Saudi Arabia’s surprise cuts after the OPEC + meeting gave oil bulls a big boost, putting Brent above $ 55.
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Friday, January 8, 2021
Brent reached $ 55 a barrel at the end of the week, as Saudi Arabia’s promise to cut deeper has built a solid rally. Other forces are also at play, including monetary stimulus, prospects for a deeper fiscal stimulus in the U.S. and optimism about vaccines. “The past 10 weeks of trading have seen only a weekly drop, which has been comparatively small,” said Carsten Fritsch, an analyst at Commerzbank AG. “This is a testament to the strength of the oil market over the past 2 and a half months.”
The cold winter brings together coal and gas. China’s thermal coal prices are soaring, and JKM’s prices for LNG are soaring. Spot prices for delivery of liquefied natural gas (LNG) in Asia have jumped to the highest increase in six years. A cold winter in the northern hemisphere is contributing to price gains. Javier Blas of Bloomberg grades that at least one spot LNG cargo was sold for $ 33- $ 36 / MMBtu, which would be a historically high price.
3 reasons to bet everything on lithium. Actions by major lithium producers and operators, including Sociedad Quimica y Minera de Chile (NYSE: SQM), Albemarle Corp. (NYSE: ALB)and Orocobre Ltd (ASX: ORE) received a big hammer after Morgan Stanley’s forecast that low-cost Chilean brine producers could add up to 200 kt per year until 2025, while the expansion of the hard rock mines in China and Australia could pump another half a million tons metrics over the term. But there are three main reasons for betting everything on lithium.
US LNG exports reached a record high in December. US LNG exports set a new record in December, after November 2020, averaging 9.8 billion cubic feet per day (Bcf / d).
Pioneer paints dark prospects for shale. The immediate future of U.S. shale remains bleak, despite Saudi Arabia’s promise to cut an additional 1 million bpd in production to sustain prices. “I really don’t see much of an increase in the Permian Basin or US shale for years to come,” Scott Sheffield, of Pioneer Natural Resources (NYSE: PXD) said this week. I never expect to grow above 5% under any conditions … Even if oil dropped to $ 100 a barrel and the world was in short supply. ” Related: How to Play the First Oil Rally of 2021
Shale promises restraint. Devon Energy (NYSE: DVN) said it will not start drilling aggressively, even with higher oil prices. “I have a hard time seeing the need for US producers in the coming years to return to double-digit growth,” new CEO Rick Muncrief told Bloomberg. “For this management team, if we really think about 2021, we will keep it flat.”
2020 tied as the hottest year on record, disaster costs double. 2020 was tied with 2016 for the hottest year on record, according to new data. Costs with natural disasters in the United States reached $ 95 billion last year, double the costs of the previous year.
Musk becomes the richest person in the world. Elon Musk overtook Jeff Bezos to become the richest person in the world, driven by the sharp rise in Tesla’s share price (NASDAQ: TSLA). Musk’s net worth is estimated at $ 195 billion.
Saudi Arabia seeks to build bridges with Biden. Saudi prince Mohammed bin Salman canceled a multi-year blockade of Qatar this week and also said he would voluntarily cut 1 mb / d of oil production. The new tone, some analysts say, aims, at least in part, to gain goodwill with the next Biden government.
Exxon releases GHG data for the first time. ExxonMobil (NYSE: XOM) released emissions data for its Scope 3 emissions – those burned by end users – for the first time. Exxon’s sales in 2019 were equivalent to 730 million metric tons of carbon dioxide, roughly the same amount across Canada. It is also the highest of all major Western oil companies.
ANWR sells an “epic failure”. The long-awaited first rental sale at the Arctic National Wildlife Refuge (ANWR) was a major failure. Only 50% of the area on offer received bids, and the sale generated only US $ 14 million in sales, a fraction predicted in recent years. To make matters worse, the state of Alaska was the main player in the winning bids, and only two small private companies – Knik Arm Services LLC and Regenerate Alaska Inc. – leaflets obtained. Environmental groups called the sale an “epic failure”.
Banks criticize lending that bind the rules. Wall Street banks have criticized a rule proposed by the Trump administration that would force them to lend to energy and firearms companies.
Rivian close to $ 25 billion valuation. Rivian Automotive Inc., the electric truck startup supported by Amazon.com Inc. and Ford Motor Co., is close to raising a new round of financing worth about $ 25 billion.
Biden plans to build an international coalition to fight China. In opposition to the Trump administration’s autonomous approach, the Biden government will aim to build an international coalition to confront China on several fronts, including trade, according to the WSJ. Related: LNG price hike – Welcome – News for US exporters
Canada’s tar sands grow. Canada’s oil sands production reached a record high in November of 3.16 mb / d.
Norway’s EVs reach 54%. EV sales in Norway reached a 54% market share in 2020, surpassing gasoline and diesel vehicles for the first time.
Georgia Senate contests open up more aggressive plans for Biden. The two victories in Georgia by two Democrats deflected control of the Senate. This opens up much more possibilities for the Biden government in a series of energy and climate initiatives. S&P Global Platts presents a summary.
The Army Corps finalizes the pipeline licensing program. The Army Corps of Engineers has completed its Nationwide Permit Program (NWP), a technically complex program that allows for quick pipeline licensing. However, the Biden government may suspend the program.
By Tom Kool for Oilprice.com
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