Saturday, December 19, 2020 / 08:00 AM / by Tom Kool of
Oilprice.com / Header Image Credit: Oilprice.com
Optimism about COVID-19 vaccines is
driving oil prices higher and energy stocks are now on course to see their
largest quarterly gain since 1989
Friday, December 18th, 2020
Crude oil prices held their gains this week and pushed to new highs. In midday
trading on Friday, Brent was over $52. Optimism on vaccinations is outpacing
the bearish winds from record Covid-19 infections in the United States.
Analysts differ on what happens next, but some say oil has more room on the upside.
Investors turn bullish on North
American oil. Having been savaged for much of 2020,
stocks for North American oil and gas producers have surged in recent weeks. The Canadian Energy
Sector Index is up 40% since November 9, and U.S. energy stocks are having
their best quarter since 1989.
LNG
prices skyrocket. JKM prices shot up over $12/MMBtu in recent days. Energy Intel says a combination of factors is
leading to the 80% rally in just three weeks. Supply disruptions in Australia,
Qatar and Norway, weather-related supply issues in the U.S., congestion at the
Panama Canal, colder temperatures in the Northern Hemisphere,
Saudi
cuts budget. Saudi Arabia cut its 2021 budget by 7%, as it seeks to
minimize the damage from falling oil revenues.
Hydrogen
production to increase 5000% in 5 years. After decades of stagnation
and multiple false dawns, the hydrogen economy appears primed for a major
takeoff. Industry experts are predicting that hydrogen could become a globally
traded energy source, just like oil and gas, while the Bank of America says the
industry is at a tipping point and set to explode into an $11 trillion
marketplace.
ExxonMobil
upgraded to Buy by Goldman Sachs. Goldman Sachs upgraded ExxonMobil (NYSE: XOM) to a Buy
rating with a $52 price target, up from $42. The bank sees oil demand returning
and Exxon's shares have already been beaten down.
BP
buys stake in forest carbon offsets. BP (NYSE: BP)
bought a controlling stake in Finite Carbon,
which helps landowners sell credits for their forests.
Strong
oil demand in Asia. The Dubai January-February spread moved
into backwardation this month, due to strong demand for
crude in India and China.
Banning
drilling on federal lands to cost $8.1 billion. A potential ban
on drilling on federal lands would cost eight western states up to $8.1 billion
in tax revenue according to a study from the state of
Wyoming.
Federal
Reserve joins climate risk body. The U.S. Federal Reserve joined an international group of central
banks - the Network of Central Banks and Supervisors for Greening the Financial
System (NGFS) - a body that uses regulatory and research clout to mitigate
effects of climate change risk to the financial system.
EVs
to reach price parity in three years. EVs could reach price
parity with the internal combustion engine on an upfront unsubsidized basis
within the next three years, according to BloombergNEF. The key threshold can be reached when
the cost of battery packs falls to an average of $100 per kilowatt-hour. The
cost is now at about $126.
Lloyd's
of London to exit fossil fuels by 2030. Lloyd's of London, the
world's largest insurance market, said it would end coverage of coal, oil sands and Arctic energy
exploration by 2022, and withdraw from the sector altogether by 2030.
SEC
approves a watered-down anti-corruption rule. The
Securities and Exchange Commission approved a rule requiring oil, gas and mining
companies to disclose payments made to foreign governments, although the rule
had been significantly weakened. Unlike previous iterations, the new rule
allows companies to disclose aggregated data at the country level, as opposed
to on a contract-by-contract basis.
7
European energy majors agree on transition principals. Seven
European energy companies - BP (NYSE: BP), Royal Dutch Shell (NYSE: RDS.A), Eni
(NYSE: E), Equinor (NYSE: EQNR), Galp (FRA: DE), and Total (NYSE:
TOT) - plus Occidental Petroleum (NYSE: OXY) have
agreed on six energy transition principles:
support Paris Agreement, reduce emissions from operations, collaborate with
stakeholders and investors, support emissions sinks and carbon capture,
disclose climate risk, and report information about membership in trade
associations.
Trafigura
denies bribery allegations in Brazil. Oil trader Trafigura is under fire for alleged bribery in Brazil, a case
stemming from the long-running Lava Jato investigation.
Canada
floats North American ban on gasoline vehicles. Canada's
Environment Minister floated potential closer ties with the U.S. on
environmental issues, including aligning vehicle policies that could eventually
lead to a North American phase out of the internal combustion engine.
Biden's
energy and environment team. President-elect Joe Biden unveiled
multiple cabinet and sub-cabinet picks related to energy and environment this
week. Former EPA administrator Gina McCarthy will be Biden's domestic climate
czar. North Carolina environmental regulator Michael Regan will be heading up
EPA. Rep. Deb Haaland (D-NM) will be Secretary of Interior. Former Michigan
Governor Jennifer Granholm will lead the Department of Energy.
Oil
industry needs $12.6 trillion in investment. The global oil
industry needs some $12.6 trillion in investments
through 2045, the secretary-general of OPEC said at a videoconference.
Credit:
The post-Energy Stocks Soar and Oil
Prices Climb first appeared in Oilprice.com on December 18, 2020.
Related News - Previous Oilprice Intelligence Report
1. Oil Bulls are Back Despite New COVID Lockdowns - OIR 151220
2. Oil Takes a Breather After Big Rally - OIR 111220
3. Gasoline Demand Hits 20 Year Low During Thanksgiving - OIR
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4. Oil Rallies On OPECplus Agreement - OIR
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5. Oil Prices Drop On OPECplus Uncertainty - OIR 011220
6. Oil Markets Hopeful as OPECplus Meeting Looms - OIR 271120
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8. Oil
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9. Oil
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10. Surge in COVID Cases Counters Oil Market Optimism- OIR 131120
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