Written by rjs, MarketWatch 666
Here are some more selected news articles for the week ending 16 January 2021. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening or Tueday morning.
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U.S. Supreme Court Tosses Review of Minnesota County Fracture Sand Ban – – The U.S. Supreme Court on Monday denied a petition that sought to overturn a Minnesota county ordinance banning the mining of silica sand, which is used in some Lower 48 well completions. Minnesota Sands LLC, which filed its initial lawsuit in 2017, was challenging an adverse ruling by the Supreme Court of Minnesota regarding Winona County’s ban imposed in 2016 (No. A18-0090). Five years ago Winona County banned sand mining that was commercially “valuable for use in the hydraulic fracturing of shale to obtain oil and natural gas.” However, the county still allowed the same silica sand to be mined for “local construction” uses. Minnesota Sands President Rick Frick at the time the company filed the initial lawsuit said, “Banning this type of mining based on the end use of this resource is not only unconstitutional, it takes away the rights of landowners and defies common sense…” The ban has not changed the fact that the energy industry in the U.S. has dramatically recovered from recent economic challenges and there is now a growing need for the kind of silica we are lucky to have here. “It has instead hurt people here and ignores the fact Minnesota already has a very rigorous and thorough approval and review process for any mining project.” A divided Supreme Court of Minnesota last year ruled against the company and held that the ban did not violate the U.S. Constitution’s Commerce or Takings clauses. Minnesota Sands appealed to the U.S. Supreme Court, arguing a “conflict with clear rulings” for similar lawsuits. In addition, Minnesota Sands said the state ruling threatened “an industry that is vital to the nation’s energy supply.”
Protesters gather at Line 3 construction site in Aitkin County – Opponents of the Line 3 oil pipeline replacement project gathered Saturday in northern Minnesota to protest its construction across northern Minnesota. By mid-morning, a couple hundred people had gathered near Palisade in Aitkin County, where the controversial pipeline Enbridge Energy is building is expected to cross under the Mississippi River. Opponents of the project, who call themselves water protectors, carried signs and walked down a county road. Some Native women danced in jingle dresses, a healing tradition. “There’s a lot of folks that came to bring their prayers and to stand for the rivers for our future generations against big oil.” The group later traveled to just south of Hill City, where they blocked traffic on U.S. Highway 169. Eight people were arrested; law enforcement officials said seven people were booked on possible charges of gross misdemeanor trespass on critical infrastructure, and the eighth person was cited and released for failing to leave an unlawful assembly.Enbridge Energy started construction on the 338-mile pipeline in December after receiving the necessary permits. Opponents have filed a federal suit seeking to halt construction on the project. The pipeline construction project is expected to employ more than 4,000 skilled workers. Supporters say it will bring additional tax revenue to northern Minnesota in a slow economy.
Line 3 protesters chain themselves together in piece of pipe (AP) – Two people accused of chaining themselves together inside a piece of pipe to protest construction of the Enbridge Energy Line 3 oil pipeline replacement in northern Minnesota were arrested Thursday morning, authorities said. Cass County Sheriff Tom Burch said the incident took place about 10:30 a.m. in McKinley Township, west of the town of Backus. He said the protesters were taken into custody without incident and face charges of trespassing and obstructing. About a dozen protesters showed up at the site. One man was arrested for refusing to leave the area and one woman was arrested for violating conditions of release on a previous arrest, Burch said. Line 3 starts in Alberta, Canada, and clips a corner of North Dakota before crossing northern Minnesota en route to Enbridge’s terminal in Superior, Wisconsin. The 337-mile (542-kilometer) line in Minnesota is the last step in replacing the deteriorating pipeline that was built in the 1960s. Construction on Thursday morning was interrupted “for about an hour or two,” Burch said. “I can’t emphasize enough how respectful the protesters are,” Burch said. “It makes everybody’s job and this whole issue a lot easier.”
