Saturday, December 05, 2020 /09:40
PM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
Oil prices rallied on Friday morning as OPEC+ finally came to
a compromise, with the group unanimously agreeing to add 500,000bpd to January
quotas.
Friday, December 4th, 2020
Oil prices rose after OPEC+ agreed to partial increases in production beginning
in January, preventing a breakdown in the agreement. Brent inched close to $50 per barrel in a sign of confidence in the deal.
OPEC+
agrees to monthly increases. Discord characterized the
OPEC+ meeting this week, and concerns grew that the group would fail to agree
to postponing the planned production increases. But in the end, instead of
allowing cuts to ease by 2 mb/d, the group agreed to monthly
incremental production increases of just 0.5 mb/d. They also agreed to meet
monthly going forward in early 2021 to assess the health of the market. The
deal was not as bullish as market analysts had expected, but neither was it a
failure. The reaction in oil prices suggests OPEC+ did enough to maintain
market stability.
Aramco
sees higher oil prices. Oil prices are set to see a
meaningful recovery in the second half of next year as the worst for producers,
and the market is behind us, the CEO of Saudi Aramco (TADAWUL: 2222), said at an industry
event this week.
Denmark
to phase out oil and gas production by 2050. Denmark's
parliament voted to phase out
North Sea oil and gas production by 2050. The plan includes canceling an
offshore licensing round, which only had weak interest.
Report:
Appalachian frackers post more red ink. A report from IEEFA found
that a group of nine top Appalachian-focused shale gas drillers lost a combined
$504 million in the third quarter. That came even after several waves of
spending cuts, which brought CAPEX down to a six-year low.
Automakers
line up to work with Biden on emissions. The Alliance
for Automotive Innovation, an industry group representing automakers, said that
wants to work with the Biden administration on emissions, including on EVs.
"The long-term future of the auto industry is electric," John Bozzella, the
head of the group, said this week. "We
are investing hundreds of billions to develop the products that will drive this
electric future, and we are committed to working collaboratively."
ConocoPhillips
lays off 500. ConocoPhillips (NYSE: COP) said on Tuesday that
it would lay off up to 500 Houston employees, about a fifth of its headquarters
workforce.
Imperial
Oil's $1.2 billion oil sands write down. Imperial Oil
(TSE: IMO) expects to take a write-down of between $900
million and $1.2 billion in the fourth quarter and it is giving up on some of
its assets. "Imperial has re-assessed the long-term development plans of its
unconventional portfolio in Alberta, Canada, and no longer plans to develop a
significant portion of this portfolio," the company said.
India
may resume imports from Iran and Venezuela. India's
oil minister suggests that
his country will resume importing oil from Iran and Venezuela, eyeing the
change of administration in Washington.
Venezuela's
oil exports double. Venezuela's oil exports nearly
doubled in November as new buyers linked to a Russian trading firm stepped up
purchases. A total of 24 cargoes left Venezuelan waters last month carrying
some 639,000 barrels per day, up from 360,000 bpd in October, according
to Reuters.
BMO
won't finance U.S. shale. The Bank of Montreal
will end its investment banking
business in U.S. oil and gas and concentrate on Canada.
Japan
to phase out gasoline cars by mid-2030s. Japan announced a
plan to phase out gasoline vehicles by the mid-2030s. They are aiming for "100%
electrification" over 15 years.
Pioneer
announces emissions intensity target. Pioneer Natural
Resources (NYSE: PXD) announced a
plan to cut emissions intensity by 25%, which is a cut of emissions per unit of
oil, rather than an absolute reduction in emissions.
Chevron
cuts spending. Chevron (NYSE: CVX) cut CAPEX to $14-$16
billion annually between 2022 and 2025, down 27% from the mid-point on its
previous forecast.
Gas
traders give up on cold winter. Natural gas for
January delivery is now trading below February
prices, a sign of bearishness and a sense that the U.S. winter will not tighten
the market. The EIA also reported a 1 bcf withdrawal from inventories, a
weaker-than-expected drawdown.
Sempra
Energy to spin off assets to fund LNG growth. Sempra Energy
(NYSE: SRE) hopes to attract funding for its North
American LNG push, and may spin off natural
gas and renewable assets into a package that may be more attractive to
investors.
Occidental
to become a "carbon management" company. Occidental
Petroleum (NYSE: OXY) CEO Vicki Hollub talked up the
company's foray into carbon sequestration. "Ultimately, I don't know how many
years from now, Occidental becomes a carbon management company and our oil and
gas would be a support business unit for the management of that carbon," Hollub said. Occidental has the
most ambitious carbon targets of any U.S. oil producer, aiming to reach net
zero by 2050.
Energy
transition could cost $40 trillion. If the world is to
come anywhere close to limiting global warming to 2 degrees Celsius or below,
it will need a bare minimum of US$30 trillion to US$40 trillion of investment in energy systems and decarbonization of
industries where emissions are notoriously hard to abate such as steel and cement
making, according to Wood Mackenzie.
Eni
buys a stake in the world's largest wind farm. Eni (NYSE: E) purchased a
20% stake in the Dogger Bank Wind Farm project from Equinor (NYSE:
EQNR) and SSE.
Credit:
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