Oil prices have fallen below $ 60, but remain at unprecedented levels since January 2020.
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Friday, February 19, 2021
The Texas electricity crisis is calming down, but the outages, damage and human toll have been historic. Since Friday morning, the Texas network operator ERCOT SAPS that he will come out of “emergency conditions” later in the day. After a crazy week, the WTI fell slightly, but maintained gains of almost $ 60, a price not seen since January 2020.
The Texas break is relaxing. As of Tuesday, about 45 gigawatts of electricity from renewable sources, coal and natural gas were offline. More than 4 million people have lost power. By Friday, most of these people had their power restored. The crisis has once again focused on several network policy issues – the lack of air conditioning in Texas’ electricity generation assets, the lack of a capacity market and the isolation of the state grid from the rest of the country.
US oil production has been affected. About 4 mb / day of US oil production was excluded due to power outages, wellhead freezing and other equipment failures. Most of the outages were in the Permian Basin. Restarting frozen or closed wells is not necessarily straightforward, and some restarts may take weeks.
Related to this: Is the oil rally the beginning of something much bigger?
Texas bans natural gas transportation outside the state. Texas Gov. Greg Abbott has taken drastic measures to ban the export of natural gas from the state to conserve supplies. The measure is highly controversial and potentially illegal, although most analysts note that any legal challenges would be questionable, as the order will expire when a judge examines them. The governor also personally sent requests to several LNG exporters to stop operations.
LNG goods canceled. According to Bloomberg, at least 10 LNG loads have been canceled due to the network crisis.
Restarting the refinery can take weeks. Four of Texas’ largest oil refineries have seen widespread damage from the cold and could take several weeks to repair, according to Bloomberg. Outages could reduce demand for crude oil, but reduce the supply of refined products. The four refineries include ExxonMobil’s (NYSE: XOM) Baytown and Beaumont Plants, Marathon Petroleum (NYSE: MPC) Galveston Bay Refinery andTotal (NYSE: TOT) Port Arthur Facility. The result could be $ 3 a gallon gasoline by May.
The United States wants to reopen talks with Iran. The US government has said it will accept an invitation from the EU to hold talks with Iran. Iran did not jump to the news, saying it would “immediately reverse” recent actions on its nuclear program, but only after the US lifted sanctions.
Gas companies hit the “jackpot” of the Texas frost. As Texans struggle to keep the lights and heating on, Lone Star state gas producers, or at least those whose probe heads haven’t frozen, are having fun.
Saudi Arabia will increase production. Saudi Arabia is set to reverse the voluntary reduction in production of 1 mb / d in the coming weeks, according to the Wall Street Journal, with the returned barrels to enter the market in April. “An increase in production in Saudi Arabia makes perfect sense, given the tightness that is beginning to appear on the market,” Ole Hansen, head of commodity strategy at Saxo Bank in London, told WSJ. “The market will probably take it pretty well.”
Shell will sell assets in Alberta for $ 900 million. Royal Dutch Shell (NYSE: RDS.A) will sell its Duvernay shale assets in Alberta for $ 900 million to Crescent Point Energy Corp. (TSE: CPG). Related: Oil prices rise as US oil production falls 30%
Maersk plans carbon-neutral transport containers. Shipping giant AP Moller Maersk A / S is accelerating plans to transition to carbon-neutral operations, including plans to add the first container ship to run on biofuels.
The US shale is sticking, for now. With WTI rising to $ 60 a barrel, the US shale industry could be in a better financial position than previously expected. Recent comments from shale directors suggest that drilling will not return to aggressive spending plans, instead focusing on cash generation.
Canadian gas drilling is on the rise. Canadian shale gas drilling has grown rapidly this year, and Canadian gas exports to the US are also growing. Drilling in Canada hopes to gain more market share as drilling in the US has shrunk.
The Texas freeze raises the cost of charging a Tesla to $ 900. The lack of electricity in Texas, amid the cold, has caused spot electricity prices to rise so much that rising energy prices have cost $ 900 to charge a Tesla.
$ 100 of oil possible on the cargo supercycle. Several investment bank analysts say oil could rise to $ 100 a barrel because we could be at the beginning of a new commodity supercycle.
Egypt will restart a second LNG plant. Egypt is close to restarting a second LNG facility after it was closed for eight years. The restart boosts Egypt’s hopes of developing a major gas hub and an LNG export industry.
Shell’s Nigerian accounts have been frozen in litigation. A Nigerian court has restricted Royal Dutch Shell’s (NYSE: RDS.A) access to his bank accounts in the country during a legal dispute for years.
By Tom Kool for Oilprice.com
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