Saturday, November 21, 2020 /06:00
AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
Oil prices look set to
rebound in 2021 as optimism grows around a COVID vaccine and OPEC looks set to
extend its production cuts.
Oil prices pared recent gains as investors nervously watch the spread of
Covid-19, which has tempered bullishness following positive vaccine news. "It's
not good news," Bill O'Grady, executive vice president at Confluence Investment
Management in St. Louis, told Bloomberg. "This is probably
going to be a disappointing travel holiday coming up, and that's going to weigh
on demand." Still, there are signs of life in global oil demand visible beyond
the near-term coronavirus wave.
Asia's
oil demand looks strong. While oil demand in Europe and
the United States continues to disappoint, refiners in Asia are racing to
procure crude from around the world, giving the oil market some hope that at
least in one region, demand is
strengthening in the fourth quarter.
China's
oil binge to extend into 2021. China stockpiled oil this
year when prices were cheap, offering an extra bit of demand to the market.
Reuters reports that China's
private refiners will stockpile an additional 100 million barrels in 2021.
Oil
demand primed for recovery. Crude oil demand is likely
to rebound next year
following the promising news about a vaccine against the novel coronavirus, according
to Fitch Ratings.
Goldman
Sachs: Structural bull market on the way. Goldman Sachs
said in a new report that not only will oil prices rise next year, but we could
soon see a "structural bull market on par with the 2000s." The bank says
under-investment in new commodity supplies, fiscal stimulus to rebound from the
pandemic, and the risk of higher inflation all point to a bull market in the
2020s.
GM
raises bet on EVs. GM (NYSE: GM) told investors
that it plans on spending $27 billion on electric vehicles through 2025, an
increase over prior plans by 35%. The automaker intends to introduce 30
different models over the next four years, some of which will have a sticker
price cheaper than $35,000. "We have everything in place to accelerate mass
adoption of EVs," GM CEO Mary Barra said at a Barclays
auto conference. "We want to be No. 1 in EVs." The company aims to cut the cost
of manufacturing battery packs by 60%, which would mean reaching cost parity
with gasoline vehicles by 2025.
Iberdrola
aims to dominate hydrogen. Spanish utility Iberdrola (BME:
IBE) is building a 200-megawatt
electrolyzer and has plans for an additional 600 MW over the coming
years.
EU
wants 300 GW of offshore wind by 2050. The EU's new
"Offshore Renewable Energy Strategy" calls for increasing offshore wind
from 12 to 300 GW by 2050. In the interim, the plan calls for 60 GW by 2030.
Hitting the 2050 target will require $940 billion in investment.
Libya's
oil to hit 1.25 mb/d. Libya's oil production has reached 1.25 mb/d,
according to the country's National Oil Corp. The cuntry's output could rise to
1.3 mb/d within a month.
Natural
gas prices fall on mild weather. Natural gas prices fell below
$2.70/MMBtu this week as the U.S. saw warmer weather. At the end of October,
prices had surged close to $3.50/MMBtu. "November's mild weather has flipped
the script," Gelber & Associates analysts said in a recent note.
California
considers a 90% EV target for Uber and Lyft. California
regulators are considering a rule that will
require ride-hailing fleets to transition to 90% electric by 2030.
California
wants Imperial Valley to be "Lithium Valley." California's
Imperial Valley holds vast reserves of lithium. A report from earlier this year
found that the Salton Sea could produce 600,000 tons of lithium per year,
nearly 8 times the size of the entire world's production in 2019. A growing
number of mining companies and investors are looking at the
region's lithium potential.
Solar group wants Biden to end solar tariffs. The solar
industry wants the Biden
administration to use an executive order to repeal the Trump administration's
2018 order that slapped tariffs on imported panels.
Middle East oil
producers drowning in debt. Arab Gulf oil producers
are losing billions of U.S. dollars from oil revenues this year due to the
pandemic that crippled oil demand and oil prices. Because of predominantly
oil-dependent government incomes, budget deficits across the
region are soaring.
UAE
clarifies its position in OPEC. Anonymous UAE officials
claimed earlier in the week that the country was considering breaking away from
OPEC, citing the difficulties it is facing due to the stringent production cuts
it must adhere to. Now, the UAE's Energy Minister has officially responded to the
allegations.
Enbridge
to buy Spectra Energy for $3.3 billion. Enbridge (NYSE:
ENB) will buy the rest
of Spectra Energy Partners for $3.3 billion in stock.
Enbridge already owns 83% of Spectra.
Investors
shifting capital from fossil fuels to renewables. According
to Morningstar, investors funneled 1.9 billion
euros into European renewable energy investments between July and September, up
11-fold from a year earlier. By comparison, conventional energy funds saw less
than 115 million euros flowing in.
Credit:
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