Tuesday, December 29, 2020 /08:55
PM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice
Today, 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
Market
Movers
Tuesday
December 29, 2020
Oil has seesawed back and forth over the past
week, sandwiched between very strong bullish and bearish forces on each side.
Covid-19 is at its worst in many parts of the world, but vaccinations are
picking up in earnest as well. Brent edged back above $51 per barrel after the
house passed a major stimulus bill on Monday evening. "Markets feel very rangy
into the New Year but should find support today from broader risk markets as
stocks are soaring on the prospects of larger stimulus checks," said Stephen Innes,
chief global market strategist at Axi.
OPEC+ deal could be tweaked. The terms of the OPEC+ production pact could be revised if oil demand recovers next year faster than currently
expected, Russian Deputy Prime Minister Alexander Novak, who is still in charge
of coordinating Russia's oil policy with OPEC, told Rossiya TV news channel in
an interview on Monday.
U.S. LNG set for strong 2021. Rising JKM prices for LNG in Asia brighten the outlook for U.S. LNG exports. "We
assume near-max utilization rates of US LNG export facilities next year," Bank
of America said.
Oil and gas write-downs largest in over a decade. Oil and gas companies in North America and
Europe wrote down around $145 billion in assets in the
first three quarters of 2020, the most since 2010. Prices are rebounding, but
the write-downs also reflect long-term concerns. "They are coming to grips with
the fact that demand for the product will decline, and the write-downs are a
harbinger of that," KPMG's Regina Mayor told the WSJ.
Japan to phase out ICE vehicles. Japan said it would end sales of gasoline vehicles by the mid-2030s, the latest
major economy to chart a course away from the internal combustion engine.
Exxon's emissions higher than thought. Internal planning documents reviewed by Bloomberg Green reveal detailed emissions projections for
individual projects from ExxonMobil (NYSE: XOM). For
instance, the Golden Pass LNG project would emit 3.1 million metric tons, and
the liquefaction process would emit as much as a coal-fired power plant.
Investors are growing increasingly concerned that carbon-intensive projects
will be subjected to future regulation or taxation, and they are pressuring
Exxon to detail more of their risk.
The worst-performing energy stocks of 2020. Schlumberger
(NYSE: SLB), has rallied 23
percent in Q4. Nevertheless, the oilfield service provider has lost nearly half
of its market valuation year to date, its shares are down 47 percent this year.
Here are a few other of the worst-performers of the year.
Dominion plans 2.6 GW of offshore wind. Dominion Energy (NYSE: D) filed for the construction of 2.6 GW of offshore wind in
Virginia.
Oil demand won't recover until 2022. Global oil demand will likely take another year or so to return to
pre-pandemic levels-by late 2021 or early 2022, according to IHS Markit. Other
analysts see something similar. A "full-fledged demand recovery is shaping up
to be a 2022 story, with the 2021 exit rate getting close but not quite at
pre-COVID levels," Raymond James wrote in a note. Developing countries will
face structural hurdles to vaccination programs, resulting in a drawn-out
recovery.
BP well in Australia comes up empty. "BP Australia can confirm that no significant
hydrocarbons have been found at the Ironbark exploration well in Western
Australia," the company said in an email to Reuters. The result is a disappointment for a project that hoped to
supply the North West Shelf LNG plant.
UK grid shows rapid decarbonization. The carbon intensity of electricity generation
in the UK fell 60% in the six years to 2019. In 2019, renewables
accounted for 37% of electricity generation. More recently, on December 26,
wind accounted for more than half of the total. The UK grid will be coal-free
by 2025 at the latest.
Is the energy transition creating an investment bubble? NextEra
(NYSE: NEE), the solar power
firm, overtook ExxonMobil (NYSE: XOM) as the
most valuable energy company in the United States, albeit just briefly.
Everyone is talking about hydrogen. The energy transition narrative is hogging
energy headlines. But what if it turns out to be one huge bubble?
Oil tanker market in for long recovery. Overcapacity for ships and a questionable outlook for
demand means that the market for crude oil tankers remains difficult, according to consultancy Drewry.
Goldman: Exxon is oversold. ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), and ConocoPhillips
(NYSE: COP) have returned an average of -36% this
year, a dreadful result. "That said, the stock that appears most dislocated
relative to negative revisions is XOM, with shares down 40% relative to our
cash flow per share estimate down 19%," Goldman Sachs wrote in a note. The
investment bank recently upgraded Exxon to a Buy rating.
Continental Resources upgraded by KeyBanc. KeyBanc Capital upgraded Continental Resources (NYSE: CLR) to
Overweight from Sector Weight on Tuesday, noting higher future Bakken activity
and also upside to oil in Oklahoma. Continental will see "improved leverage
next year, significant FCF generation in 2021, and nice exposure to higher oil
prices," according to KeyBanc.
China's Yahua to supply Tesla with lithium. Sichuan Yahua Industrial Group signed a five-year deal
to supply battery-grade lithium hydroxide to Tesla (NASDAQ:
TSLA).
U.S. restricts CNOOC trading. The U.S. Treasury Department barred American investors from trading shares of CNOOC (NYSE:
CEO) beginning in February. The Trump administration
blacklisted CNOOC over ties to the Chinese military.
Credit:
The post Oil Prices Climb on Stimulus Hopes first appeared
in Oilprice.com on December 29, 2020.
Related News - Previous Oilprice Intelligence Report
1. Oil Rally Unravels On New COVID-19
Lockdowns - OIR 221220
2.
Energy Stocks Soar
and Oil Prices Climb - OIR 181220
3.
Oil Bulls are Back
Despite New COVID Lockdowns - OIR 151220
4.
Oil Takes a Breather
After Big Rally - OIR 111220
5.
Gasoline Demand Hits
20 Year Low During Thanksgiving - OIR 081220
6. Oil Rallies On OPECplus Agreement - OIR
041220
7.
Oil Prices Drop On
OPECplus Uncertainty - OIR 011220
8.
Oil Markets Hopeful
as OPECplus Meeting Looms - OIR 271120
9.
Oil Bulls Drive Prices Higher on
Vaccine Success - OIR 241120
10. Oil Demand Set to Rebound in 2021 -
OIR 201120
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