Despite a strong US dollar, there is an unmistakably strong sentiment in the oil markets as demand comes online again and the rollout of vaccines continues.
In this week’s Global Energy Warningour trading team examines how an inflationary environment will affect oil supplies. Register today to get news, expert analysis and trading tips.
Friday 12 March 2021
Oil prices were lost again by the end of the week as tight stocks forced a global decline in stocks. “Overall, we are strong on the demand for oil to continue its upward trajectory along with vaccine programs and the resumption of economic activities,” Bjornar Tonhaugen of Rystad Energy said in a statement.
Forecast of the OPEC downgrade of demand. OPEC lowered its demand forecast for the next two quarters, by 690,000 bpd in the second quarter compared to a previous forecast. “Continued closure measures, voluntary social distance and other pandemic-related developments” continue to weigh on economic activity, OPEC said in its monthly report.
Saudi Arabian voluntary cuts smaller than mentioned. Saudi Arabia has promised to voluntarily reduce its production by 1 mb / d in February and March, but new data suggest the cut was smaller than expected. “According to Petro-Logistics’ assessment and after discussions with sources and contacts in the market, our estimate of the Saudi Arabian supply in February is a cut of about 600,000 bpd month on month,” said Daniel Gerber, CEO of Petro-Logistics. Logistics, told Reuters. .
Analysts warn that OPEC + is tightening too strongly. U.S. shale drillers have promised self-control, but prices have risen so much that it can be tempted from the sidelines. Analysts warn OPEC + that they are playing with fire. “Holding back barrels as a way to sustain the price increase will work,” Bill Farren-Price, a director of research firm Enverus, told Bloomberg. “But in doing so, the table is set for a festival in which the American short-bike operator will be the guest of honor.”
Related: Europe Can’t Keep Up with Battery Metal Demand
BP and Shell earn billions of trades. BP (NYSE: BP) earned nearly $ 4 billion from its energy trading unit in 2020, dampening the blow to earnings from the pandemic.Royal Dutch Shell (NYSE: RDS.A) said its trading profit doubled to $ 2.6 billion.
Iran’s oil exports to China are increasing. China’s imports of Iranian oil into China more than doubled in March, compared with February. Iran’s oil is selling because of sanctions at $ 3 to $ 5 a barrel discount relative to Brent. At the same time, Saudi Arabia’s exports to Asian buyers for April will fall by 15%.
American refinery gas celebrating high tide of 18 months. Natural gas flame at U.S. non-upstream oil and gas plants peaked in 18 months in February, at 180.9 million cubic feet per day (MMcfd), according to a report by Rystad Energy.
Biden-admin approves drilling permits. After an initial break, the Department of Home Affairs has approved 200 drilling permits over the past two weeks, mostly in Wyoming and North Dakota. While lease agreements on federal lands have been temporarily suspended, it appears that the approval of drilling permits is being resumed.
Biden rental report by summer; Congress is looking at reforms. Biden’s government has said it will publish an interim report on the suspension of rental sales on federal lands by the summer. At the same time, a dual group of senators is looking at reforms to increase the royalties paid by oil, gas and mining companies.
Shell utilizes mine management as new chairman. Royal Dutch Shell (NYSE: RDS.A)Andrew Mackenzie appointed as its new chairman. Mackenzie is the former CEO of BHP Group Ltd. and replaces the outgoing chairman of Shell, Chad Holliday.
India is looking for alternatives amid high prices. India calls on OPEC + to increase production to curb crude prices. India’s oil minister Dharmendra Pradhan has said he wants to diversify his country as the source of the Middle East.
BP leaves Kazakh oil projects. BP (NYSE: BP) abandons three oil projects in Kazakhstan amid a shift in strategy to focus on renewable energy.
Why are investors turning to fossil fuels? Over the next five years, oil and gas companies will certainly see less investment, as the largest institutional investors in the world increasingly look to the environmental evidence of the companies in their portfolios.
US Senate pushes methane tax. Three Democratic senators support a bill that would tax methane emissions.
Vaca Muerta is ready for a return. Drilling activity collapsed in the Vaca Muerta in Argentina last year, but it rose to a 17-month high in January 2021. Higher prices and government subsidies help bring the Dead Cow back to life. Related: How oil can go up to $ 100 a barrel
Biden’s DOE secretary says the oil industry must adapt or die. “I’m not going to sugarcoat how difficult transitions are,” US Secretary of Energy Jennifer Granholm said during the CERAWeek conference. “The end result is that this growth of clean energy and the reduction of carbon provide a great opportunity, and I reach out my hand to work together,” Granholm said.
US air travel is starting to rise. Aviation will be the last sector to recover from the pandemic, but there is evidence to suggest that it is on the rise. The number of passengers traveling through airports is now flirting with the highest levels since the pandemic began.
Canoo, EV start-up, takes part in an all-electric take-off race. Canoo, a U.S. EV company, said it plans to launch a fully electric pickup truck like a pickup truck in 2023, which will provide a faster-growing selection of electric vehicles available to U.S. buyers.
By Josh Owens for Oilprice.com
More lectures from Oilprice.com: