The surprise cuts by Saudi Arabia to the OPEC + meeting gave oil bulls a big boost, bringing Brent above $ 55.
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Friday 8 January 2021
Brent reached $ 55 a barrel at the end of the week as Saudi Arabia’s promise to cut deeper built a solid rally. Other forces are also on the agenda, including monetary stimulus, the prospect of deeper fiscal stimulus in the US and the optimism of vaccines. “Over the past ten weeks’ trading, there has been only one weekly decline, which has been relatively small,” said Carsten Fritsch, an analyst at Commerzbank AG. “This is a testament to the strength of the oil market over the past 2 1/2 months.”
Cold winters bring together coal and gas. Thermal coal prices in China are rising and JKM prices for LNG are rising. Spot prices for liquefied natural gas (LNG) delivery in Asia have risen to a six-year high. A cold winter over the northern hemisphere contributes to price increases. Javier Blas from Bloomberg notes that at least one LNG cargo was sold for $ 33- $ 36 / MMBtu, which would be a historically high price.
3 reasons to go all-in on lithium. Shares of major lithium producers and explorers, including Chemical and Mining Company of Chile (NYSE: SQM), Albemarle Corp. (NYSE: ALB), en Orocobre Ltd (ASX: ORE) Morgan Stanley predicted that Chilean cheap brine producers could add as much as 200kt a year by 2025, while the expansion of China and Australia’s hard rock mines could pump in another half a million tonnes over time. But there are mainly three reasons to use lithium.
U.S. LNG exports hit a record high in December. U.S. LNG exports set a new record in December after a record-breaking November 2020, averaging 9.8 billion cubic feet per day (Bcf / d).
Pioneer paints gloomy prospects for shale. The immediate future of US shale remains bleak, despite Saudi Arabia’s promise to cut extra production by 1 million bpd to raise prices. “I really don’t see much increase in the Permian basin or the American shale over the next few years,” said Scott Sheffield of Pioneer Natural Resources (NYSE: PXD) said this week. I never expect to grow to more than 5% under any circumstances … Even if oil were $ 100 a barrel and the world was in short supply. ” Related: How to play the first oil rally in 2021
Shale promises self-control. Devon Energy (NYSE: DVN) said it would not start drilling aggressively even with higher oil prices. “I’m struggling to see the need for U.S. producers to return to double-digit growth over the next few years,” new CEO Rick Muncrief told Bloomberg. “If we’re really thinking about 2021, we need to keep it flat for this management team.”
2020 is the hottest year on record, disaster is double. According to new data, 2020 was equal to 2016 for the warmest year on record. The cost of natural disasters in the US last year exceeded $ 95 billion, which was double the previous year.
Musk becomes the world’s richest person. Elon Musk overtook Jeff Bezos to become the richest person in the world, driven by the wild rise in Tesla’s share price (NASDAQ: TSLA). Musk’s net worth is estimated at $ 195 billion.
Saudi Arabia wants to build bridges with Biden. Saudi Crown Prince Mohammed bin Salman this week lifted a multi-year blockade from Qatar and also said he would voluntarily reduce oil production by 1 MB per day. According to analysts, the new tone is aimed at at least in part at eliciting goodwill from the incoming Biden government.
Exxon launches GHG data for the first time. ExxonMobil (NYSE: XOM) first released emission data for its Scope 3 emissions – which are burned by end users. Exxon’s sales in 2019 were equivalent to 730 million tons of carbon dioxide, about the same amount as the entire country of Canada. It is also the highest of all the western oil majors.
ANWR sales are an ‘epic failure’. The highly anticipated first rental sale in the Arctic National Wildlife Refuge (ANWR) was a big bust. Only 50% of the area offered received bids, and sales generated only $ 14 million in sales, a fraction predicted in recent years. To make matters worse, the state of Alaska was the most important player in the successful offerings, and only two small private companies – Knik Arm Services LLC and Regenerate Alaska Inc. – obtain treaties. Environmental groups call the sale an ‘epic failure’.
Banks criticize the rule that forces loans. Wall Street banks have blasted a proposed rule from the Trump administration that would force them to lend to energy and firearms firms.
Rivian nearly $ 25 billion valuation. Rivian Automotive Inc., the launch of electric trucks developed by Amazon.com Inc. and Ford Motor Co. is close to a new round of funding that values it at about $ 25 billion.
Biden intends to form an international coalition to counter China. Contrary to the Trump administration’s own approach, the Biden government will seek to form an international coalition to confront China in a number of areas, including trade, according to the WSJ. Related: Rising LNG Prices Welcome News for US Exporters
Canada’s oil sands are growing. Oil sands production in Canada reached a record high of 3.16 mb / d in November.
Norway’s EVs reach 54%. EV sales in Norway reached a 54% share in 2020, surpassing petrol and diesel vehicles for the first time.
Senate races in Georgia open more aggressive Biden plans. The twins won control of the Senate by two Democrats in Georgia. It offers many more opportunities for the Biden government on a range of energy and climate initiatives. S&P Global Platts provides an overview.
Army Corps finalizes the pipeline admissions program. The Army Corps of Engineers has completed its Nationwide Permit Program (NWP), a technically complex program that quickly provides for pipelines. However, the Biden administration may suspend the program.
By Tom Kool for Oilprice.com
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