Oil Prices Rebound as Demand Optimism Returns - OIR 250521


Tuesday, May 25, 2021 / 06:34 PM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice

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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.

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Chart of the Week

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  • Natural gas-fired power generation averaged 3,394 GWh per day in the first four months of 2021, down nearly 7% from the same period in 2020.
  • The decline is mostly the result of higher natural gas prices and increased competition from renewables. The decline is the first year-on-year decline since 2017.
  • The drop is even more notable given that overall electricity generation increased by 6.6% over the same period.  

Market Movers

  • Williams Companies (NYSE: WMB) has an extra two years to build its proposed Northeast Supply Enhancement (NESE), a gas pipeline from Pennsylvania to New York, according to a decision from FERC. The project has run aground due to the lack of permits in New York and New Jersey.
  • BP (NYSE: BP) said it will sell its stake in the Shearwater field in the North Sea to Tailwind Energy for an undisclosed sum.
  • Royal Dutch Shell (NYSE: RDS.A) won a $2.5 billion 10-year contract to supply New South Wales with battery backup power. 

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Tuesday, May 25, 2021 

Oil prices rose by more than 3% on Monday on renewed 
optimism about global demand as global vaccinations continue. Also, concerns about a rush of new supply from Iran eased.

Hiccups in Iran negotiations. Iran said that gaps remain in negotiations with the U.S., which helped 
push up crude oil prices. 

Cabot and Cimarex to merge. Cabot Oil & Gas (NYSE: COG) has 
agreed to merge with Cimarex Energy (NYSE: XEC), combining two shale drillers in a deal valued at $7.4 billion. It is the latest sign of consolidation in the shale industry, and the combined company will have a major presence in the Marcellus, Permian, and Anadarko basins. 

Investors skeptical of new oil deal. Shares of both Cabot and Cimarex fell by 6% on the announcement, an indication of skepticism from investors. Analysts questioned the logic of combining companies from different geographies rather than creating scale in one basin. "This deal comes as a bit of a surprise and may have a less clear story to tell investors,' Andrew Dittmar, an analyst at Enverus, 
wrote in a statement. "Some investors may wonder why in-basin opportunities weren’t pursued ahead of a surprising multi-basin deal."

Goldman: $80 oil this year. Goldman Sachs still 
expects crude oil to rise to $80 per barrel by the end of the year despite reports about progress on U.S.- Iranian talks about the lifting of sanctions. "The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply," Goldman analysts said.

Dakota Access to remain open. A federal judge 
decided against shutting down the Dakota Access pipeline, even though the same judge vacated a crucial permit last year. Still, the Army Corps of Engineers is conducting an environmental review on a new permit that will be completed in 2022, which will decide the fate of the project. But the court decision lets the pipeline operate until then.

China tamps down commodity prices. China 
said it will curb "unreasonable" increases in commodity prices, a move intended to deflate soaring prices.

Exxon’s referendum on Darren Woods. On Wednesday, shareholders will vote on one of the most significant investor activist campaigns in years, with Engine No. 1’s proposal to replace a third of ExxonMobil’s (NYSE: XOM) board. The vote is shaping up to be a 
referendum on CEO Darren Woods’ tenure, and also a symbolic fight in Exxon’s corporate strategy in the context of energy transition. 

European oil majors compete with renewables companies. The European oil majors are increasingly expanding their footprints in renewable power generation, and are trying to compete with traditional renewables companies. "We're actively exposed to different forms of energy in a way that pure-play renewable companies don’t have," Dev Sanyal, BP’s (NYSE: BP) head of gas and low-carbon energy, told the 
WSJ. "We're basically getting our wind from the Nordics, and we’re taking solar from Spain… We’re providing a blended offer."

OPEC to enforce compensation. OPEC has had to 
remind once again the laggards in compliance in the OPEC+ oil production deal to submit plans on how they will compensate for pumping above their respective quotas in recent months, sources at OPEC told Energy Intelligence this week.

Oasis exits Permian, switches to Williston. Oasis Petroleum (NASDAQ: OAS) 
said that it is exiting the Permian basin and is instead doubling down on the Williston Basin as a pure-play driller. Oasis is selling its Permian acreage for $481 million to an undisclosed buyer.

U.S. looks abroad for EV metals. The Biden administration plans on looking abroad for metals needed for batteries, while focusing domestic efforts on processing, according to 

California begins rulemaking on fracking. California 
initiated on Friday the pre-rulemaking stage of proposed legislation that would end fracking in the state in 2024.

Shell on trial in the Netherlands. A Dutch court is expected to 
issue a decision on Wednesday on whether or not Royal Dutch Shell (NYSE: RDS.A) has a legal responsibility for climate change. The decision is only legally binding in the Netherlands but is being closely watched by both industry and environmental groups for its potential impacts elsewhere. 

$150 billion in stolen oil money in Iraq. Some $150 billion in oil revenues has been 
stolen and smuggled out of Iran since the fall of Saddam Hussain in 2003, the president of Iraq said.

Texas requires winterization. A new law has 
advanced in Texas that would require power plants and some gas facilities to winterize their operations, potentially adding significant costs to utilities and owners of gas infrastructure.

Pemex buys Houston refinery. Pemex will 
buy Royal Dutch Shell’s (NYSE: RDS.A) stake in a Deer Park, Texas refinery for $596 million.

Top 5 oil firms saw revenues fall 31%. The five largest oil and gas companies in the world saw their combined revenues 
 by 30 percent last year, although they still generated more than $1 trillion in total revenues.



The post Oil Prices Rebound as Demand Optimism Returns first appeared in Oilprice.com on May 25, 2021.

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Related News - Previous Oilprice Intelligence Report 

1.       Oil Prices Rebound After Major Collapse - OIR 210521

2.      IEA Drops Bombshell Report On Oil And Gas - 180521

3.      Oil Prices Rebound as Global Oil Glut Drains - 140521

4.      Panic Buying Sparks Gasoline Shortages - 110521

5.      Oil Markets Optimistic After Brent Flirts With $70 - 070521

6.      Oil Prices Hit 7-Week High on Demand Optimism - 040521

7.      Oil Prices Pull Back After A Big Week - 300421

8.     OPECplus Buoys Oil Despite India Concerns - 270421

9.      Bullish Oil News Offset By New Lockdowns In India - 230421

10.  Oil Prices Down Despite Libya Outage - 200421

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3.      Nigeria Governors' Forum Okay Full Deregulation of Petrol, to Hover Around N385 per Litre

4.      Average Prices of PMS, AGO, HHK and Cooking Gas - April 2021

5.      Gas Flaring: The Dilemma of Value Destruction

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8.     Era of High Oil Prices Slowly Ebbing as OPECplus Eases Supply Cuts

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10.  Average Prices of PMS, AGO, HHK and Cooking Gas - March 2021

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