Despite the strong US dollar, there is an unmistakable bullish sentiment in the oil markets, as demand returns to work and vaccine distribution continues.
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Friday, March 12, 2021
Oil prices recovered the lost ground at the end of the week, with tight supply forcing a global drain on inventories. “Overall, we are optimistic about the demand for oil, continuing its upward trajectory in conjunction with vaccine programs and the resumption of economic activities,” said Bjornar Tonhaugen of Rystad Energy in a statement.
OPEC downgrades demand forecast. OPEC has cut its demand forecast for the next two quarters, with second quarter demand dropping 690,000 bpd compared to an earlier forecast. “Ongoing blocking measures, voluntary social detachment and other developments related to the pandemic” continue to weigh on economic activity, OPEC said in its monthly report.
Saudi voluntary cut smaller than declared. Saudi Arabia pledged to voluntarily cut its production by an additional 1 mb / d in February and March, but new data suggests that the cuts were less than expected. “According to Petro-Logistics’ assessment and after discussions with sources and market contacts, our estimate for Saudi supply in February is a cut of around 600,000 bpd month-to-month,” said Daniel Gerber, chief executive officer of Petro-Logistics, Reuters.
Analysts warn that OPEC + is tightening too much. US shale punches have promised moderation, but prices have risen so much that they may be tempted to leave the market. Analysts warn OPEC + that they are playing with fire. “Retaining barrels as a means of sustaining rising prices will work,” Bill Farren-Price, director of research firm Enverus, told Bloomberg. “But in doing so, the table is being prepared for a banquet at which the United States short bike operator will be the guest of honor.”
Related: Europe cannot keep up with demand for battery metals
BP and Shell earn billions in negotiations. BP (NYSE: BP) it earned nearly $ 4 billion from its energy trading unit in 2020, cushioning the blow to pandemic profits.Royal Dutch Shell (NYSE: RDS.A) said its commercial profits doubled to $ 2.6 billion.
Iran’s oil exports to China are on the rise. Chinese imports of Iranian oil are on the way to more than double in March, compared to February. Iran’s oil is sold at a discount of $ 3 to $ 5 a barrel compared to Brent, due to sanctions. At the same time, Saudi Arabian exports to Asian buyers in April are expected to fall by 15%.
Burning of US refinery gas at an 18-month high. The burning of natural gas in non-upstream onshore oil and gas facilities in the U.S. reached an 18-month high in February, at 180.9 million cubic feet per day (MMcfd), shows a report by Rystad Energy.
The Biden administrator approves the drilling licenses. After an initial pause, the Department of the Interior has approved 200 drilling permits in the past two weeks, mainly in Wyoming and North Dakota. Although federal land leases have been temporarily suspended, approval of drilling permits appears to be resuming.
Biden’s summer rental report; Congress looks at reforms. The Biden government said it would publish an interim report on suspending federal land lease sales by the summer. At the same time, a bipartisan group of senators is looking for reforms to raise royalty fees paid by oil, gas and mining companies.
Shell hires mining executive as new president. Royal Dutch Shell (NYSE: RDS.A)appointed Andrew Mackenzie to be its new president. Mackenzie is the former CEO of BHP Group Ltd. and replaces Shell’s outgoing president, Chad Holliday.
India is looking for alternatives amid high prices. India asked OPEC + to increase production in order to reduce oil prices. India’s oil minister, Dharmendra Pradhan, said his country will seek to diversify from the Middle East as a source of supply.
BP comes out of Kazakhstan’s oil projects. BP (NYSE: BP) abandoned three oil projects in Kazakhstan in the midst of a change in strategy to focus on renewable energy.
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 companies’ environmental credentials in their portfolios.
The US Senate fluctuates methane tax. Three Democratic senators are supporting a bill that would tax methane emissions.
Vaca Muerta is ready for a comeback. Drilling activity collapsed in Vaca Muerta, Argentina, last year, but peaked in 17 months in January 2021. Higher prices and government subsidies are helping to bring the dead cow back to life. Related: How oil can reach $ 100 a barrel
Biden’s DOE secretary tells the oil industry to adapt or die. “I’m not going to embellish how difficult the transitions are,” said new United States Secretary of Energy Jennifer Granholm at the CERAWeek Conference. “The end result is that this specific growth in clean energy and carbon reduction offers a great opportunity and I am reaching out to the partnership,” said Granholm.
Air travel in the United States is starting to increase. Aviation will be the last sector to recover from the pandemic, but there is some evidence to suggest that it is recovering. The volume of passengers passing through airports now flirts with the higher levels since the beginning of the pandemic.
Canoo, startup EV, joins a race of all-electric pick-ups. Canoo, a US EV startup, said it plans to launch a capsule-like all-electric pickup in 2023, adding a choice of fast-growing electric vehicles available to American buyers.
By Josh Owens for Oilprice.com
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