Tuesday, January 19, 2020 / 10:14 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, January 19,
2021
Oil prices fell more than 2% on Monday on rising concerns about oil demand. New
lockdown restrictions in China spooked the market. "The COVID-19 pandemic's
spread is taking center stage again and traders are getting increasingly
worried about the long duration of European lockdown and about the new
restrictions (in) China," Bjornar Tonnage from Rystad Energy said.
However, oil regained lost ground in early trading on Tuesday.
IEA: Demand to recover by
5.5 mb/d. In the IEA's January Oil Market Report, the
agency projects that oil demand will bounce back to 96.6 mb/d this year, an
increase of 5.5 mb/d over 2020 levels. That erases some of the 8.8-mb/d decline
from last year. However, the agency cut its forecast for
first-quarter demand by 600,000 bpd compared to last month's report. On the
supply side, production will increase by 1 mb/d this year, after declining by
6.6 mb/d in 2020.
Biden may cancel Keystone
XL. President Biden may cancel the permit for the Keystone
XL, perhaps on his first day in office, according to Reuters. In an
effort to stave off a death sentence for the project, TC Energy (NYSE: TRP) said it
would make the pipeline have a net carbon zero emissions profile by spending
$1.7 billion on renewable energy to power the pipeline and to use union labor.
Bloomberg reports that
materials and pipe could be sold for scrap.
Biden executive orders
planned for Day 1. A series of executive orders are expected on
Wednesday from newly inaugurated President Biden. In addition to one on
Keystone XL, Biden is expected to rejoin the Paris Climate Agreement, reimpose
methane regulations on oil and gas operations, use the federal procurement
power to make government buildings shift towards clean energy, and block new
drilling permits in the Arctic National Wildlife Refuge.
Sky-high LNG prices may
not last. The rally in LNG prices in Asia is likely
temporary. While February JKM prices topped $21/MMBtu, April contracts are
trading at around $7. And the long-term pricing outlook for LNG remains
bearish, according to the Wall Street Journal. China stands at the center of long-term forecasts, and China's
domestic gas production is on the rise, increasing by 9% in the first 9 months
of 2020.
Oil majors benefit from
LNG price spike. Majors such as Royal Dutch Shell (NYSE: RDS.A) and Total (NYSE: TOT) might
benefit more from the LNG price spike than trading houses due to their access
to multiple sources of gas, allowing them to reroute cargoes, according to Reuters.
Total buys $2.5 billion
stake in Indian renewables company. Total (NYSE: TOT) is investing $2.5
billion to acquire a 20% stake in Adani Green Energy Ltd., an India-based
renewable energy company.
IEA: New methane report
warns cuts needed. Oil and gas operations emitted 70
million metric tons of methane in 2020, a 10% reduction from the year before
due to the pandemic, according to the IEA's new report on
methane. "The task now for the oil and gas industry is to make sure that there
is no resurgence in methane emissions, even as the world economy recovers, and
that 2019 becomes their historical peak," said IEA executive director Fatih
Birol. The IEA said that methane emissions need to decline by 70% over the next
decade.
Enbridge defies Michigan,
attempts to keep Line 5 open. In November, Michigan ordered
the Line 5 pipeline shut down. On January 12, Enbridge (NYSE: ENB) wrote a letter
arguing that the state didn't have the authority to shut down the aging
pipeline.
China's economy picked up
speed in the fourth quarter. China's GDP grew 2.3%
in 2020, making China the only major economy that did not suffer economic
contraction last year. China grew 6.3% in the fourth quarter, year-on-year.
$501 billion in
decarbonization. The world invested $501 billion into
cleantech and decarbonization efforts in 2020, beating the previous record by
9%, according to BloombergNEF. That
included more than $300 billion on renewable energy and nearly $140 billion one
electric vehicles.
Pipeline issue hits Libyan
production. A leak that forced the shutdown
of an oil pipeline in Libya has reduced its recovering oil production by as
much as 200,000 bpd.
SEC to increase scrutiny
on oil and gas. The Biden administration is likely via the
SEC to increase disclosure requirements related to climate risk for oil and gas
companies. In fact, a more aggressive push on ESG standards and requirements
could be in the offing. The Wall Street Journal looks at the SEC's potential agenda. Bloomberg also looks at the SEC,
although from the angle of financial fraud in the
oil and gas industry.
Court strikes a fatal blow
to Trump carbon rule. The U.S. Court of Appeals for the
District of Columbia Circuit killed the
Trump administration's rule on power plant emissions. The court said that the
Affordable Clean Energy (ACE) rule, a watered-down replacement for the
Obama-era Clean Power Plan, did not adequately protect health and the
environment. The decision gives the Biden administration something of a clean
slate to start over.
Russia starts work on its
Arctic mega project. Russia is aiming to develop the massive Vostok
project. Rosneft expects the operation to cost $170 billion over a decade that
will employ 400,000 workers, create 15 new industrial towns, and build 800 km
of new pipelines. The Vostok projects should already produce 30 million tonnes
of oil by 2024 which rounds up to 600,000 barrels per day. Eventually, it could
produce as much as 2 mb/d.
Biden to face question on
Venezuela fuel swaps. Representatives of fuel suppliers in
Venezuela are expected to press the Biden administration to loosen the ban on
fuel swaps for the impoverished country.
Axis Capital rules out
Arctic projects. Axis
Capital Holdings Ltd. said it
wouldn't insure oil and gas projects in the Arctic National Wildlife Refuge,
the first underwriter to rule out insurance for the Arctic.
Money pouring into
offshore green investments. The Wall Street Journal reports that
investors are pouring money into retrofitting deep-sea vessels that once
serviced offshore oil projects to now handle offshore wind installations.
Credit:
The post Oil Demand Fears Continue To Weigh On Markets first appeared in Oilprice.com on January 19, 2021.
Related News - Previous Oilprice Intelligence Report
Related News - Oil and
Gas
Signup with Facebook
Signup with Twitter
