Tuesday, March 09, 2021
/09:21 PM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
newsletter, we will take a quick look at some of the critical figures and data
in the energy markets this week.
We will then look at some of the key market
movers early this week before providing you with the latest analysis of the top
news events taking place in the global energy complex over the past few days.
Chart of the Week
- U.S. exports of
propane reached record highs
in 2020, up 13%.
- Propane became the largest
source of refined product exports, surpassing distillate fuel oil.
- The increase is the result
of strong petrochemical and heating demand in Asia.
- Eni (NYSE:
E) may spin off its new retail
and renewable energy business next year, while taking a minority stake in the
company, in an effort to raise money for the energy transition. Reuters reports
that the company could be worth around 10 billion euros.
- The oil majors are moving
into "overbought" territory, according to Seeking Alpha.
- Vineyard Wind may soon
receive a greenlight from the Biden administration. The $2.8 billion 800-MW
offshore wind farm off the coast of Massachusetts would be the first major offshore
wind project in federal waters.
Tuesday, March 9, 2021
Oil prices took a breather after a huge rally
last week. Brent dipped back below $68 per barrel in early trading on Tuesday.
While analysts broadly see the oil market as tight and potentially moving
tighter following the OPEC+ cuts, the flip side is that high prices could start
to eat into demand.
$70 oil could slow demand. While the unexpected rollover of the OPEC+ production
cuts sent Brent Crude prices up to $70 a barrel, the highest oil prices in more
than a year could dampen global oil demand recovery, which the OPEC+ group
itself still sees as fragile.
Vitol: "OPEC+ is in control." One of the world's top oil traders says that
OPEC+ decision-making is the key factor driving the oil market this year. "The
market is telling us that OPEC+ have control," Mike Muller, Vitol's head of
Asia, said Sunday in an
online forum hosted by consultant Gulf Intelligence. "We're going to get a
stock-draw that is going to accelerate through the second quarter and that's
why the market is doing what it's doing."
OPEC+ leans towards over-tightening. The surprise OPEC+ extension signals an "overtightening of the market is likely, and is only likely to be corrected
after a significant lag," Standard Chartered said in a note. The investment
bank hiked its oil price forecast by $14, with Brent averaging $66 per barrel
this year. But higher prices hit 2022 demand, and the bank sees Brent averaging
Refiners' fortunes rebound. Seven of 18 refineries affected by the Texas
grid crisis -- making up over 2 million barrels a day of crude processing
capacity -- were operating normally as of Monday.
U.S. sour crudes have seen margins shoot up as OPEC+ extended cuts and demand
globally looks healthy.
Houthis hit Aramco. Houthi forces in Yemen fired drones and
missiles at Saudi Arabia, including a Saudi Aramco facility at Ras Tanura that
is vital to petroleum exports. But Saudi Aramco said there was no loss of
Chevron keeps spending restraint. Chevron (NYSE: CVX) will keep CAPEX at $14
billion for the next few years, while still hoping to grow Permian production
to 1 mb/d by 2025. Chevron also promised improved returns and a modest
reduction in carbon intensity, although not a reduction in absolute
Saudi Arabia doubts demand strength. Last week, Saudi oil minister Prince Abdulaziz bin
Salman Al-Saud expressed some skepticism that the global economy would roar
back to life imminently, a sentiment that appears to have bolstered the OPEC+
extension."I will believe it when I see it," he said multiple
Iran reaches out to Asian buyers. Iran has reached out to refiners in
Asia, suggesting that it hopes to soon step up oil exports. The overtures are perhaps
an indication that Iran expects a thaw in relations with the U.S. in the coming
China leaves climate plans vague. Analysts expected China to add more meat on the bones
to its strategy of ratcheting down greenhouse gas emissions last week when it
released details of its latest 5-year plan, but analysts were disappointed with
the lack of information. China said Friday it
plans to lower emissions per unit of gross domestic product by 18% by 2025-the
same level it targeted in the previous five-plan. Meanwhile, analysts see the size
of China's carbon market growing to $25 billion by 2030.
Goldman ups Imperial Oil to Buy. Goldman Sachs upgraded Imperial Oil
(TSE: IMO) to a Buy rating from Sell, with a price target
of C$36. Goldman sees earnings improving due to both better operations and
costs, and the bank sees positive revisions to cash flow and earnings and now
sees 23% total return for the shares.
Tesla is building a secret energy storage project in
Texas. Tesla (NASDAQ: TSLA) is building a gigantic battery storage project in
southern Texas, one that has been literally under wraps until Bloomberg discovered
Qatar's massive LNG buildout moves it closer to China. Qatar has plans to expand its LNG footprint with
a $29 billion buildout,
which will increase export capacity by a third to 110 mtpa. A string of recent
deals also suggest that Qatar may be shifting a bit closer towards
China's sphere of influence.
Energy transition leads to surging metals prices. Three billion tons: this is how much metals and
minerals the energy transition will require, according to a
World Bank report. Demand for some of these, such as copper, lithium, cobalt,
and graphite, is set to increase 500 percent by 2050.
California drilling moves ahead. Kern County approved a plan to
allow 40,500 new oil and gas wells in the county over the next 15 years.
Shell to sell some Egypt assets. Royal
Dutch Shell (NYSE: RDS.A) plans
on selling upstream
assets in Egypt worth up to $926 million.
Rystad: Oil employment more resilient in China. The job losses in the oil and gas industry from the
pandemic were not as bad in China as they were elsewhere. A Rystad Energy
analysis shows that the world's top oil and gas employer, China, lost only 5.3%
of its massive workforce. The toll in the US was more devastating, estimated at
11.1%, worse than its European peers and Russia.
India wants to cut Mideast dependence. Following the OPEC+ decision to roll over the
production cuts into April, India is asking its state-owned refiners to
aggressively look to diversify imports away from the
Middle East, as the world's third-largest oil importer isn't happy with the
tighter oil market and higher oil prices.
The post Oil Prices Dip After Hitting $70 first appeared in Oilprice.com on March 09, 2021.
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