Saturday, September 19, 2020 /07:00
AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice
It's been a busy month for oil markets,
with a build-up of bearish news sending oil prices crashing at the start of the
month, only for prices to rally again this week. A combination of outages from
Hurricane Sally, a drawdown in oil storage, and high compliance from OPEC is
responsible for the rebound.
September 18th, 2020
Oil rebounded above $40 at
the end of the week after EIA data showed a drawdown in oil storage and
Hurricane Sally forced offshore platforms offline.
up on OPEC+ meeting. Oil gained more ground after the Saudi
oil minister warned speculators
gambling in the market. To short-sellers betting on a slide in prices, he said:
â€œMake my day.â€ He added that OPEC+ will actively and pre-emptively manage the
market. The group also pressured laggards to increase their compliance.
$49 by year-end. Goldman Sachs sees Brent rising
to $49 per barrel before the end of the year. "We estimate that the oil market
remains in deficit with speculative positioning now at too low levels," Goldman
"Fracking has to continue." Democratic Presidential
candidate Joe Biden once again reiterated support for fracking in a CNN town
hall event in Pennsylvania on Thursday. "Fracking has to continue because we
need a transition," Biden said. "We're going
to get to net-zero emissions by 2050, and we'll get to net-zero power emissions
by 2035. But there's no rationale to eliminate, right now, fracking."
to lift blockade. The head of the Libyan National Army,
General Khalifa Haftar, said he would lift
the blockade on Libyan oil exports after reaching an agreement with the
country's deputy prime minister. The impact is unclear, however, as the
National Oil Co. previously denounced the negotiations.
expects a drastic drop in oil exports. Pemex expects oil exports
to fall sharply over the next three years due to declining production and the
need to supply a new $8 billion refinery. Heavy Maya crude exports could fall
by as much as 70 percent between 2021 and 2023.
LNG asks for five more years to build. Magnolia LNG, a
proposed gas export terminal in Louisiana, asked FERC for five
more years to build its project, citing poor market conditions. Its original
permit expires in 2021.
operators hurting on low demand. The shale production crash
has spilled over to the
midstream sector, which was caught between falling oil production and pipeline
utilization from the upstream and crumbling demand for fuels in the downstream.
admin considers $300 million for refiners. The Trump
administration is looking at dishing out $300 million in aid to
refiners who were denied an exemption on ethanol blending requirements.
bids $750 million for Chevron's Appalachian assets. EQT (NYSE:
EQT) has bid $750 million
(NYSE: CVX) Appalachian assets, part of an acquisition that
Chevron originally spent $4.3 billion to obtain. EQT, already the nation's
largest natural gas producer, would significantly expand its presence if the
deal is successful.
stockpiles cap oil prices. Even as crude stocks decline,
diesel inventories continue to increase, rising to a record high for this time
of year. Diesel cracks fell to their lowest level since 2010. The weakening margin
is the "worst possible scenario for refiners," Bob Yawger, director of the
futures division at Mizuho Securities USA, wrote in a note.
business group backs carbon pricing. The Business
Roundtable, a grouping of CEOs from some of the biggest U.S. companies, announced support for
"market-based emissions reduction policy." The announcement is notable because
the group has actively opposed such a policy track for years.
considers clean energy acceleration. China is considering stepping up its clean
energy deployment as part of its next five-year plan that begins in 2021. One
option includes bringing forward its 20 percent renewable energy target from
2030 to potentially 2025.
files offshore drilling plans in Alaska. Shell Offshore
Inc. has submitted plans to
plans to drill for oil in the waters along the National Petroleum
Reserve-Alaska in the coming years.
moves to join RGGI. The Pennsylvania Environmental Quality
Board (EQB) voted 13-6 to launch a formal rulemaking process to join
the Regional Greenhouse Gas Initiative (RGGI), a carbon cap-and-trade program
among 10 Northeast and Mid-Atlantic states.
Co. curbs drilling with greater setbacks. Ventura County,
California voted to increase
drilling setbacks to 2,500 feet for new oil wells near schools. It also triples
the setback distances from homes to 1,500 feet. The vote also curtailed
flaring. Ventura county is home to some of the largest sources of oil
production in California.
Access safe through 2020. After initially ordered to shut
down, the Dakota Access Pipeline will likely remain online at least
through the end of the year under a new court schedule.
shuts Gulf of Mexico platform. Hurricane Sally passed
through the Gulf, but another storm looms. Royal Dutch Shell (NYSE: RDS.A)
said it shut down
production at some of its facilities with more tropical storms heading towards
the Gulf of Mexico.
opens door for more renewables. The Federal Energy
Regulatory Commission voted 2-1 to remove
market barriers for rooftop solar and other distributed energy resources. The
order allows distributed energy resources to participate in regional wholesale
gas prices plunge. Natural gas prices plunged this week,
including a 10 percent one-day sell-off. Goldman Sachs pointed to congestion in
storage as we near the end of injection season. But the crash could be brief. "Ultimately, however, we believe the high inventories to end this injection
season are still not sufficient to derail next year's bullish gas
fundamentals," Goldman Sachs said in a note.
The post Oil Bulls
Return As OPEC+ Reassures Markets first appeared in Oilprice.com on September 18, 2020.
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