January 11, 2020 /07:14AM / By Tom Kool of
Oilprice.com / Header Image Credit: Oilprice.com
Oil prices have fallen dramatically as
fears of a hot war subside and the reality of a global oil glut returns to the
forefront of traders' minds.
Friday, January 10th, 2020
Oil prices are set to close out the week down sharply, lower than where they
were before the Soleimani killing. WTI is currently at a one-month low. With
de-escalation in the air, the geopolitical risk premium has disappeared for the
stocks soar. Crude stocks rose slightly in the past week, but
gasoline stocks shot up sharply. In the past two weeks, gasoline stocks have
increased by more than 22 million barrels. The EIA data was released shortly
after President Trump spoke about Iran, a move the market interpreted as a
de-escalation. The EIA data combined with the Iran news sent oil prices
wants U.S. out of the Middle East. "It is in their interest
that they pack and leave voluntarily, not only Iraq but Afghanistan and the
Arabic countries," Brig. Gen. Amir Ali Hajizadeh said on Thursday. The U.S. faces uncertainty in Iraq as the Iraqi
parliament and Prime Minister have voiced support for expelling American forces
from the country.
tightens pollution on trucks. The U.S. EPA initiated a process to limit emissions of nitrogen dioxide
from heavy trucks. The industry supports it, as analysts say the move could
head off stricter state-level standards in California.
GHG emissions fall 2 percent. U.S. greenhouse gas emissions declined by 2.1 percent last year, due to an 18 percent
decline in coal generation. Without policy changes, analysts say emissions
declines will not accelerate.
Corp. skyrockets 27 percent on Suriname find. Apache Corp.
(NYSE: APA) saw its share price shoot up 27 percent this week after it announced a prolific discovery
in offshore Suriname. Apache is partnering with Total SA (NYSE: TOT)
on the project. "It's binary. Yesterday, Suriname was worth nothing and now: we
don't know what it's going to be worth," BofA Global Research energy analyst
Doug Leggate told Reuters. One brokerage called the discovery "among the most
anticipated in the world." The discovery comes at a critical time as Apache's
Permian assets are struggling. Meanwhile, Apache also announced that it would eliminate nearly 500 jobs in order
to cut costs.
says Mexico discovery holds 670 million barrels. Talos Energy
(NYSE: TALO) said that its Zama field, one of the largest discoveries in Mexico in
two decades, may hold roughly 670 million barrels of recoverable oil.
joins climate investor group. BlackRock, the world's largest
asset manager, said that it would join Climate Action 100+, a collection of 370 institutional investors
managing $41 trillion in assets. The group pressures companies to cut carbon
to water down NEPA. The Trump administration wants to weaken the National Environmental Policy Act (NEPA), one
of the bedrock environmental laws that requires environmental assessments
before major infrastructure or energy projects move forward. The plan to defang
NEPA is intended to accelerate permitting for big projects, but it will likely
face legal challenges once it is finalized later this year.
opens TurkStream. Russia inaugurated the TurkStream pipeline this week, a pipeline
that runs from Russia to western edge of Turkey via the Black Sea. The pipeline
will then carry gas to Western Europe. Just a few weeks ago, Russia started up
the Power of Siberia pipeline, a long-distance conduit that runs to China.
Meanwhile, the Nord Stream 2 pipeline has stalled at the eleventh hour due to
U.S. sanctions, but is likely to be completed later this year.
Coast Pipeline loses permit. A federal court unanimously tossed out a federal permit for a compressor station
servicing the Atlantic Coast Pipeline because of the deleterious health effects
it would have on an African-American community, which constitutes "unequal
treatment," the court said. The pipeline aims to carry Marcellus shale gas to
the U.S. Southeast, but will have to cross sensitive forests and the
Appalachian Trail, and as the court decision indicates, would have negative
impacts on certain areas.
on U.S. Gulf Coast to soar. The shale boom, and the coming wave
of petrochemical plants, LNG export terminals and other infrastructure - mostly
in Texas and Louisiana - will cause a spike in greenhouse gas emissions over the next
five years. A new report said 157 planned facilities to be built by 2025 will
result in the emissions equivalent of 50 coal-fired power plants.
Bank: Global GDP growth a tepid 2.5 percent. The World Bank said that global GDP will expand by just 2.5 percent this year, "if
everything goes just right." Behind the lethargy is an "unprecedented runup in
debt worldwide, and the prolonged deceleration of productivity growth." Last
year, GDP grew by 2.4 percent. Emerging market debt ballooned to 170 percent of
GDP in 2018, up from 115 percent in 2010.
opens oil and gas exploration. For the first time, China will
allow foreign companies to explore for oil and gas in the country. "China is
accelerating the sector reform due to growing energy security concerns," Zhu
Kunfeng, the Beijing-based associate director of upstream research at IHS
Markit, told Reuters.
to slash jobs. Occidental Petroleum (NYSE: OXY) said it would "significantly" cut jobs as it tries to cut costs after
the $38 billion takeover of Anadarko Petroleum. The acquisition quadrupled the
company's debt to $40 billion.
oil prices fall again. Alberta may have loosened the mandatory
production cuts too far as WCS prices have recently fallen sharply relative to
WTI. The differential is at risk of a "blowout," according to Credit Suisse. If
the discount reaches $25 per barrel, the Alberta government "might be forced to
step back in" and issue cuts again, Manav Gupta of Credit Suisse said. WCS recently fell to a $22-per-barrel discount.
oil and gas discoveries hit 4-year high. The world's oil and
gas companies discovered 12.2 billion barrels of oil equivalent last year,
the largest total since 2015. There were 26 discoveries of at least 100 million
barrels in 2019.
of refineries up for sale. Royal Dutch Shell (NYSE: RDS.A) said
that it is looking to sell its refinery in Anacortes, Washington, and there are now seven
major refineries in the U.S. that are up for sale, accounting for 5 percent of
the country's processing capacity. Companies are having trouble finding bidders
because of unfavorable locales, worries about falling margins, and the coming
restart of nearby facilities in the Caribbean that will add to competition," Reuters said.
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