Water Protectors Arrested in Minnesota After Chaining Themselves Inside Enbridge Line 3 Pipe – Water protectors were arrested Thursday after halting construction at a Minnesota worksite for Enbridge’s Line 3 project by locking themselves together inside a pipe segment. “After moving to Minnesota to attend college and study environmental science, I was excited to be in a place where people valued protecting the Earth and finding a viable future. What I found, however, was a state that had formed ‘ambitious’ climate goals yet endorsed one of the dirtiest fossil fuels, tar sands oil,” water protector Abby Hornberger said in a statement. “I realized that Indigenous ways of knowing and practicing harmony with the environment are continuously ignored.” KFGO reports that Cass County Sheriff Tom Burch said two protesters who were taken into custody on Thursday now face charges of trespassing and obstructing. Hornberger explained that “the Line 3 pipeline far outweighs all clean energy initiatives and progress being made in renewable energies. Line 3 will destroy Minnesota’s essential clean water resources for future generations and will ultimately drive us into climate doom. Education and spreading awareness is no longer enough to create meaningful change for me.” “Enbridge’s last-ditch effort to build fossil fuel infrastructure is killing people and the planet. I refuse to be complicit in settler colonialist practices, and feel that I have to put my body on the line to protect Indigenous communities’ sovereignty and all of our futures,” Hornberger added. “This is not just an issue relevant to some, it affects each of us on a deeper level that goes beyond our daily lives. It determines if we will have a livable future.” Indigenous and environmental activists have long opposed the Canadian company’s efforts to replace an aging oil pipeline with a larger one running from Alberta, through North Dakota and Minnesota, to Wisconsin — noting Enbridge’s track record on spills and that cultural maps indicate “numerous sacred and significant sites lie in the path of the Line 3 project.” Minnesota Gov. Tim Walz has come under fire from Indigenous and climate leaders in recent months as the state has approved key permits that Enbridge needs to complete the new Line 3, especially given the Democratic governor said publicly in February of 2019 that projects like this one “don’t just need a building permit to go forward, they also need a social permit.” As some water protectors on Thursday protested inside a pipe segment a few miles from a man camp in Backus, “dozens more held space,” according to the Giniw Collective. The group also pointed out that “Enbridge is working 24 hours per day at several worksites, as a pending injunction to halt work while tribally led lawsuits are heard has yet to be decided.”Water protector Andrew Lee said that he participated in the action against Line 3 on Thursday “to protect the treaties that my ancestors failed to uphold.” “I’ve learned over the course of this year that Tim Walz isn’t going to protect us, the government of Minnesota isn’t going to protect us, and the federal government isn’t going to protect us,” Lee continued. “I believe it is my duty, as a colonizer and as a person with the privilege, to do so, to put my body on the line to stop the Enbridge Corporation from building this pipeline.”
Stopping Trump’s Last Pipeline Will Take All of Us – Winona LaDuke – In normal times, about 100 souls live in this small Northern Minnesota town on the banks of the Mississippi River where we are making our stand against one of the largest tar sands pipeline projects in North America. Known as Line 3, it has the potential to carry 915,000 barrels a day of dirty oil over 1000 miles, from Alberta in Canada to Superior, Wis. Palisade is the kind of place where most people know one another a couple of generations back, a town with a tiny main street and just one café. Now there are about 400 workers here – most from out of state – rolling heavy trucks and equipment down icy, windy unfamiliar roads every day. This small town is nestled in the deep woods and muskegs of Aitkin County, the lands of the Chippewa of the Mississippi, as my people are known. Akiing, the Anishinaabe word for “the land to which the people belong,” is half land and half water. Waters deep and shallow filled with wild rice, sturgeon and muskies, and all the mysteries of the deep waters. This is the only place in the world where wild rice grows. Each year in succession the manoomin returns, the only grain native to North America. This is the homeland of the Anishinaabe. And here Enbridge, the largest pipeline company in the world, is hell-bent on jamming through their Line 3 Pipeline, the company’s most massive project, under the cover of this Covid winter as fast as they can – before we can stop them and before the world takes notice.From the Water Protector Center at the edge of the pipeline route, Water Protectors gather. We hear the pounding all day long. The constant roar of heavy machinery as it rips through the forest and the wetlands. It’s brutal work, and dangerous as hell. Two weeks ago, Jorge Lopez Villafuerte was killed in the Enbridge Pipeyard, run over by a forklift. He came here from Utah for work. Instead, he found death. Enbridge halted work in the area for less than four hours – and then the pounding began again.Then there’s the armed forces, the sheriff’s office, and the Minnesota Department of Natural Resources (DNR) who have deployed here. Their wages are paid by Enbridge. That’s because Minnesota noted the $38 million bill for Standing Rock, and decided just to pay in advance. A Canadian corporation paying for the police in Minnesota. It looks like an occupation. It feels like an occupation. With all the violence that entails. First the big dozers came, then the excavators, backhoes, and buncher fellers. That last one just sort of walks through the forest, beheads a tree, drops the top to one side, and then comes back for the rest of the tree. This is how Enbridge rolls through a forest. They are gunning for the rivers now, heading straight for them: the Mississippi, the Willow, the Shell, the Little Shell, the Crow Wing: 22 rivers crossings in all. They are coming with something called a High Directional Drill. So they can drill under the river, just like they did at Standing Rock, at the Cannonball River. It feels a lot like a rape.We have been fighting this pipeline for seven years. And so far we’ve held it off in the courts and through the permitting process. The carbon output would be equivalent to opening 50 new coal plants – more carbon emissions than the entire current Minnesota economy. And all this for a dying industry. Energy companies and investors are fleeing the tar sands. Keystone XL is doomed, Dakota Access is in a legal mess (federal courts have ruled that its Environmental Impact Statement is inadequate). Enbridge itself is putting 400,000 barrels a day less through its main lines than they did a year ago. But the company still wants to sell this last pipeline. The Last Tar Sands Pipeline. Our governor, Tim Walz, took the bait. Minnesota needs real infrastructure: water, sewer, and bridges. But we’re getting a climate bomb pipeline instead.
