OIL PRICE INTELLIGENCE REPORT

 We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

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Chart of the Week



-    Colder-than-normal temperatures in January and February led to higher natural gas inventory withdrawals.

-    Gas storage at the end of heating season (March 31) totaled 1,778 Bcf, or 1.4% less than the five-year average.

-    Withdrawals were 10.6% larger than the five-year average. 

Market Movers

-    Baker Hughes (NYSE: BKR) was upgraded by BMO to Outperform. 

-    New Petrobras (NYSE: PBR) CEO pledged price parity for fuel imports and maintaining a focus on deepwater. 

-    First Solar (NASDAQ: FSLR) was upgraded from Neutral to Buy by Citi on a “catalyst rich environment.”

Tuesday Aril 20, 2021 

Oil prices posted modest gains on early Tuesday morning following reports of an outage in Libya, but demand concerns sent prices falling as the day progressed. 

Discounted oil a headache for OPEC. Rising Iranian oil imports into China had forced other producers, including Russia, Angola, and Brazil, to cut the prices of their crude in order to keep it competitive.

Texas landmen switching to renewables. The shale boom resulted in a boom for landmen, who find, sell and flip tracts of land to drillers. These days, more landmen are pivoting to renewables.  

BP aims to end flaring by 2025. BP (NYSE: BP) said it would spend $1.3 billion to build more pipelines in order to capture natural gas in an effort to end flaring in the Permian by 2025.

Inventory glut at an end. The inventory buildup during the pandemic is nearing normalization, according to Bloomberg. “Commercial oil inventories across the OECD are already back down to their five-year average,” said Ed Morse, head of commodities research at Citigroup Inc. “What’s left of the surplus is almost entirely concentrated in China, which has been building a permanent petroleum reserve.”

IEA: Global emissions surging. The IEA expects global greenhouse gas emissions to surge by 4.6% this year, one of the largest annual increases ever recorded. “This is a dire warning that the economic recovery from the Covid crisis is currently anything but sustainable for our climate,” said Fatih Birol, IEA’s executive director, in a statement.

U.S. climate summit. The Biden administration is hosting an international climate summit this week, where the U.S. will unveil new climate targets and attempt to woo other nations in stepping up their ambition.

Oil industry looks to carbon offsets for each barrel. Occidental Petroleum (NYSE: OXY) has tested the practice of offsetting the carbon that each barrel of its oil holds. Sources told Reuters that Occidental paid $1.3 million in offsets for a shipload of crude, which added about 65 cents per barrel. The company has marketed its oil as carbon-neutral. 

Gas faces $100 billion in stranded asset risk. Natural gas is falling out of favor, and gas-fired power plants could wind up getting mothballed much sooner than expected. Analysts expect major banks to begin tightening financing restrictions on new natural gas projects, and some European utilities can’t find buyers for their gas assets. “Gas will be a repeat of coal but quicker,” said Catharina Hillenbrand von der Neyen of Carbon Tracker.

Lithium giant emerges. A planned $3.1 billion merger between Orocobre Ltd. (ASX: ORE) and Galaxy Resources Ltd. (ASX: GXY) is the largest mining sector M&A deal so far this year and could create the world’s fifth-largest lithium producer.

U.S. refiners looking for heavy crude. U.S. refiners were forced to source their heavy crude from somewhere else after the United States sanctioned Venezuelan crude oil. Now, U.S. refiners may again be forced to resource crude oil as French bank Natixis stops funding the Ecuadorian oil trade.

Banks face pressure to phase out fossil fuel lending. Investors with $11 trillion in assets under management have called on the world’s largest banks to phase out fossil fuel lending. 

China's oil buying frenzy may end this month. Higher Chinese crude oil imports and increased domestic production led to a jump in crude volumes directed to storage in the world’s top oil importer in March, according to calculations by Reuters columnist Clyde Russell based on official data.

Libyan oil disrupted. Libya’s oil exports from the port of Hariga have been disrupted over a budget disagreement with the country’s central bank. “If the 120,000 bpd Al-Hariga port remains closed, we estimate that more than 100,000 bpd of Libyan oil production could be shut in,” Rystad Energy said in a note. 

Exxon and Shell want to profit from carbon capture. ExxonMobil (NYSE: XOM) and Royal Dutch Shell (NYSE: RDS.A), among other oil companies, are looking into expanding carbon capture services that they could offer to heavy industries such as steel and cement. 

Exxon pitches $100 billion in carbon capture. ExxonMobil (NYSE: XOM) said that if the U.S. government puts in tax breaks, it can build a $100 billion carbon capture project near Houston. The idea would consist of capturing 50 million tons of CO2 annually beginning in 2030. There are no signs that the Biden administration is considering the idea. 

Can the energy sector maintain its crazy momentum? Is the pessimism in the fossil fuel sector overdone? Can investing in oil and gas still pay off over the long term? After years of underperformance, the U.S. energy sector has been displaying flashes of brilliance that suggest that it’s still got some legs to run.

Coal miner’s union warms up to transition. The head of the U.S.’ largest coal-mining union said on Monday that it would back the Biden administration’s shift away from coal so long as there are specific investments and benefits to Appalachia and priority for coal miners obtaining renewable energy jobs. The shift in position is a major boost for the Biden administration’s infrastructure package.