bad For Oil As Critics Suggest? (11 November 2020): By Robert Rapier - There has been a lot of hand-wringing in the oil industry about the consequences of a Joe Biden win, so let’s discuss those today. Here is some context I like to use to frame the discussion. President George W. Bush was formerly a Texas oilman. His Vice President, Dick Cheney, was the former Chairman of the Board and Chief Executive Officer of the oilfield services company Halliburton. You couldn’t ask for a more oil-friendly administration. Yet U.S. oil production declined all eight years they were in office. The year before Bush was inaugurated U.S. oil production averaged 5.8 million barrels per day (BPD). In 2008 — his last full year in office — production averaged 5.0 million BPD. Barack Obama took office in January 2009. He had campaigned on combating climate change. He implemented lots of policies designed to encourage the use of renewable energy. He was often openly hostile to the oil industry, slowing down pipeline permits and placing more federal lands off-limits to drilling. (Source: Oil Price)
India Could Be The Next Breakout Natural Gas Market (10 November 2020): By Vanand Meliksetian - Economic expansion strongly correlates with CO2 emissions as more energy is needed to power factories, transportation, and a higher standard of living. India is not an exception where growth has increased demand for energy. Considerable domestic coal reserves have ensured demand for a steady and secure supply of the pollutant energy source. However, rampant air pollution and global warming require more sustainable sources. In the long run, renewables are required to fill the demand. Technological limitations, however, require additional sources, for the time being, to ensure a stable and secure energy system. Natural gas is the most suitable option as it’s relatively clean and emits 50 percent less CO2 compared to coal. With the current trend, India's demand for natural gas could match China's. To make it clear, however, there is a long way to go. Currently, 5 percent of the South Asian country's energy mix is natural gas. India's massive population and relatively underdeveloped economy signify that there is enormous potential. (Source: Oil Price)
Citibank Forecasts $49 WTI For 2021 (9 November 2020): By Tsvetana Paraskova - Citi revised down on Monday its outlook for the WTI Crude price for next year by $5 to $49 a barrel, citing the global spike in coronavirus cases that is set to impact oil demand. Citi Research also cut its estimate for Brent Crude by $5 a barrel to $54 per barrel, Reuters quoted the bank as saying in a note on Monday. Two months ago, Citi was expecting oil prices to recover to $60 a barrel by the end of next year as the oversupply will have been drawn down by then, as major investment banks and analysts were fairly bullish on oil. However, the surge in COVID-19 infections in recent weeks and the renewed lockdowns and curfews in major European economies—including France, the UK, Italy, and Germany—are pressuring oil prices downwards as the rebalancing of the oil market is once again slipping to a later than initially expected time. (Source: Oil Price)
How China Is Racing To Expand Its Global Energy Influence (8 November 2020): By Haley Zaremba - The global geopolitical power map is changing. While oil has been king of the world for centuries, it’s becoming irrefutably clear that the once invincible resource and bestower of geopolitical might will soon be singing its swan song. As the world continues a trajectory toward clean energy transition on the eve of catastrophic climate change, the concept of peak oil has become an increasingly common refrain in headlines. Of course, the world didn’t always run on oil, and the geopolitical power map has been in near-constant flux since the Industrial Revolution. While the Middle East once held enormous power in international relations thanks to the region’s massive oil deposits, in recent years the United States upset political power structures around the world with a flood of cheap shale oil and gas flowing out of the West Texas Permian Basin. The United States’ shale revolution “redrew the global political map” by unseating OPEC at the helm of the world energy market and handing that power over to the “Big Three”: the United States, Russia, and Saudi Arabia. (Source: Oil Price)
UK Warning Highlights Energy Storage Importance To Renewables (6 November 2020): By Tsvetana Paraskova – The United Kingdom, which has recently set a record for wind power meeting its demand, issued a security of supply alert earlier this week as wind power output was low due to calm weather. This event highlights the need of increased energy storage capacity able to balance power to the grid at times of strained supply, energy historian and expert Ellen R. Wald wrote in Forbes. On Tuesday, National Grid ESO issued an electricity margin notice (EMN) for the evening on Wednesday. “This is a routine signal that we send to the market to indicate that we’d like a larger cushion of spare capacity,” National Grid said. The grid operator was expecting tight margins on the UK electricity system because of low renewable output and the availability of generators over periods of the day with higher demand. (Source: Oil Price)
