Despite the strong US dollar, there is an undeniable sentiment in the oil markets, as demand returns online and the launch of the vaccine continues.
This week Global energy alert, our trading team delves into how an inflationary environment will impact oil stocks. Sign up today to receive breaking news, expert analysis and trading tips.
Friday, March 12, 2021
Oil prices have regained their lost ground by the end of the week, as tight supplies are forcing a global stock outflow. “Overall, we are growing in demand for oil, which continues its upward trajectory in parallel with vaccination programs and the resumption of economic activities,” Bjornar Tonhaugen of Rystad Energy said in a statement.
OPEC downgrades demand forecast. OPEC reduced its demand forecast for the next two quarters, with second-quarter demand declining by 690,000 bpd compared to a previous forecast. “Ongoing measures, voluntary social distancing and other pandemic developments” continue to influence economic activity, OPEC said in its monthly report.
Saudi voluntary reduction lower than mentioned. Saudi Arabia has promised to voluntarily reduce its production by another 1 mb / day in February and March, but new data suggest that the cuts have been smaller than expected. “According to the Petro-Logistics assessment and following discussions with market sources and contacts, our estimate for the Saudi supply in February is a reduction of about 600,000 bpd per month,” Daniel Gerber, Petro-Logistics’ chief executive, told Reuters. .
Analysts warn that OPEC + is too tight. American shale drilling machines promised to hold back, but prices have risen to such a high level that they could be tempted from the sidelines. Analysts warn OPEC + that they are playing with fire. “Retaining barrels as a means of supporting the price rally will work,” Bill Farren-Price, director of research firm Enverus, told Bloomberg. “But in doing so, the table is set for a holiday in which the US short-cycle operator will be the guest of honor.”
Related to this: Europe cannot keep up with the demand for metals for batteries
BP and Shell earn billions in trading. BP (NYSE: BP) earned nearly $ 4 billion from its energy trading unit in 2020, cushioning the impact of the pandemic gains.Royal Dutch Shell (NYSE: RDS.A) said its trade profits doubled to $ 2.6 billion.
Iranian oil exports to China are rising. China’s imports of Iranian oil are on track to double at most in March compared to February. Iranian oil sells at a reduction of $ 3 to $ 5 a barrel relative to Brent due to sanctions. At the same time, Saudi Arabia’s exports to Asian buyers in April will fall by 15%.
The gas from the American refinery burns at a maximum level of 18 months. Natural gas emissions from non-upstream US oil and gas facilities peaked at 18 months in February at 180.9 million cubic meters per day (MMcfd), according to a Rystad Energy report.
Administrator Biden approves drilling permits. After an initial hiatus, the Department of the Interior has approved 200 drilling permits in the past two weeks, mostly in Wyoming and North Dakota. While leases on federal land have been temporarily suspended, approval of drilling permits appears to be resumed.
Biden rental report by summer; Congress looks at reforms. The Biden administration has said it will publish an interim report on the suspension of leasing sales on federal land by summer. At the same time, a bipartisan group of senators is looking at reforms to increase the rates of royalties paid by oil, gas and mining companies.
Shell takes on the role of miner as the new president. Royal Dutch Shell (NYSE: RDS.A)he appointed Andrew Mackenzie to be its new president. Mackenzie is the former CEO of BHP Group Ltd. and replaces Shell President Chad Holliday.
India is looking at alternatives on the back of high prices. India has called for OPEC + to increase production to lower crude oil prices. India’s oil minister, Dharmendra Pradhan, said his country would seek to diversify away from the Middle East as a source of supply.
BP comes out of Kazakh oil projects. BP (NYSE: BP) has abandoned three oil projects in Kazakhstan amid a strategic shift to focus on renewable energy sources.
Why are investors turning against fossil fuels? Over the next five years, oil and gas companies will certainly see less investment, as the world’s largest institutional investors are increasingly looking at the environmental credentials of companies in their portfolios.
The US Senate pays the methane tax. Three Democratic senators are supporting a bill that would tax methane emissions.
The dead cow has prepared a comeback. Drilling collapsed in Argentina’s Vaca Muerta last year, but rose to a 17-month high in January 2021. Higher prices and government subsidies are helping to bring the dead cow back to life. Related to this: How could oil reach $ 100 a barrel
Biden’s DOE secretary tells the oil industry to adapt or die. “I’m not going to eat how hard the transitions are,” New Energy Secretary Jennifer Granholm told CERAWeek. “The bottom line is that this special increase in clean energy and reduced carbon emissions offers a huge opportunity and extends a handful of partnerships,” Granholm said.
US air travel is starting to grow. Aviation will be the last sector to return due to the pandemic, but there is some evidence to suggest that it is rising. The volume of passengers passing through airports is now flirting with the highest levels since the pandemic began.
Canoo, EV startup, joins a fully electric takeover race. Canoo, an American electric vehicle startup, has said it plans to launch a full-bridge, electric-electric pickup truck in 2023, adding to a rapidly growing range of electric vehicles available to American buyers.
By Josh Owens for Oilprice.com
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