Tuesday, December 01, 2020 /09:40
PM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
In 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
Oil prices dipped on Tuesday as the OPEC+
meeting ran into some
unexpected turbulence, with the three most influential members failing to agree
on how best to proceed with production in 2021.
OPEC+ delays meeting as talks continue. OPEC+ postponed a decision on its next steps until
Thursday after talks proved trickier than expected. Analysts expected the group
to extend its current agreement by three months or so, rather than allowing the
cuts to taper beginning in January. However, Reuters reports that
some members are itching to increase production. Russia has suggested easing by
0.5 mb/d each month beginning in January. At the same time, the UAE is
uncomfortable with low compliance levels of other members.
Exxon takes historic $20 billion writedown. ExxonMobil
(NYSE: XOM) said that it would
write down as much as $17 to $20 billion in the fourth quarter, the largest
writedown in modern history. The impairment was concentrated in natural gas
assets across a wide geographic area: Appalachia, Rocky Mountains, Oklahoma,
Texas, Louisiana, along with Western Canada and Argentina. The move dates back
to a major blunder when Exxon purchased XTO Energy for $35 billion in 2010, an
acquisition widely seen as a costly mistake.
Exxon's new strategy. Exxon is also slashing capex to $20-$25 billion per
year, down $10 billion from pre-pandemic guidance. The oil major said it would
concentrate its focus on the Permian, Guyana, Brazil and its chemicals
portfolio. Exxon is also seeking to protect its dividend, a $15 billion payout
that analysts increasingly see as unsustainable.
Invenergy breaks ground on massive Texas solar project. Invenergy LLC broke ground on a $1.6 billion solar project
northeast of Dallas, which will be the nation's largest when it comes online in
2023. The WSJ reports on the solar
boom in Texas.
Gazprom to restart Nord Stream 2 after a year-long
delay. Gazprom will attempt to restart
construction on the Nord Stream 2 pipeline, which has been held up for a year
due to U.S. sanctions. Analysts believe that Russia has the ability to complete
the project. Sanctions have targeted pipelaying vessels, which have complicated
Russia's construction effort.
U.S. shale is broken. After many ups and downs, most analysts see U.S. shale
production remaining flat for years, handing leverage back to OPEC+. "I see no
more growth until 2022, 2023, and it will be very, very light in regard to the
U.S. shale industry ever-growing again," said Pioneer (NYSE:
PXD) CEO Scott Sheffield.
Shale drillers shift to gas. Higher natural gas prices and subdued crude
prices have drillers shifting towards gas, a turnaround from much of the past
decade. EOG Resources (NYSE: EOG) and Continental
Resources (NYSE: CLR) have both increased their
focus on gas, for example.
S&P to buy IHS Markit for $44 billion. S&P Global Inc. agreed to acquire IHS
Markit Ltd. for about $44 billion, the companies said Monday. The all-stock
deal is the largest of the year and will create a data behemoth.
New Asia trade pact could hurt U.S. LNG. Fifteen countries in the Asia-Pacific region-including
China and Australia-recently signed the world's
newest and largest trade pact. The Regional Comprehensive Economic Partnership
(RCEP) Agreement is set to gradually reduce and, in some cases, eliminate,
trade tariffs on goods, including commodities. The pact could further sideline
U.S. exporters of energy to the world's most resource-thirsty region.
Volkswagen plans small EV. Volkswagen is accelerating plans
for a mass-market small electric vehicle, with a price of between $24,000 and
$30,000.
Venezuela convicts Citgo executives. A judge in Venezuela convicted six
oil executives at Citgo, five of which are American citizens. The so-called "Citgo 6" were arrested on corruption charges three years ago, but their
lawyers argue that the charges are without evidence.
Oil markets face a 200-million-barrel glut in 2021. Rystad Energy's balances show that should
OPEC+ fail to amend its existing deal and increase its production, the world in
January will face its biggest monthly glut since April 2020 with an average
daily surplus of 3.1 million barrels for the month.
Bank of America rules out Arctic financing. Bank of America joined other major
banks in ruling out funding for new oil and gas drilling in the Arctic. Goldman
Sachs, Morgan Stanley, Wells Fargo, and Citi have all previously done the
same.
Enbridge gets Line 3 greenlight. Enbridge (NYSE: ENB) received final
approval from Minnesota regulators to begin construction on its Line 3
replacement, which will roughly double the system's throughput.
Japan and Kuwait strike major oil storage deal. Japan and Kuwait have struck a deal to
store crude oil for Southeast Asia in Japan in a bid to boost the region's oil
supply network, which is currently rather weak and vulnerable to supply
outages.
Ford urges fuel economy deal with California. Ford
(NYSE: F) is urging other major
automakers to back a deal with California over fuel economy standards, as a way
of aligning regulations with the incoming Biden administration. A week
ago, GM (NYSE: GM) also abandoned the Trump
administration's effort in favor of California's stricter standards.
Credit:
Related News - Previous Oilprice
Intelligence Report
1.
Oil
Markets Hopeful as OPECplus Meeting Looms - OIR 271120
2.
Oil Bulls Drive Prices
Higher on Vaccine Success - OIR 241120
3.
Oil Demand Set to
Rebound in 2021 - OIR 201120
4.
Oil Markets See Light
At The End Of The Tunnel - OIR 171120
5.
Surge in COVID Cases Counters Oil Market Optimism- OIR 131120
6. Oil
Optimism Returns on Vaccine News - OIR 101120
7.
COVID Surge Keeps
Oil Below $40- OIR 061120
8.
Why Oil Markets Aren't
Focused On The Election - OIR 031120
9.
Oil
Prices Dragged Down By COVID - OIR 301020
10. Oil
Demand In Doubt As COVID Cases Climb - OIR 271020
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