Bullish news on oil offset by further lockdowns in India

Demand for oil is finally rebounding, but a further spike in COVID in India could threaten the rebound.

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Friday, April 16, 2021

Oil prices held steady at the end of the week and are expected to close virtually flat compared to the previous week. Oil prices are trapped between horrific downside risks, mainly in India, offset by growing optimism in the United States and, to a lesser extent, in Europe.

India’s oil demand questioned. India has seen several days of record Covid-19 cases, and Bloomberg reports that demand for fuels could drop 20% in April. “Given the grim situation, it is likely that the lockdowns could be in place for several weeks, if not a few months,” said Senthil Kumaran, South Asia oil manager at industry consultant FGE. “India’s aggregate demand for key petroleum products will decline significantly. “

Biden commits to reducing its GHG emissions by 50 to 52%; other countries up to commitments. President Biden announced an emissions reduction target of 50 to 52 percent by 2030 at the climate summit on Thursday. Canada has raised its target from a 30% reduction to a 40-45% reduction. Japan raised its target to 46% from 26%.

Gathering of natural gas. Bank of America said natural gas is “throwing in the towel,” noting that March saw weaker than expected industrial demand and warm weather, leading inventories to end the month at 1.78 trillion feet. cubes, higher than expected, which wiped out the inventory deficit compared to the five-year average.

The production of natural gas on the rise. Even though demand has calmed down, natural gas production is increasing after an outage of about 18 months. Rystad Energy issued a note predicting strong production gains for the next three years and beyond. Both Rystad and Bank of America have said the Haynesville Shale in particular looks solid.

China promises a withdrawal from coal. Chinese Xi Jinping said China will “strictly limit” coal consumption over the next five years and then start phasing out it.

US Senate to repeal methane reduction. The US Senate will repeal the withdrawal of Trump-era methane regulations next week.

New York is suing Big Oil. New York City sued ExxonMobil (NYSE: XOM), BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS.A) for misleading advertisements claiming their products “reduce emissions.”

Chevron presses US against Myanmar sanctions. The New York Times reports that Chevron (NYSE: CVX) pressured the US government not to impose sanctions on Myanmar, following the military coup and the brutal crackdown in the country since February. Chevron operates a large natural gas project in the country with Total (NYSE: TOT).

White House unveils its climate finance strategy. The White House unveiled its international climate finance strategy, which includes pushing the government’s lending arms – the US International Development Finance Corporation, the Millennium Challenge Corporation, and the Export-Import Bank – to virtually eliminate fossil fuel lending except in extraordinary circumstances.

Small Businesses Buy Big Oil Assets. Supermajors are pledging billions of low-carbon energy investments and pledging to achieve net zero goals over the next decade. Meanwhile, the smaller oil and gas companies are taking over the assets of the hangar.

Are peak demand forecasts accurate? Goldman Sachs believes demand for oil will peak in 2026, while BP Plc believes the highest global demand growth is already over, and the International Energy Agency (IEA) believes the peak could come more late in 2030. Whatever the design, it is clear that the oil and gas industry faces a turbulent future.

Related: The Best Is Yet To Come For The World’s Hottest Oil Game

$ 70 trillion managed UN-backed climate finance group announced. The Glasgow Financial Alliance for Net Zero (GFANZ), a UN-backed group of asset managers, banks, investors and insurers, was launched this week. The more than 160 members of the group are responsible for more than $ 70 trillion in assets and “will strive to mobilize the trillions of dollars needed to build a zero-emission global economy and achieve the goals of the Accord. of Paris, ”says the ad. Participants include Barclays, Morgan Stanley, Citigroup, Munich Re, Zurich Insurance Group and many more.

California to ban new hydraulic fracturing permits. California Governor Gavin Newsom is expected to announce a ban on new fracking projects from 2024.

The lithium era has only just begun. It’s been a big week for lithium, with a multibillion-dollar mega-fusion, a major new production deal in Chile, and funding for Europe’s first large-scale lithium refinery in Chile. Things are looking up for the vital metal of the battery.

Halliburton sunk on ‘moderating’ fracking forecast. Halliburton (NYSE: HAL) beat earnings consensus, but saw its share price fall after saying it expects US fracking activity to moderate in the second quarter.

Total contract terminations in Mozambique. While militant attacks show no sign of abating, Total (NYSE: TOT) terminates contracts with some companies in Mozambique related to its $ 20 billion LNG export project. Analysts say the project could be at least a year behind schedule.

Biden administrator unties Trump’s auto policy. The Biden administration will give California back the power to set its own fuel economy standards that are stricter than federal standards, following the Trump administration’s efforts to repeal that authority.

Extended break in drilling on public lands. The US Department of the Interior has extended its break from drilling on federal lands until June, a policy that primarily affects only the southeastern corner of New Mexico.

12 states call for ECI ban. 12 U.S. states have called on the federal government to ban the sale of gasoline vehicles by 2035.

Kinder Morgan $ 1 billion Texas windfall. Kinder Morgan (NYSE: KMI) said he took advantage of a billion dollar windfall during the Texas electricity crisis in February. “[W]We see the big KMI beat as a ‘zero sum game’ meaning that someone (i.e. gas buyers) had to foot the bill, which could generate some interesting revenue calls. for utilities, ”Citigroup said.

By Michael Kern for Oil Octobers

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