Shell To Shut Down Louisiana Refinery (6 November 2020): By Irina Slav - Royal Dutch Shell will shut down its Convent refinery in Louisiana after failing to find a buyer for the facility, Bloomberg reports, citing a statement by the company. The move, due to be completed before the end of the month, is in line with Shell’s plans to reduce the number of refineries it operates from 14 to 6 over the next four years. The plans, in turn, are part of its strategy to shift away from its core business and into alternative energy. The supermajor will “invest in a core set of uniquely integrated manufacturing sites that are also strategically positioned for the transition to a low-carbon future,” Shell said in the statement. “A key advantage of these core sites will also come from further integration with Shell trading hubs, and from producing more chemicals and other products that are resilient in a low-carbon future.” (Source: Oil Price)
Oil Prices Drop As Markets Await U.S. Election Result (5 November 2020): By Tsvetana Paraskova - Oil prices dropped on Thursday morning as a highly contested presidential election continued to be too close to call as of 11 a.m. ET, although Democratic candidate Joe Biden was within six electoral votes to win. As of 11:37 a.m. ET on Thursday, WTI Crude was down 1.53 percent at $38.47, and Brent Crude was trading down 1.50 percent at $40.74, as Biden was in the lead in electoral votes over President Donald Trump. A Trump win would be more bullish for oil, analysts say, because of the President’s continued pro-oil policies. Biden, on the other hand, has said he would seek a path of diplomacy toward Iran, which could potentially bring Iranian barrels back to the oil market at some point next year under a Biden Administration. (Source: Oil Price)
Oil Prices Jump On Large Crude Inventory Draw (4 November 2020): By Irina Slav - Crude oil inventories in the United States shed 8 million barrels last week, the Energy Information Administration reported a day after the American Petroleum Institute estimated an 8-million-barrel draw that pushed oil prices higher. At 484.4 million barrels, U.S. crude oil inventories remain above the five-year average for this time of the year when demand tends to be weaker. Yet the resurgence in coronavirus cases in the country will likely lead to a further weakening of oil demand, driving builds in inventories. The EIA also reported a 1.5-million-barrel build in gasoline inventories for the week to October 30, compared with a decline of 900,000 barrels for the previous week. Gasoline production averaged 9.1 million bpd last week, slightly down on the previous week. (Source: Oil Price)
China Looks To Boost Oil Exploration, Expand Oil & Gas Storage (3 November 2020): By Charles Kennedy - China plans to further increase oil and gas exploration and accelerate the construction of more oil and gas storage infrastructure, state news agency Xinhua reported on Tuesday. Last week, China’s Communist Party adopted the principles of the five-year development plan 2021-2025. China will also aim to build more oil and gas pipelines, according to its authorities. China has been looking to increase its energy security in recent years, including by increasing domestic oil and gas production and expanding its storage facilities. Over the past decade, China’s oil production has been falling while its oil demand has been soaring, increasing Beijing’s dependence on sourcing oil from abroad. China’s dependence on crude oil imports has been growing in recent years as its domestic production has faltered, and the world’s top oil importer covered 73.4 percent of its oil demand with imported oil in the first half of 2020. (Source: Oil Price)
Oman Becomes First Gulf Country To Introduce Personal Income Tax (2 November 2020): By Tsvetana Paraskova - Non-OPEC oil producer Oman, which is part of the OPEC+ alliance, could become the first country in the Gulf Cooperation Council (GCC) to introduce an income tax on individuals as oil-dependent economies in the Middle East reel from the price and demand crash. Oman plans to introduce in 2022 a personal income tax on wealthy individuals, its finance ministry said on Sunday, as carried by Reuters. The Middle Eastern oil producer heavily depends on oil income for its budget and has been one of the most affected economies in the region after prices crashed earlier this year. Oman’s new economic plan through 2024, which will include the income tax on wealthy individuals from 2022, is aimed at reducing the widening budget deficit of the country and increasing the non-oil revenues. Oman’s plan would make it the first member of the Gulf Cooperation Council (GCC)—which also includes Bahrain, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—to introduce an income tax on individuals. (Source: Oil Price)