Oil prices have fallen below $ 60, but remain at levels not seen since January 2020.
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Friday 19 February 2021
The electricity crisis in Texas is easing, but the disruptions, damage and human toll have been historic. As of Friday morning, the ERCOT network operator in Texas said that it would result from “emergencies” later in the day. After a crazy week, WTI fell just a little bit, but kept profits close to $ 60, a price that has not been seen since January 2020.
Texas interruption facilitated. As of Tuesday, about 45 gigawatts of electricity generation from renewable energy, coal and natural gas was offline. More than 4 million people have lost their power. By Friday, most people had seen the power restored. The crisis has once again brought attention to several network policy issues – the lack of wear and tear on the power generation assets in Texas, the lack of a capacity market and the isolation of the state network from the rest of the country.
Affects U.S. oil production. About 4 mb / d of US oil production has been shut down due to power outages, freezer drilling rigs and other equipment failures. Most interruptions were in the Perm basin. Restarting frozen or shutter wells is not necessarily straightforward, and some reloads can take weeks.
Related: Is this oil rally the beginning of something much bigger?
Texas bans the shipment of natural gas outside the state. Texas Gov. Greg Abbott has taken the drastic step of banning the export of natural gas from the state to save supply. The move is highly controversial and potentially illegal, although most analysts note that any legal challenges will be difficult because the order has expired by the time a judge reviews it. The governor also personally made requests to several LNG exporters to cease operations.
LNG loads have been canceled. According to Bloomberg, at least ten LNG cargoes have been canceled due to the crisis in the network.
Restarting refineries can take weeks. According to Bloomberg, four of the largest oil refineries in Texas have suffered major damage. The disruptions may reduce the demand for crude oil, but reduce the supply of refined products. The four refineries include ExxonMobil’s (NYSE: XOM) Baytown and Beaumont plants, Marathon Petroleum’s (NYSE: MPC) Galveston Bay Refinery, andTotal’s (NYSE: TOT) Port Arthur facility. The result could be $ 3 per liter by May.
The US wants to reopen talks with Iran. The US government has said it will accept an invitation from the EU to negotiate with Iran. Iran did not exactly jump on the bandwagon, saying that it would “reverse” recent actions on its nuclear program, but only after the US lifted sanctions.
Gas companies have frozen ‘jackpot’ in Texas. While Texans struggle to keep the lights on and the heating on, gas producers in the Lone Star state, or at least those whose drill heads have not frozen, are exploding.
Saudi Arabia to increase production. According to the Wall Street Journal, Saudi Arabia is prepared to reverse its voluntary production reduction of 1 MB / d in the coming weeks, according to the Wall Street Journal, with the barrels returning to market in April. ” A Saudi increase in production … makes perfect sense in light of the tightness that is starting to emerge in the market, ” Ole Hansen, head of commodity strategy at London’s Saxo Bank, told WSJ. “The market is likely to demand it pretty well.”
Shell sells Alberta assets for $ 900 million. Royal Dutch Shell (NYSE: RDS.A) will sell its Duvernay shale assets in Alberta for $ 900 million Crescent Point Energy Corp. (TSE: CPG). Related: Oil prices rise as US oil production falls by 30%
Maersk plans carbon-neutral shipping containers. The shipping giant AP Moller Maersk A / S is accelerating plans to switch to carbon-neutral operations, including plans to add the first cargo ship that runs on biofuels.
For the time being, American shale is holding on to self-control. With WTI rising to $ 60 a barrel, the US shale industry could be in a better financial position than previously expected. Recent comments from shale managers suggest that drillers will not return to aggressive spending plans, but rather to cash generation.
Canadian gas drilling is on the rise. Canadian shale gas drilling has increased rapidly this year, and Canadian gas exports to the US are also increasing. Canada’s drillers are hoping to gain more market share as US drillers cut back.
The freezing of Texas increases the cost of charging a Tesla to $ 900. The shortage of electricity in Texas amid the cold moment has caused electricity prices to rise so fast that the rise in power prices equates to a cost of $ 900 for charging a Tesla.
$ 100 oil possible on commodity superbike. Several analysts at the investment bank say oil could rise to $ 100 a barrel because we could be at the start of a new commercial cycling cycle.
Egypt starts a second LNG plant. Egypt is close to starting a second LNG facility again after being shut down for eight years. The restart raises Egypt’s hopes of developing a major natural gas center and LNG export industry.
Shell’s Nigerian accounts were frozen in a court dispute. A Nigerian court limited Royal Dutch Shell’s (NYSE: RDS.A) access to his bank accounts in the country over a years-long legal dispute.
By Tom Kool for Oilprice.com
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