COVID Surge Keeps Oil Below $40- OIR 061120

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Saturday, November 07, 2020   /07:00 AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice

 

While most of the world's media is focused on the painfully slow progression of the U.S. presidential election, it's COVID that's impacting oil prices.

 

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Friday, November 6th, 2020


At the time of this writing, Joe Biden held small leads in Pennsylvania, Georgia, Arizona and Nevada, but most are too close to definitely call the election. Still, assuming Biden wins, he will take office with a divided government. He will have little wiggle room in Congress without Republican support, and he will also have his hands full with multiple crises - the pandemic, unemployment, climate change, and deep political division. 

Executive actions? Barring a sweep of two January Senate races in Georgia, presumed President-elect Joe Biden will struggle to push through major green stimulus as he had proposed unless he can somehow bring Sen. Mitch McConnell on board with concessions elsewhere. That leaves executive authority, something President Trump used heavily during his four years. A few possibilities jump out: rejoining the Paris Climate agreement, nixing Keystone XL and possibly the Dakota Access pipeline, slowing down drilling in Alaska and reinstating methane regulations on drilling. Plenty of other actions are possible, but may not be immediate, such as stricter fuel economy standards, reduced permitting for drillers on federal lands, greater environmental enforcement, etc. But big-spending items will require an act of Congress. 

New Mexico to finalize methane rules in January. New Mexico regulators will 
hold a January 4 public meeting to finalize rules on emissions from oil and gas operations. For instance, drillers will be required to capture 98% of their gas emissions. 

Colorado to (mostly) ban flaring and venting. Colorado regulators 
adopted new rules that largely ban flaring and venting natural gas, with some exceptions for emergencies. Flaring is significantly less common in Colorado than it is in Texas, due to adequate access to pipelines. As such, industry groups have largely supported the new rules. 

Ballot initiatives push clean energy forward. Several state-level ballot initiatives favor renewable energy. In Nevada, for instance, voters approved a stricter renewable portfolio standard at 50% renewables by 2030. Columbus, Ohio approved a measure requiring the city to get 100% of its electricity from renewables by 2023. A vote in Alaska to tax the oil industry is 
losing, but all votes have not yet been counted. Here is a rundown of a few other state-level initiatives. 

Trump replaces FERC Chairman. President Trump 
demoted FERC Chairman Neil Chatterjee, elevating Commissioner James Danly to take over the chair role. The move comes a few weeks after Chatterjee expressed some support for a form of carbon pricing. 

Oil prices slide on covid. Coronavirus cases continue to surge in the U.S. and Europe, and nationwide lockdowns in several European countries could 
drag down demand. The U.S. surpassed 120,000 cases in a single day on Thursday.

Shell to shut LA Louisiana refinery. Royal Dutch Shell will 
shut down its Convent refinery in Louisiana after failing to find a buyer for the facility.

Consolidation is killing shale jobs. The M&A frenzy unfolding in the shale industry will inevitably lead to job losses. As firms announce deals, they are also announcing 
layoffs at the new entities. Even if the industry has left the worst of the crisis behind, as much as 70 percent of the more than 100,000 jobs lost in the U.S. oil, gas, and chemicals industries due to the pandemic may not return by the end of 2021.

EU weighs system of certifying "green" LNG. Officials at the European Commission, the union's executive arm, are 
assessing ways to reduce pollution from gaseous fuels as part of the Green Deal. Engie recently rejected an LNG deal with the U.S. over concerns about methane emissions. 

Clean energy stocks sink, rebound. In the wake of the disappointing performance of Democrats in U.S. Senate races, stocks for renewable energy companies plunged on reduced expectations of green stimulus. However, they 
rebounded on Thursday as analysts focused on what a Biden administration can do with executive authority. 

Republicans win Texas RRC seat. A Republican businessman 
won the open seat on the Texas Railroad Commission, which regulates oil and gas. The Democrat had hoped to increase climate scrutiny on the industry but lost the race.

Shale completions jump. Completions of already-drilled wells have picked up pace with oil prices at $40 per barrel. The number of completions has 
increased by 50% since mid-September. 

Rig count rises again. The U.S. rig count ticked up once again, rising by 5 compared to a week earlier. The increase offers further evidence that drilling activity may have turned a corner.  

What's next for Iranian oil? The presumed election of Joe Biden raises questions about the U.S.-Iran relationship. Biden may try to rejoin the Iran nuclear deal and ease tensions once again, which could lead to the return of Iranian oil to the global market. 

Turkey Expands Gas Drilling In The Black Sea. After announcing a major natural gas discovery in the Black Sea earlier this year, Turkey has started drilling for gas at a second location in the sea, Turkish Energy and Natural Resources Minister Fatih Dönmez 
said on Twitter on Thursday.  

From Billions To Millions: Canada's Offshore Oil Disappointment. The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) 
announced disappointing results this week from its call for bids on offshore oil parcels, according to a press release.

 

Credit:

The post COVID Surge Keeps Oil Below $40 first appeared in Oilprice.com on November 06, 2020.

 

Related News - Previous Oilprice Intelligence Report 

  1. Why Oil Markets Aren't Focused On The Election - OIR 031120
  2. Oil Prices Dragged Down By COVID - OIR 301020
  3. Oil Demand In Doubt As COVID Cases Climb - OIR 271020
  4. Oil Back Down As COVID Cases Surge - OIR 231020 
  5. Oil Prices Are Going Nowhere Until Election - OIR 201020 
  6. COVID Kills Another Oil Rally - OIR 161020 
  7. Oil Holds Its Breath As Presidential Election Approaches - OIR 131020 
  8. Oil Prices Climb 10% in a Week - OIR 091020 
  9. Stimulus Hopes And Hurricane Push Oil Prices Higher - OIR 061020 
  10. Oil Tumbles As Trump Tests Positive - OIR 021020 

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