Saturday, September 05, 2020 /07:00
AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice
Oil prices fell below
$40 for the first time since June as demand concerns grow and stock markets
Friday, September 4th, 2020
Oil prices hit a rough patch this week, falling back in concert with broader
financial markets. The dollar gained strength, which also pushed down crude.
The demand rebound is also sputtering. WTI was driven below $40 for the first
time since June.
seeks OPEC+ exemption. Iraq is looking for an exemption from
the OPEC+ deal for the first quarter of 2021, raising fears that the group's
compliance may start to slip. A separate report says that
Iraq wants a two-month extension on the extra production cuts that it agreed to
implement in August and September.
oil economy running on fumes. Kuwait's budget deficit
is expected to reach $46 billion this year. But oil revenues collapsed after
the 2014-2016 downturn and neve recovered. Now the country is grappling
with tapping its sovereign wealth fund as the days of huge oil revenues appears to be
warns of running low on critical metals. A new report
from the European Commission warns that the shortage of critical materials
could threaten the EU's push to become climate neutral by 2050. The EU estimates that
it will need up to 18 times more lithium and five times more cobalt in 2030, a
figure that rises to 60 times more lithium and 15 times more cobalt by 2050.
LNG faces blowback in Europe. The Trump
administration's aggressive use of sanctions related to Nord Stream 2 risks
blowback from angry European policymakers. "This is not a way you treat allies
and friends. Now, the European Union should show unequivocally that it will not
be blackmailed," said Klaus
Ernst, chairman of the German parliament's energy and economic affairs
committee. "If diplomacy fails, we'll need penalty tariffs on fracking gas or
even an import ban as a painful countersanction, since the U.S. gas industry
seems to be a major driver of the sanctions policy."
under pressure on Nord Stream 2 after Navalny poisoning. The
poisoning of Russian opposition leader Alexei Navalny is ratcheting up the pressure on Germany to cancel the Nord Stream 2 project as
retaliation against Russia.
exits fracking. Schlumberger (NYSE: SLB) agreed to
sell its North American fracking business to Liberty
Oilfield Services (NYSE: LBRT), marking something of an exit
from shale for the oilfield services giant.
14% of utilities prioritize renewables. A new
University of Oxford study found
that worldwide only about 14 percent of utilities prioritize renewables over
gas or coal. "This research highlights a worrying gap between what is needed to
stop global warming and what actions are being taken by the utility sector,"
the author said.
glut continues. Overcapacity in the downstream sector
is a global problem, and some aging European refineries face the prospect of closure. Energy Aspects estimates that the refining sector needs to
cut capacity by 10 percent. Total (NYSE: TOT) and Eni
(NYSE: E) have already converted three refineries into
handling biodiesel, and more are likely to follow.
cuts oil sands after pipeline leak. Imperial Oil
(TSE: IMO) shut down its production at the 220,000-bpd
Kearl oil sands site after the Polaris pipeline leaked diluent. The pipeline
delivers diluent for blending but spilled 566
barrels near Fort McMurray. The outage is likely to remove 240,000 to 270,000
bpd from the market for at least a few weeks, according to Reuters.
gas losing out to batteries. Batteries are
becoming more attractive than gas-fired electric capacity in Australia. AGL Energy
(ASX: AGL) new COO Markus Brokhof recently said that
"there is a clear business case for big batteries." New electric capacity is
increasingly coming from renewables plus batteries, and as natural gas prices
rise worldwide from recent lows, that dynamic should continue.
fuels are here to stay. The future looks bright,
emission-free, and electric. But a recent IEA
report offers a reality check. The world is still very much dependent on oil
and gasâ€”and even coalâ€”for its continued energy supply. The 100-percent
renewable energy world is still decades away, and more than a couple.
jet fuel demand rebounding. Jet fuel demand in the
U.S. is recovering faster than it is in Europe or the
rest of the Americas.
Aramco slows diversification plans. Saudi Aramco
(TADAWUL: 2222) is tapping the breaks on major investment
plans in Texas, China, India, and Pakistan, according to the Wall Street Journal. It is also delaying plans to increase domestic crude
oil and gas permitting up 190%. California has issued 190
percent more oil and gas drilling permits in the first six months of 2020
compared to a year earlier.
Gates-backed battery company to go public. QuantumScape,
a 10-year old battery company backed by Volkswagen Group, is looking to go public through a reverse-merger with SPAC Kensington Capital Corp.
growth not assured. A new report from Carbon Tracker
finds that while the oil and petrochemical industries are betting their future
growth on demand for plastics, demand is likely to peak as the world starts to
transition from a linear plastic system to a circular one. The report warns
that disappointing demand growth will lead to $400 billion in stranded petrochemical assets.
The post Oil Prices Fall Below $40 on Demand Concerns first appeared in Oilprice.com on September 04, 2020.
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