Tuesday, March 02, 2021
/07:13 PM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
today's newsletter, 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
- The volume of crude that
went into Gulf Coast refineries declined by 2.7 mb/d for the week of February
19 as a result of the Texas grid crisis.
- The drop in refinery
processing of 2.4 mb/d, or 28%, was the largest weekly decline since Hurricane
Harvey in 2017.
- In total, an estimated 3.7
million b/d, or 20% of total U.S. refining capacity, was shut in as a result of
the weather, according to the EIA.
- Texas utility Vistra (NYSE:
VST) sees a $1.3
billion hit from the Texas freeze.
- Atmos Energy
(NYSE: ATO) trimmed its expected loss from Texas grid
crisis to $2.5 billion, down from $3.5 billion previously.
- Baker Hughes
(NYSE: BKR) and Akastor (OTCPK: AKKVF) have announced a
joint venture company to pursue offshore drilling solutions.
Tuesday, March 2, 2021
Oil prices pared gains at the start of the week,
seemingly hitting a temporary high note. Traders are on edge as they away a
decision from OPEC+ regarding the potential easing of production cuts.
Oil up, but bearish forces remain. Oil prices have posted substantial gains in recent
weeks, and most recently after fully pricing in the impacts of U.S. economic
stimulus, combined with more positive vaccine news with the approval of the
one-shot Johnson & Johnson vaccine. However, Rystad Energy points to some
caveats and potential pitfalls for crude prices: OPEC+ could add more supply
this week; refinery maintenance season is upon us, and Chinese demand has run
into a bit of a soft patch.
Rystad: Energy transition to cut oil by $10. The downside risk that the energy transition can bring
to oil prices is calculated to
as much as $10 per barrel in the long term, meaning oil prices could end up $10
lower in the future than they otherwise would if the transition to cleaner
energy speeds up, according to Rystad Energy. Texas utility files for bankruptcy. Brazos Electric Power Cooperative, Texas' largest and
oldest electric power cooperative, filed for bankruptcy after
getting hit with a $1.8 billion bill from the grid crisis last month.
Oil titans unsure about the energy transition. At CERAWeek, oil executives grappled with
how aggressively to pursue energy transition. Some urged faster movement,
others talked up the need for more fossil fuels. "We don't think peak oil is
around the corner - we see oil demand growing for the next 10 years," said John
Hess, CEO of Hess Corp. (NYSE: HES). "We're not investing enough to
grow oil and gas in the future."
UAE signals easing supply cuts in April. Abu Dhabi's ADNOC has told
Asian oil buyers that it plans to increase crude allocations in April, sources
close to the matter told Reuters.
The news comes just ahead of the OPEC+ meeting.
U.S. cold snap leads to a record gas drawdown. Natural gas inventories plunged during the
extraordinarily cold weather that hit much of the continent in February. Weekly
stocks fell by 338 billion cubic feet (Bcf) in the week ending February 19,
2021, nearly three times the average withdrawal for mid-February, according to
the EIA. A
record amount of natural gas, 156 Bcf, was withdrawn during that week in the
South Central region, which includes Texas.
DOE to tap $40 billion in clean energy funding. U.S. Secretary of Energy Jennifer Granholm said she
plans to revive a $40 billion loan program for energy projects. The program was
authorized by Congress but went unused during the Trump era.
Private shale step up drilling. Private shale drillers are leading the
charge on new drilling as publicly-listed companies face pressure from
investors. As Bloomberg reports, privately-held DoublePoint
Energy has more rigs in the Permian basin than Chevron (NYSE:
SEC says Exxon has to let shareholders vote on
resolutions. In an
early sign that a shift in direction is underway at the Securities and Exchange
Commission, the SEC shot
down a request from ExxonMobil
(NYSE: XOM) to exclude a shareholder resolution. Major
institutional investors, including BNP Paribas, pushed a resolution that would
require Exxon to release more information on its lobbying activities and its
climate risk. Exxon wanted it tossed out, but the SEC declined.
U.S. gasoline demand surge. U.S. gasoline demand surged by 1 mb/d last week to
nearly 8.8 mb/d. "Last week was pretty eye-popping indeed," Patrick DeHaan,
head of petroleum analysis at GasBuddy, told Bloomberg.
"We've seen a continued recovery as Covid-19 slowed, on the warmer weather, and
basically a big bounce since the Texas cold weather hampered numbers."
Texas PUC Chair resigns. The head of the Texas Public Utility Commission resigned on
Monday in the wake of the grid crisis.
API considers carbon tax. The oil industry's most powerful lobby group is
preparing to endorse a carbon tax. The Wall Street Journal reports that
the decision has been highly divisive internally.
Deep cuts put African oil at risk. Five of OPEC's 13 member states are from Africa.
Angola has gone from being Africa's top crude producer just five years ago to
barely pumping more than war-torn Libya while Nigeria--another key OPEC
member--is in grave
danger of suffering Angola's fate as Big Oil
makes yet another round of deep CAPEX cuts.
Can abandoned oil wells be used for geothermal? Some companies have been researching and testing
something that could expand geotherma's reach and benefit oil companies:
oil wells into geothermal wells.
Petaluma, CA first city to ban new gas stations. Petaluma, California became the
first U.S. city to outlaw new gasoline stations. Activists hope that it becomes
a trend, not unlike the proliferation of bans of natural gas hookups in new
buildings that started in California just a few years ago.
Asia LNG price falls. The price of spot LNG in Asia has retreated almost
as fast as it surged during a cold winter snap, leaving a market grappling with
how best to deal with the recent extreme volatility.
China plans a power grid upgrade. China's utility giant State Grid Corp of China
plans to build ultra-high voltage transmission
lines over the next few years to help shift the country away from coal.
Electrification requires new mines. Can the U.S. build them? You can't have green
energy without mining," Mark Senti, chief executive of Florida-based rare earth
magnet company Advanced Magnet Lab Inc. "That's just the reality." Reuters explores
the challenges of building new mines for lithium and other metals critical for
Carbon emissions top pre-pandemic levels. Global CO2 emissions have
surpassed pre-pandemic levels.
The post Oil Markets on Edge
Ahead of OPECplus Meeting first appeared in Oilprice.com on March 02, 2021.
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