Tuesday, February 02, 2021 / 08:33 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. We hope you enjoy.
Chart of the Week
Market Movers
Tuesday, February 2, 2021
Oil shot up to a one-year high on Tuesday, with WTI topping $55 per barrel. The
oil market is "supported by the combination of tightening fundamentals, as seen
through the rising backwardation and the renewed risk appetite in the U.S.
stock market," said Ole Hansen,
head of commodities research at Saxo Bank A/S.
ExxonMobil
posts first annual loss in decades. ExxonMobil
(NYSE: XOM) reported a loss of
$20.1 billion in 2020, the first annual loss in at least 40 years, and also the
fourth consecutive quarterly loss. The loss included a $19.3 billion
write-down. At the same time, Exxon vowed to defend its dividend, stating that
it would cut spending rather than the dividend if oil prices drop below $50 per
barrel.
ExxonMobil
announces carbon capture effort. ExxonMobil
(NYSE: XOM) pledged to spend $3
billion on low-emissions technologies through 2025, mostly related to carbon
capture. Bloomberg notes that much of
the effort is old news and depends on not-yet-enacted government
subsidies.
Exxon
announces board shakeup. Exxon announced changes to its
board amid investor pressure to cut spending. The changes came as D.E. Shaw,
which owns a sizable
position in Exxon. Reuters reported last week
that more than 135 investors managing more than $2 trillion in assets formed a
coalition to pressure the oil giant. Engine No. 1, a San Francisco-based
investment firm, said Exxon needs independent board members "to ensure a clean
break from a strategy and mindset that have led to years of value destruction."
Exxon
discussed a possible Chevron merger last year. Exxon and
Chevron, were in talks to merge amid the pandemic crisis last year, the Wall
Street Journal has reported, citing
unnamed sources in the know. Such a tie-up would be one of the biggest
corporate mergers ever and create a company that could be worth more than $350
billion based on Exxon's and Chevron's current valuations.
BP
lost $5.7 billion. BP (NYSE: BP) lost $5.7 billion
in 2020, the first loss in a decade. The company said it would ramp up
renewable energy capacity to 50 gigawatts by 2030, up from 3.3 GW currently.
Glimmers
of hope for crude oil prices. Oil was off to a reasonably
good start this year thanks to the start of a vaccination push and a Saudi
commitment to cut more production. The continued surge in Covid-19 infections
and a new flare-up in China shook optimism and weighed on prices, but now
things appear to be looking up based on the
latest supply and demand data and forecasts.
Goldman
Sachs: Oil market tightening. The oil market rebalancing "continues to beat our above-consensus expectations," Goldman Sachs said in a
January 31 note to clients. "Our base-case remains for a demand-led rebalancing
of the oil market," the bank said.
Total
outperforms peers in 2020. French oil company Total (NYSE:
TOT) outperformed other oil majors last year. According to Rystad Energy, Total
reduced costs on a per-barrel basis by the most compared to its peers. It also
discovered 1 billion boe in 2020, allowing it to be the only major able to
replace more than 100% of what it produced.
Biden
admin revokes drilling permits. Biden's Interior Department
approved drilling permits in the first few days in office, despite an executive
order putting a freeze on them. On Friday, Interior said 70 permits
were improperly issued, and they rescinded them.
Iran
won't return to the nuclear deal unless sanctions lifted.
Iran said it would not
simply return to the terms of the 2015 nuclear deal until American sanctions - implemented after the U.S. pulled out of the deal in 2018 – are removed.
Shell
ordered to pay compensation for Nigeria oil spills. Royal Dutch
Shell (NYSE: RDS.A) was ordered by a Dutch
court to pay compensation to two Nigerian villages in a case that stretches
back more than a decade. Importantly, the case establishes a precedent of
parent companies being held responsible for pollution abroad.
Shell
bets on power trading and hydrogen. Royal Dutch
Shell (NYSE: RDS.A) is making big bets on expanding
its power trading and hydrogen units as part of its energy transition plans.
Offshore
wind turbine market heating up. Competition is heating up in the market
for offshore wind turbine manufacturing, with incumbent Siemens Gamesa
Renewable Energy (BME: SGRE) seeing a rising challenge from GE (NYSE: GE)
and Vestas
Wind Systems (CPH: VWS). Meanwhile, Siemens said it would eliminate 7,800 jobs by
the end of 2025, mainly from its gas and power division.
Natural
gas prices rise on winter weather. On Monday, natural gas
prices shot up by more than
11% as colder weather swept over the northeast.
Goldman:
Gas markets tight in summer. Goldman reiterated its view
that natural gas markets look increasingly tight heading into next winter. The
bank sees U.S. natural gas prices averaging $3.25/MMBtu in the summer.
Automakers
abandon Trump's effort to stop California fuel economy rules. A
group of automakers abandoned their support for the Trump administration's
efforts to bar California from setting tighter fuel economy standards. The companies
include Toyota, Fiat Chrysler, Hyundai Motor, Kia Motors, Mitsubishi Motors,
and Subaru Corp. An auto industry trade group also proposed opening talks
with the Biden administration on tightening federal standards.
Credit:
The post Oil Prices Hit 1-Year High first appeared in Oilprice.com on February 02, 2021.
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