Oil prices rebounded on Friday morning as inflation fears fade and the global supply glut slowly drains, although the IEA revised its demand projection downward.
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Friday May 14, 2021
Oil prices rebounded on Friday after a midweek sell-off. Neither bullish nor bearish narratives are in order at this time, and Brent crude is trading in the upper $ 60.
Restart of the colonial pipeline. The Colonial pipeline restarted product flows on Wednesday, although localized shortages are taking time to resolve. The company reportedly paid the ransom, but the operator of the Darkside ransomware group said on Friday it had lost control of its servers and some of the money it had earned from the ransom payment.
Exxon is increasing production in Guyana. ExxonMobil (NYSE: XOM) raised its forecast for oil production in Guyana for 2025 to 800,000 bpd, with plans for a fourth project in the Stabroek block. “Production is expected to begin at the end of 2025 with an expected lifespan of at least 20 years,” Exxon told Guyanese regulators.
The Fed is pressuring banks on climate risk. The US Federal Reserve has asked lenders to start reporting on the measures they are taking to mitigate climate change risks on their balance sheets, according to Reuters.
Qatar partners with China on LNG. Qatar is in talks with Chinese companies to make them partners in its LNG expansion.
Enbridge operates Line 5 despite the shutdown order. Enbridge (NYSE: ENB) continues to operate the pipeline across the Great Lakes, recalling that it is up to the US federal government to say whether the pipeline should continue to operate. Michigan revoked Enbridge’s easement to operate the sister Line 5 pipeline last November, citing repeated violations of the easement and the need to protect the Great Lakes.
Related video: Mass shutdown of US pipeline in cyberattack
Oil prices are falling. Oil prices fell on Thursday as concerns about rising inflation spilled over to market expectations. “Oil is sucked into the fear of inflation scenario,” said Bob Yawger, head of the futures division at Mizuho Securities, according to Bloomberg. Inflation tends to push crude up higher, but fears of weaker growth can push commodities down. Likewise, expectations of rising interest rates can hamper price increases. Oil was regaining ground on Friday.
IEA: Glut compensated, demand revised downwards. The IEA said the glut in the global oil supply resulting from the pandemic has disappeared, due to a sharp drop in supply, aided by OPEC + production cuts. Stocks have run out. But the agency also downgraded its oil demand forecast for 2021 by 270,000 bpd, due to lower consumption levels in Europe, the OECD Americas and India.
Iran offers oil sales through Saudi Arabia. Iran seeks to persuade its regional rival, Saudi Arabia, to help it sell Iranian crude oil in international markets in exchange for limiting attacks by Iran-aligned Houthi rebels in Yemen on oil infrastructure Saudi women.
Occidental sees its shares fall after the results of the 1st quarter. Occidental Petroleum (NYSE: OXY) saw its stock drop 8% on Tuesday after reporting a net loss of $ 300 million in the first quarter, but strong free cash flow of $ 1.6 billion. The Permian’s higher production and strong profits from its chemicals unit boosted cash flow. But the additional cash flow from the company will be spent on reducing its $ 30 billion debt.
The EIA reduces the supply forecast. The EIA slightly reduced its supply forecast for US oil production for 2022 due to restraint on ongoing E&P spending, lowering its expected production from 20,000 b / d to 11.84 mb / d .
The ESG bubble bursts. Clean energy has been the worst performing sector so far, with investors drawing liquidity from the sector at the fastest rate in a year. The iShares Global Clean Energy (ICLN) ETF, a catch-all bet on clean energy, has fallen 26.7% year-to-date, while the market’s only pure-play solar ETF, Solar Invesco ETF (NYSEARCA: TAN), increased 32.7% during the period.
Biden’s $ 2.5 trillion infrastructure plan could push up those EV inventories. A massive $ 2.5 trillion infrastructure plan could send EV companies – and many of their ties – to new heights. And some investors are preparing to pile in like never before as the “green tidal wave” prepares to reach tsunami proportions.
Pembina puts Jordan Cove on hiatus. Pembina (NYSE: PBA) “Paused” its Jordan Cove LNG export project in Oregon, a project that has been on and off the drawing board for 15 years but has been plagued by repeated license denials.
Tesla is looking at renewable energy credits. Tesla (NASDAQ: TSLA) seeks to enter the multi-billion dollar renewable energy credit market in the United States. The EPA seeks to qualify electric vehicles that generate tradable credits under the Renewable Fuels Standard.
Gas faces an uncertain future in Europe. As carbon prices hit record highs and EU climate policy turns the screw on carbon emissions, coal is on the way out in Europe, but natural gas is also undergoing a increased surveillance. “The window for (building) conventional gas production seems to be narrowing. We have a feeling you need to get some big investments in gas by the middle of the decade, unless you partner them with CCS or do something creative with hydrogen, ”Murray Douglas told Reuters, research director at the consulting firm Wood Mackenzie.
Renewable energies posted a record in the first quarter. The United States added 2.5 GW of wind power and 1.2 GW of large-scale solar power in the first quarter, the best start to the year on record.
By Tom Kool for Oil Octobers
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