Williams County gas processing plant, pipeline complete – Construction has finished on a natural gas processing plant west of Williston. Outrigger Energy II’s Bill Sanderson Gas Processing Plant can handle up to 250 million cubic feet of natural gas per day. It’s a cryogenic facility, meaning it can go further than some of the other processing plants in the state by cooling the gas enough to separate out ethane and propane from methane, the main component of raw natural gas. An 80-mile pipeline starting in southeastern Williams County connects to the facility. It will pick up natural gas from wells along the way, including from anchor customer XTO Energy, a subsidiary of ExxonMobil. The pipeline system and processing plant are not yet operational but likely will be later in 2021, as oil and gas production is expected to pick up, said Alex Woodruff, executive vice president and chief commercial officer for Outrigger. North Dakota’s oil and gas output fell in 2020 amid a price collapse brought on by the coronavirus pandemic, though prices have slowly trickled back up in recent months. West Texas Intermediate crude, the U.S. pricing benchmark, hit $53 per barrel Thursday. Many oil watchers say $55 per barrel is needed to spur more drilling in North Dakota. “While Williston Basin activity levels clearly slowed due to the 2020 crude oil pricing and COVID-19 environments, we are seeing substantial interest from producers to accommodate future drilling plans as crude oil prices near sustainable levels for the Basin,” Outrigger CEO Dave Keanini said in a statement. “Our assets are perfectly situated to provide producers with a competitive midstream option for both new development and volumes that are currently flaring due to infrastructure constraints.”
Large power plant slated for Williston area to harness Bakken’s ethane supply – A large power plant is slated to go in west of Williston that would run on ethane, an abundant component of natural gas produced in the Bakken. The developer, Bakken Midstream Natural Gas, hopes to begin construction of the $400 million facility in 2022. CEO Mike Hopkins said the plant will help alleviate the wasteful flaring of excess natural gas, provide a cheap source of electricity and help lure more “value-added” projects to the region to make use of natural gas liquids such as ethane. North Dakota produces about 350,000 barrels per day of ethane, according to the North Dakota Pipeline Authority. Ethane makes up 20% of the content of raw natural gas, which is extracted alongside oil from deep underground. Ethane and other natural gas liquids are separated from methane — the main component of natural gas — at processing facilities scattered throughout the Bakken. Ethane and other parts of the gas stream such as propane and butane exist in liquid form and are exported via pipeline to markets in other states. State leaders, along with the oil and gas industry, have for several years sought to attract projects to North Dakota that make use of natural gas liquids in the Bakken. “What North Dakota does not have is a lot of the infrastructure, in fact most of the infrastructure you’d want to see,” Hopkins said. Bakken Midstream formed in 2018 with a mission to develop such projects, even securing a $200,000 investment from the North Dakota Department of Commerce in 2019. State leaders have long discussed a desire to establish a petrochemical industry in North Dakota that would use ethane and other liquids. Petrochemical projects such as plastics manufacturing can be enormous in scope, and Hopkins said Bakken Midstream settled first on the power plant in an effort to achieve “something relatively near-term.” Construction is expected to take two years. Creating infrastructure for ethane in North Dakota could make the state more attractive to other companies seeking to build ethane-based projects, Hopkins said. Bakken Midstream considered focusing on developing a large gas-fired power plant, but it shifted gears to ethane given recent advances in turbine technology allowing for power generation from the substance. Using ethane to run a large power plant is a relatively new concept. It’s been used before in Asia, but on a smaller scale, Hopkins said. The Williston Basin Energy Center will have a capacity of hundreds of megawatts, he said. “It’s going to be running pretty much 24/7 as a baseload plant,” he said.
