Saturday, January 16, 2020 /06:30AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
Oil prices fell back on Friday morning as demand fears grow,
but OPEC has predicted an increase in U.S. shale production at current price
levels.
Oil prices fell back
on Friday over demand concerns. News that China has reported its highest Covid-19 case count in months weighed on
market sentiment.
OPEC
sees shale rebounding. OPEC admitted that an improved outlook for crude oil prices could result in higher
U.S. shale production. OPEC upgraded its forecast for U.S. oil production,
expecting an increase of 370,000 bpd, up from a previous forecast of 71,000
bpd.
LNG
spike causing havoc worldwide. Bitter cold and
skyrocketing prices for LNG is now being felt in more places than just Asia.
The ripple effects are affecting gas markets everywhere, straining supplies and forcing consumers to cut back. Another potential side effect could be the undermining of the spot market, potentially leading to more
emphasis on oil-linked contracts, which would provide more stability.
Total
quits API. Total (NYSE: TOT) announced
its decision to withdraw from the American Petroleum Institute, the industry's
most powerful lobby. The French oil giant cited API's opposition to methane
regulations, EV subsidies, and carbon pricing. Total also disagreed with API's
political contributions to U.S. politicians that oppose the Paris Climate
Agreement.
Gas
projects in Mozambique at risk. A chronic insurgency
puts Total's
(NYSE: TOT) $23 billion gas production and LNG export
project at risk. The
same is true of ExxonMobil's (NYSE: XOM) planned
$33 billion facility. Total has halted work at its site due to nearby attacks.
JPMorgan
touts commodities, pro-risk posture. JPMorgan told investors to boost commodity positions, go underweight on bonds
and take a pro-risk exposure to equities. "We increase our overweight in
commodities, in particular energy, both as an inflation hedge and to position
for a continued cyclical recovery," analysts wrote.
Exxon
target of new SEC probe. ExxonMobil
(NYSE: XOM) is under investigation by the Securities and Exchange Commission (SEC) after
an employee filed a whistleblower complaint last fall, alleging that the
company has overvalued its Permian assets.
Shale
boosts hedging. U.S. shale drillers increased hedging with WTI surging above $50 per barrel.
Is
the rally in renewables sustainable? Solar and wind
power companies have soared in value. The New York Times explores the potential bubble in clean tech stocks.
Biden's
$1.9 trillion stimulus could preview energy package. President-elect
Biden proposed a $1.9 trillion covid rescue package, which included
vaccination efforts, $1,400 checks to Americans, and other stimulus measures.
He has indicated that a sequel package in the spring, which could be even
larger, would target major investments in clean energy.
Halliburton
turns to grid instead of diesel. Halliburton
(NYSE: HAL) is swapping out diesel engines for the electric grid for its
Permian basin operations.
Shell
declares force majeure on Forcados. Royal Dutch
Shell (RDS.A, RDS.B) says loadings
of Nigeria's key export grade Forcados are on force majeure due to the shutdown
of the Trans Forcados pipeline.
Summit
Midstream Partners soars on greenlight. Summit Midstream
Partners, LP (NYSE: SMLP) saw its share price shoot up
after its Double E Pipeline received a greenlight from FERC.
ExxonMobil
upgraded by JPMorgan. JPMorgan upgraded ExxonMobil
(NYSE: XOM) to Overweight for the first time in seven
years.
Siemens
to produce hydrogen from wind. Siemens Gamesa
(BME: SGRE) and Siemens Energy (ETR: ENR) are
developing a commercial offshore wind turbine that produces hydrogen via
electrolysis, the companies said.
EIA:
Oil production to rise to 11.49 mb/d in 2022. The EIA
unveiled its first forecast for 2022, projecting that U.S. oil production rises to
11.49 mb/d, a 3% increase over this year's levels.
Proterra
to go public. Electric bus producer Proterra
will launch an
IPO, with preliminary estimates valuing the company at $1.8 billion.
Saudi
cuts exports to Asia. Saudi Arabia has reduced sales
of oil to at least 11 refiners in Asia, evidence that it is following through
to some degree on its pledge to cut production by 1 mb/d.
Gasoline
profit margins increase. The profit margin for
refining gasoline has widened to
its largest extent since July, as markets anticipate demand recovery by
mid-year.
U.S.
warns European companies on Nord Stream 2. The Trump
administration warned European
companies that they risk U.S. sanctions over their involvement in the Nord
Stream 2 pipeline.
Equinor
wins offshore wind contract in New York. Equinor (NYSE:
EQNR) was selected for a major offshore wind project off the coast of Long
Island. The combined 3.3 GW Empire Wind and Beacon Wind projects will be the
largest offshore wind installation in the U.S. to date.
Chesapeake
Energy to emerge from bankruptcy. Chesapeake Energy
will emerge from
bankruptcy valued at over $5 billion.
Occidental
to use direct air capture for oil production. Occidental
Petroleum (NYSE: OXY) plans to
build a direct air capture (DAC) facility, which will remove carbon dioxide
from the atmosphere, and then use the CO2 to produce more oil. The project
could be the world's first large-scale DAC facility and it could cost hundreds
of millions of dollars.
Forest
Service gives go-ahead to Marcellus pipeline. The U.S.
Forest Service approved the construction of the Mountain Valley Pipeline
through a sensitive part of the Jefferson National Forest, a big win for a
project that would carry Marcellus shale gas to the U.S. southeast.
Ireland
drops another LNG terminal over methane concerns. The
Port of Cork in Ireland allowed an
agreement with NextDecade Corp. (NASDAQ: NEXT) for
an LNG import terminal to expire. It's the latest setback for the LNG company
in Europe over concerns about methane emissions. NextDecade is planning an LNG
export terminal in Texas.
Credit:
The post OPEC Predicts a Rebound in U.S. Shale first appeared in Oilprice.com on January 15, 2021.
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