Brent is now flirting with the $ 70 mark after OPEC + once again shocked markets by refusing to bring more oil production online.
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Friday March 5, 2021
Oil soared Thursday after OPEC + decided to delay easing production cuts for another month, surprising the oil market. WTI and Brent climbed more than 4%. At the start of the session on Friday, Brent topped $ 69 a barrel,
OPEC + is extending the cuts, a surprising market. OPEC + extended the cuts until April, aside from a slight increase allowed for Russia and Kazakhstan, due to seasonal consumption patterns. Even Saudi Arabia has decided to keep its 1 mb / d of voluntary reductions in place. The new surprise led to a price spike. “One of the reasons the market continues to react positively today could be that OPEC’s own balance sheets suggest very large drawdowns,” Rystad Energy said in a statement.
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Oil majors expect record cash flow. Big Oil looks to 2021 with heightened optimism, mainly because oil prices have rebounded in recent weeks. In addition, ultra-conservative investment plans and huge cost reductions have allowed international oil companies (COIs) to significantly lower their cash flow thresholds. These factors are expected to result in record cash flow for the largest oil companies this year if oil prices average $ 55 a barrel, Wood Mackenzie said in new research.
Are the oil majors going green? Speaking at the annual CERAWeek by IHS Markit Energy Conference, Big Oil executives from Exxon Mobil (NYSE: XOM), Chevron Corp. (NYSE: CVX), Occidental Petroleum (NYSE: OXY) and ConocoPhillips (NYSE: COP)all talked about the industry’s transition to a low-carbon world, with OXY even branding itself as a ‘carbon management’ company that wants to set the industry standard for zero oil production net carbon. But are they really going green?
Tighter oil market with 500,000 bpd offline. Maintaining three oil sands upgraders in Canada will result in an increase in offline production of about 500,000 bpd, which will help tighten supply amid rising prices, Bloomberg reports.
IHS Markit: The shale discipline is probably going to stay. U.S. shale is unlikely to revert to aggressive spending, but rising oil prices could cause drillers to break out of the margin. “At any price, growth will be lower than in years past, but if you get into the $ 70- $ 75 per barrel range of oil, you can both give money back to investors and have strong growth … so there is a point where the temptation gets too strong, ”Raoul LeBlanc of IHS Markit told CERAWeek.
Pioneer: very little shale growth. US oil production is likely to experience “very little growth” in the future, having remained largely stable in 2021 at around 11 million barrels per day, Scott Sheffield, Pioneer Natural Resources (NYSE: PXD) general manager, told CERAWeek.
ExxonMobil offers a new strategy. AT ExxonMobil’s (NYSE: XOM) Investor Day, he presented plans to keep production stable and return excess cash to shareholders and / or reduce debt. The new strategy is a flip-flop from previous aggressive production growth plans. Exxon also detailed larger investments in carbon capture.
Exxon will cut 300 jobs in Singapore. ExxonMobil (NYSE: XOM) plans to cut around 300 jobs in Singapore’s Asian oil trade hub by the end of 2021, as part of a global downturn announced last year.
India urges OPEC + to boost production. India, one of the largest and fastest growing oil consumers, wants OPEC + to increase production to keep prices down.
Volvo will go all-electric by 2030. Volvo will become a “fully electric car company” by 2030, the last major automaker to promise an electric transition.
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American-Iranian thaw? Iran has given encouraging signs of returning to the table with the United States regarding the potential resumption of the 2015 nuclear deal.
The withdrawal of natural gas is tightening the market. The Texas freeze led to the second-largest natural gas inventory pullback for the week ending February 19. The pullback is tightening the market and setting the stage for higher prices later this year.
Biden’s federal land moratorium could reduce production. Closing federal lands to new drilling will not have an immediate impact on Permian production, given the thousands of permits and leases the industry has already stored. By the end of 2025, however, the drilling ban could curb production from 230,000 to 490,000 bpd, according to the Dallas Fed.
Chevron will build a carbon capture plant with Microsoft. Chevron (NYSE: CVX)said he would partner with Schlumberger (NYSE: SLB), Microsoft (NASDAQ: MSFT), and Clean Energy Systems to build a carbon capture plant in California.
Exxon drills a third dry hole in Guyana. ExxonMobil (NYSE: XOM) hit a third dry hole in four months in Guyana, a series of setbacks in an otherwise successful campaign. “Our exploration success in Guyana is 80% with 18 discoveries on the Stabroek block,” the company said.
The Pentagon is testing solar in space. The Pentagon has successfully tested a solar panel in low Earth orbit as a prototype of potential future power generation systems that capture sunlight and return it as energy back to Earth.
By Josh Owens for Oil Octobers
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