Saturday, October 24, 2020 /07:00
AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
COVID cases are now surging around the
globe, threatening oil demand and sending oil prices back below $40.
October 23rd, 2020
On Thursday, the U.S. reported more than
70,000 COVID cases for the first time in three months, and the trajectory
suggests the U.S. may break new record highs in the coming days. The numbers
help explain weak (and weakening) gasoline demand in the U.S., a theme also
unfolding in Europe. The pandemic continues to largely cap any potential price
rally. Crude remains stuck at $40, where it has traded for the better part of
oil market. Demand is weak in Europe, the U.S. and Latin
America, and remains depressed as the coronavirus continues to spread. But in
Asia, gasoline demand is robust, and even jet fuel demand is rebounding
strongly. As Javier Blas notes, there is a very big difference between east
and west right now, with Asia looking to pre-pandemic demand levels.
and Trump clash over oil and climate. While the substance and
their positions were not new, the topics of oil, fracking and climate change
played a large role in the last presidential debate. Trump has largely ignored
the climate science and promises to maintain a friendly stance towards oil and
gas. Biden played up the job opportunity of renewables and said the U.S. must
transition away from fossil fuels.
propose "blue carbon" bill. A proposal from House
Democrats would expand offshore wind while barring new offshore oil
to create $20 billion clean energy powerhouse. Spain's
Iberdrola (BME: IBE) announced a deal to buy
Resources (NYSE: PNM) for $8.3 billion and adding the unit to
Iberdrola's subsidiary, Avangrid Renewables. Adding PNM would make Avangrid the
third-largest renewable energy company in the U.S., worth $20 billion.
blocks U.S. LNG because of methane. The French government blocked Engie (EPA:
ENGI) from inking a deal for U.S. LNG from Brownsville, Texas,
over concerns that the natural gas was too dirty. The incident highlights the
risks posed by the Trump administration rolling back environmental regulations,
particularly those on methane emissions. Analysts say conflict over methane and
carbon will only rise. "We're probably going to go from trade war to carbon
trade war pretty seamlessly in the next 10 years," Kevin Book, director of
analysis firm ClearView Energy, told Politico.
to announce layoffs. ExxonMobil (NYSE: XOM) announced
job cuts on Wednesday but declined to disclosed specifics. "We informed
employees today that the U.S. workforce study is under review and nearing
completion," a spokesperson told E&E News. "We
anticipate communicating further details to our employees very soon."
Morgan's profit falls. Kinder Morgan (NYSE: KMI) saw its
profits fall 10
percent in the third quarter as pipeline shipments for oil and refined products
procurement on renewables rises. Over the next decade,
corporate procurement will account for 20 percent of total renewable energy
installations, according to a new report from IHS Markit, a higher percentage
than other countries.
has 15 GW of renewables in the works. NextEra (NYSE:
NEE) says it has 15 GW
of renewables in the works, a backlog that is larger than its entire portfolio
to go net-zero by 2050. Japan's Prime Minister is set to announce a 2050
carbon-neutral target, bringing Japan in line with the EU and 60 other
countries. Japan is a big consumer of coal, oil, and LNG, and is the fifth
largest CO2 emitter in the world, so an aggressive decarbonization effort would
have global ramifications.
hints at OPEC+ extension. Vladimir Putin hinted that Russia
would be open to delaying the scheduled tapering of the OPEC+ production cuts.
Currently, OPEC+ is keeping 7.7 mb/d off the market, but beginning in January,
the deal is scheduled to reduce that to 5.7 mb/d. But demand is not coming back
as quickly as hoped. "We believe there is no need to change anything in our
agreements, we will closely watch how the market is recovering," Putin said. 2However, we
do not rule out that we could keep existing restrictions on production, and not
remove them as quickly as we had planned to do earlier."
renewable energy IPOs. New Mexico-based Array
Technologies (NASDAQ:ARRY) has charged out of the gate, surging
79% in its first three trading days to give the maker of solar-powered equipment
a market valuation of $5 billion. Array is recognized as the world's
second-largest supplier of solar tracking systems, a rapidly growing market
estimated at ~$3 billion in 2020. There are a few other IPOs worth
considers sale of Gulf of Mexico oil field. BP (NYSE: BP) is
considering selling its
stake in the Constellation oil field in the Gulf of Mexico. The company hopes
to raise $200 million.
the next takeover target? A rush of consolidation is sweeping
over the U.S. shale industry, with ConocoPhillips (NYSE: COP) and Pioneer
Natural Resources (NYSE: PXD) each making multi-billion-dollar
purchases this week. Who is next? Analysts say Diamondback Energy (NASDAQ: FANG)
might be a prime target for some of
the big companies still looking for acquisitions.
gasoline demand drops. U.S. gasoline demand is weakening,
prompting refineries to additionally cut capacity utilization and crude
processing in a sign that resurging coronavirus cases are derailing fuel demand
recovery. Demand fell to 8.289 mb/d for the week ending on October 16, down
from 8.576 mb/d a week earlier and
8.896 mb/d two weeks earlier.
The post Oil Back Down As COVID Cases Surge first appeared in Oilprice.com on October 23, 2020.
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