Saturday, July 10, 2021
/06:00 AM / by Tom Kool of Oilprice.com / Header Image Credit:Oilprice.com
Oil prices rose on Friday morning, fueled by strong U.S. fuel
consumption data, but held back by continued uncertainty about the OPEC+ deal.
Friday, July 9th, 2021
Seven straight weeks of inventory draws didn't go
unnoticed, and according to the EIA, U.S. gasoline demand rose by 870,000 bpd
last week as summer driving season heats up. U.S. gasoline consumption figures
reached their highest level since 2019, and yesterday's crude inventory report
helped oil prices back in the black.
Stays Silent Amid OPEC+ Impasse. While the Joint
Ministerial Monitoring Committee (JMMC) of OPEC+ still has to decide on a new
official meeting, behind the scenes, high-placed Russian and U.S. officials are
said to have talks to convince both camps of a reasonable output hike.
For Oil Prices Limited Without OPEC+ Agreement. Despite
the strong demand fundamentals in the U.S., markets continue to gauge the
impact of the discord within the OPEC+ alliance. Reuters quoted Stephen Brennock
of oil broker PVM as saying: "Clearly, U.S. oil markets are tight. However... the only way to prevent further losses is for the threat of an OPEC+ price
war to be contained," he added.
Full-Blown Oil Price War Seems Unlikely. As we
mentioned in Tuesday's newsletter, the risk of a new 2020-style price war is low. The OPEC+
group as a whole is currently reaping the benefits of a much tighter oil market
and it's in no one's interest to destroy the current price environment.
According to Rystad Energy's Louise Dickson: "It is in the interest of the
group to provide some leniency to the UAE and other supply hawks to produce a
bit more within the framework of the deal instead of triggering a free for all
supply regime of chaos."
CNOOC Looks To Exploit Large Ultra-Deepwater Gas Field. CNOOC's
recent success in the South China Sea has been an important step for the Asian
giant. In late June, the company started producing gas from its ultra-deepwater
Lingshui 17-2 prospect, a deposit with proven reserves of around 100 billion
cubic meters, with some wells at a depth of more than 4000 meters below the
seabed. According to CNOOC, full operational capacity will be reached as of
2024 at 3 billion cubic meters per year, representing about 1% of China's
current gas demand.
Calls For Global Carbon Price Floor. At a G20 meeting
with his counterparts, French Finance Minister Bruno LeMaire said that the
world needs a carbon price floor in order to efficiently tackle carbon
emissions. LeMaire said that while countries cannot come to agree to a "unique
carbon price", a "global floor could be a good starting point".
Oil Company Japex May Pull Out Of Canadian Oil Sands Project. Japan's
state-backed Japex is considering selling its 75% stake in the Hangingstone
project according to Reuters. The Japanese company said that it would either
consider selling its entire stake in the 20,000 bpd project or cutting
production costs to improve the profitability of the project.
U.S. Economy Drives Boom In Coal Production. U.S. domestic
coal production is set to
increase by 15% this year compared to 2020. According to the EIA, coal output
is set to rise to 617 million short tons this year, some 78 short tons more
than last year, because of higher power demand and rising natural gas prices.
The production boom, however, is likely to be short-lived as the agency expects
production volumes to fall slightly in 2022.
Half Of Oil & Gas Emissions Could Be Cut At No Cost. Analysis
from the IEA Methane Tracker shows as much as 40% of current methane emissions could
be avoided at no net cost. So what's the magic? The IEA suggests governments
and producers focus on cutting methane emissions by replacing pumps, valves,
and compressors. CBSNews quotes the IEA's Christophe McGlade as saying:
"Natural gas is essentially just methane, and in many cases if you can
avoid that methane leak, you can sell that gas for profit,"
Remains Committed To Oil & Gas. In an interview with
S&P Global, Japan's Ministry of Economy, Trade and Industry (METI) confirms
that it will continue to pursue oil and gas development. Commenting on the
IEA's net-zero 2050 roadmap, METI Director of petroleum and natural gas Takeshi
Soda said that "While the IEA says it is only one pathway, Japan does not
intend to refrain from upstream developments based on that,", he went on
to say that "it remains extremely uncertain whether the IEA's net-zero
2050 will be realized.".
New Oil Minister To Focus On Boosting Oil & Gas Production. Hardeep
Singh Puri, India's new Petroleum Minister looks to cut India's mounting energy
import bill by boosting domestic hydrocarbon production. Puri sees a big role
for natural gas as India looks to transform itself into a $5 trillion economy.
The fast-growing Asian economy is grappling with rising crude prices and
falling oil production from its aging domestic oilfields.
U.S. Refining Capacity At Six-Year Low. As a result of
refinery closures in 2020, total U.S. refining capacity has fallen to 18.1
million bpd at the start of 2021. EIA's Refinery
Capacity Report states that at
the beginning of the year, 129 sites were operating or idle versus 135 at the
beginning of last year.
Oilfield Services Struggle To Find Employees. After
having laid off more
than 100,000 employees in 2020, the oil industry is once again hiring, and
Texas oilfield services companies now report that they are struggling to find
new hands. In order to contract drivers, derrickmen, floor hands, and
supervisors, companies are now even offering startup bonuses as high as
The post Oil Prices
Rise on Strong Fuel Demand first appeared in Oilprice.com on July 09, 2021.
Related News - Previous Oilprice
Oil Rally Grinds to a Halt - OIR 060721
Oil Prices Fall as OPECplus Struggles for
Consensus - OIR 020721
COVID Variant Threatens Oil Demand - OIR 290621
Can Anything Halt This Oil Price Rally? - OIR
Oil Prices Fall as OPECplus Looks to Boost
Production - OIR 220621
Is The Oil Rally Nearing Its End? - OIR 180621
Oil Prices Rise as Demand Outstrips Supply -
IEA Tells OPEC to "Open The Taps" -
Oil Prices Take a Breather as Investors Bet On $100 Crude - OIR
Brent Crude Nears $72 as Bulls Run Rampant -
Related News - Oil and
The Petroleum Industry Bill (PIB): Top 20 Changes You Should
Petroleum Industry Bill Passed by The
Fallout from OPECplus July 2021 Meeting
PIB: Dangote Refinery, Others to Buy
Crude in Naira
Petroleum Industry Bill (PIB) 2020 -
A Game Changer?
Senate Passes Petroleum Industry Bill
The Benefits of the Passing of
Nigeria's PIB Will be Top of the Agenda at African Energy Week 2021
NNPC to Acquire 20 Percent Stake in
Investing in Marginal Fields - Key Considerations for Financiers
Legislative Analysis of Nigeria's Liquified Natural Gas Act And