OPEC, shale output needs to rise to offset possible year-end supply squeeze: Vitol CEO | S&P Global Platts – OPEC and shale oil output will need to rise this year to help offset a potential supply squeeze by the year-end as the markets play catch-up with 2019 demand levels, the CEO of Vitol said Jan. 13. “The market is fast forwarding to a point where demand kind of catches up with where it was in 2019,” Russell Hardy told the Global UAE Energy Forum 2021 organized by Gulf Intelligence. “With that catch-up, we are going to need more OPEC oil and we may need some more shale oil as well, so the market is anticipating that and it’s trying to ultimately get ahead of a potential supply problem later on in the year.” OPEC+ members, excluding Kazakhstan and Russia, decided to keep their output in February and March steady from January after two days of contentious talks this month. Saudi Arabia, however, surprised the market by announcing a voluntary 1 million b/d cut for February and March that has helped buoy Brent prices to nearly touch $57/b, an 11-month high. OPEC and its nine allies, led by Russia, decided in December after days of heated negotiations to ease their stringent quotas by a collective 500,000 b/d for January, instead of the originally scheduled 2 million b/d tapering. Vitol is forecasting oil demand will increase by 6 million-6.5 million b/d in 2021 — “an enormous change,” said Hardy. “Demand, it is going to get covered by additional OPEC+ production,” he said. “Those increases are coming but are coming probably a tad more slowly than we might have anticipated a couple of months ago because of the virus effect here in Europe.” Several European countries are in lockdown as a resurgent COVID-19 pandemic spreads through the continent. However, the roll-out of the vaccine and a cold winter are offsetting the impact of lockdowns on oil demand and prices. The US Energy Information Administration revised its crude price forecast higher in its monthly Short-Term Energy Outlook released Jan. 12 amid tightened supply outlooks and upward-trending demand projections. The EIA now expects Brent crude prices to average at around $52.75/b in 2021, up $4.25/b from its December forecast, and at $53.42/b in 2022, and the WTI spot price to average at around $49.75/b in 2021, up $4/b from its most recent report, and at $49.79/b in 2022.6:14 PM
Arctic Refuge oil lease sale an act of desperation – The first step in recovering from any addiction is to tell the truth – admit the addiction, admit its consequences. This is something we still seem unwilling to do with our addiction to oil, particularly here in Alaska. The Trump administration’s rush to drill for oil in the Arctic National Wildlife Refuge is the desperation of a junkie looking for one more fix. The lease sale this week, long-sought by oil proponents, attracted bids on only 11 of the 22 tracts offered, mostly from the State of Alaska itself. Bids totaled only about $14 million, half of which will be returned to the State of Alaska. The sale was an embarrassing bust, a spectacular humiliation for the State of Alaska and the Trump administration. For decades, oil advocates have desperately wanted to drill for oil on the Arctic Refuge coastal plain, hoping there may be eight billion barrels there. But the Refuge is also one of the most sublime Arctic wilderness areas on Earth, home to thousands of caribou, polar bears, grizzly bears, muskox, and birds, and an important subsistence region for Alaska Native peoples. Most Americans feel that oil beneath the Arctic Refuge coastal plain should stay right where it is – in the ground. Many banks agree, and will no longer finance Arctic oil projects. Against overwhelming nationwide opposition, Alaska’s Republican congressional delegation inserted the Arctic Refuge drilling provision into the 2017 tax act, ludicrously asserting that revenues from the lease sales would help offset the huge tax cuts in the bill. They won’t come close. And as president-elect Biden has promised to permanently protect the Arctic Refuge from drilling, the Trump administration rushed to hold the Refuge oil lease sale just two weeks before leaving office. Worried that no major oil companies would bid, the State of Alaska bid on eleven Refuge tracts itself, although under federal law it is almost certainly an ineligible bidder. In fact, except for two small independent bids, the state was the only bidder. The Department of Interior’s Inspector General is already investigating the propriety of the state’s bids. This is a spectacular humiliation for oil advocates who long wanted this sale. Alaska’s continuing resistance to embracing an oil-free future is a bit like the last Japanese soldier refusing to surrender until almost 30 years after the end of WWII. As an energy analyst once said: “The Stone Age didn’t end for lack of stones, and the oil age will end long before the world runs out of oil.” And now the oil age is winding down, many in Alaska can’t seem to grasp this fact.
