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Chart of the week
– Global oil demand fell to 92.2 mb / d in 2020, down 9% from the previous year, according to a new EIA estimate.
– Demand recovered quickly after reaching a low point in April 2020, but demand was stagnant and even contracted slightly in late 2020.
– The EIA expects a strong recovery in demand this year, although two massive unknowns – the pace of vaccinations and the pace of infections from new coveted variants – throw most forecasts into a state of deep uncertainty.
Market movers
– Imperial Oil (NYSEMKT: IMO) fell 2.9% at the beginning of the trading session, after registering a greater than expected loss. The company had a loss of C $ 1.17 billion in shale gas assets that it believes will not be developed.
– ConocoPhillips (NYSE: COP) it rose early in the day after posting a less than expected loss in the fourth quarter of $ 800 million.
– Oil marathon (NYSE: MPC) reported a fourth quarter profit of $ 192 million, compared to $ 443 million in the same quarter a year ago.
Tuesday, February 2, 2021
Oil hit its biggest high in a year on Tuesday, with WTI hitting $ 55 a barrel. The oil market is “supported by a combination of restrictive fundamentals, as seen through the growing setback and renewed risk appetite in the US stock market,” said Ole Hansen, head of commodity research at Saxo Bank A / S .
ExxonMobil reports the first annual loss in decades. ExxonMobil (NYSE: XOM) reported a loss of $ 20.1 billion in 2020, the first annual loss in at least 40 years, and also the fourth consecutive quarterly loss. The loss included a reduction of $ 19.3 billion. At the same time, Exxon promised to defend its dividends, declaring that it would cut spending instead of dividends if oil prices fell below $ 50 a barrel.
ExxonMobil announces carbon capture effort. ExxonMobil (NYSE: XOM) promised to spend $ 3 billion on low-emission technologies by 2025, mainly related to carbon capture. Bloomberg notes that much of the effort is old news and depends on government subsidies that have not yet been enacted.
Exxon announces change of board. Exxon announced changes to its board amid pressure from investors to cut spending. The changes came as DE Shaw, who has a considerable position at Exxon. Reuters reported last week that more than 135 investors managing more than $ 2 trillion in assets formed a coalition to pressure the oil giant. Engine No. 1, a San Francisco-based investment company, said Exxon needs independent board members “to ensure a clear break with a strategy and mindset that has led to years of value destruction.”
Exxon discussed the Chevron merger last year. Exxon and Chevron were in talks to merge in the midst of last year’s pandemic crisis, the Wall Street Journal reported, citing unknown sources. Such a merger would be one of the largest corporate mergers of all time and would create a company that could be worth more than $ 350 billion based on current assessments by Exxon and Chevron. Related: Global natural gas demand set to recover after pandemic shock
BP lost $ 5.7 billion. BP (NYSE: BP) lost $ 5.7 billion in 2020, the first loss in a decade. The company said it would increase its renewable energy capacity to 50 gigawatts by 2030, up from 3.3 GW today.
Glimpses of hope for crude oil prices. Oil started off reasonably well this year thanks to the start of a vaccination campaign and the Saudi commitment to cut more production. The continued rise in Covid-19 infections and a new outbreak in China has shaken optimism and weighed on prices, but things now appear to be improving based on the latest supply and demand data and forecasts.
Goldman Sachs: tightening in the oil market. The rebalancing of the oil market “continues to exceed our expectations above consensus,” Goldman Sachs said in a January 31 note to customers. “Our basic scenario remains a rebalancing of the demand-driven oil market,” said the bank.
Total surpasses its peers in 2020. French oil company Total (NYSE: TOT) outperformed other oil majors last year. According to Rystad Energy, Total has reduced costs per barrel to the maximum compared to its peers. It also discovered 1 billion boe in 2020, which makes it the only large boe capable of replacing more than 100% of what it produces.
Administrator Biden revokes the drilling licenses. The Biden Department of the Interior approved drilling licenses in the first few days in office, despite an executive order to freeze them. On Friday, Interior said 70 licenses had been issued improperly, and they rescinded them.
Iran will not return to the nuclear deal unless sanctions are lifted. Iran said it would not simply revert to the terms of the 2015 nuclear deal until US sanctions – implemented after the U.S. withdrew from the deal in 2018 – are removed.
Shell is ordered to pay damages for oil spills in Nigeria. Royal Dutch Shell (NYSE: RDS.A) was ordered by a Dutch court to pay damages to two Nigerian villages in a case that goes back more than a decade. It is important to note that the case establishes a precedent for holding the parent responsible for pollution abroad.
Shell is betting on the energy and hydrogen trade. Royal Dutch Shell (NYSE: RDS.A) is placing big bets on expanding its energy trade and hydrogen units as part of its energy transition plans.
Offshore wind turbines market warming up. Competition is heating up in the offshore wind turbine manufacturing market, with the incumbent Renewable energy from Siemens Gamesa (BME: SGRE) seeing a growing challenge of GE (NYSE: GE) and Vestas Wind Systems (CPH: VWS). Meanwhile, Siemens said it would eliminate 7,800 jobs by the end of 2025, mainly in its gas and energy division.
Natural gas prices rise in the winter. On Monday, natural gas prices rose more than 11% with colder weather sweeping the northeast.
Goldman: The gas markets are tight in the summer. Goldman reiterated its view that natural gas markets look increasingly tight in the coming winter. The bank expects US natural gas prices to average $ 3.25 / MMBtu in the summer.
Automakers abandon Trump’s effort to thwart California’s fuel economy rules. A group of automakers abandoned their support of the Trump administration’s efforts to prevent California from setting stricter fuel economy standards. Companies include Toyota, Fiat Chrysler, Hyundai Motor, Kia Motors, Mitsubishi Motors and Subaru Corp. An auto industry trade group has also proposed opening negotiations with the Biden government over tightening federal standards.
By Tom Kool for Oilprice.com
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