LNG Canada Conduit Coastal GasLink, Other BC Energy Projects Temper Labor Force on Covid Outbreak – Construction schedules are under review in British Columbia (BC) for its entry into the global natural gas export market as a result of labor force limits that provincial public health authorities adopted to counter the impacts from the pandemic. “Long-term impacts to the overall schedule continue to be assessed,” said TC Energy Corp. Vice President Tracy Robinson. Robinson also is president of the Coastal GasLink (CGL) supply pipeline underway across the province that would move gas to the Royal Dutch Shell plc-led liquefied natural gas (LNG) export project, LNG Canada. CGL initially would transport more than 1.7 Bcf/d from the Montney, Horn River and Cordova basins in the Dawson Creek area. At the northern Pacific coast terminal construction in Kitimat, LNG Canada construction manager Vince Kenny and JGC I Fluor JV director Berni Molz said a staged work plan is being devised to comply with the provincial pandemic control order. “As work at site progresses with a reduced workforce, our focus will be on environmentally sensitive, regulatory required, and time-sensitive work scopes,” said Kenny and Molz. “We remain committed to delivering first cargo by the middle of this decade.” Work plans are also being crafted for BC’s approval at Coastal GasLink, Robinson said. “In the immediate term there will be significant impacts to our ability to ramp up our workforce and progress project construction.” The construction labor limits, ordered at the end of 2020, followed Covid-19 outbreaks in December across industrial activity areas served by BC’s Northern Health Area. The directive affects not only activity at CGL and LNG Canada. LNG Canada last March had reduced its workforce by half as the pandemic began spreading across North America. Three other big energy construction projects included in the BC directive are BC Hydro’s Site C Dam near Fort St. John, the Trans Mountain Pipeline oil supply expansion, and the Rio Tinto Kemano power plant to serve a Kitimat aluminum smelter. The rules allowed this year’s planned CGL construction labor force to start at 400 workers in early January and grow in stages to 1,223 as of February. The LNG Canada quota started at 512, increased to 1,162 as of next week (Jan. 20), and is open to grow later. Although the Trans Mountain project has to adapt to similar public health restrictions, the oil pipeline’s sponsors have informed the Canada Energy Regulator that its BC construction schedule has not changed. No worker quotas have been ordered on the expansion project’s Alberta legs.
Big Panama with a Purple Hat Band – Propane Price Squeeze, Panama Canal Rules Fluster Market – It’s been a chaotic start to the new year for propane. In the past 12 days, the Mont Belvieu price is up over 15%, closing on Tuesday at 87 cents/gallon – the highest since October 2018. The usual culprit of winter weather has something to do with it, but not just in North America. Over the past couple of weeks, frigid temperatures in Asia, along with supply cutbacks from the Saudis, have supported U.S. propane exports to those markets, further tightening the U.S. supply/demand balance. But as is often the case these days, the market has another complicating factor. Delays transiting the Panama Canal have stacked up VLGCs – the vessels carrying U.S. propane to Asia – on both the Atlantic and Pacific sides of the waterway, pushing up charter rates to levels not seen in years. And on top of that, new transit-scheduling rules from the Panama Canal Authority will shove VLGCs to the back of the line, potentially making it even more difficult to get through the canal without significant delays. Today, we’ll explore these developments and what they may portend for the remaining weeks of winter.As we blogged about in November and December (Now You See It), the possibility for a propane price squeeze has been coming at us for several weeks. Even though the U.S. entered the propane winter season with healthy inventories, exports have been running at all-time highs and stocks have been declining rapidly. We were concerned that average days-supply, when calculated using both domestic demand and exports, had dropped to a five-year low, and that the market could get very tight, warning that “the wild ride for propane prices seen in the fourth quarter could get wilder still.”And it has. In Mont Belvieu, as mentioned above, the price of propane blasted into the stratosphere during the first few days of the New Year, reflecting not only cold weather in the U.S., but skyrocketing prices in Asia due not only to record- or near-record-low temperatures in Japan, South Korea, and northeastern China, but also to shipping and global supply issues. We’ll get back to that in a minute. But first, let’s consider how propane prices have behaved so far in 2021.
EXCLUSIVE-U.S. tells European companies they face sanctions risk on Nord Stream 2 pipeline (Reuters) – The U.S. State Department this month told European companies which it suspects are helping to build Russia’s Nord Stream 2 gas pipeline that they face the risk of sanctions as the outgoing Trump administration prepares a final round of punitive measures against the project, two sources said on Tuesday. “We are trying to inform companies of the risk and urge them to pull out before it’s too late,” The U.S. source said the State Department is expected to issue a report by Thursday or Friday on companies it believes are helping the Russia-to-Germany pipeline. Companies that could be in the report include ones providing insurance, helping to lay the undersea pipeline, or verify the project’s construction equipment, the source said. The companies could be at risk of U.S. sanctions under existing law if they do not stop work. Zurich Insurance Group could be listed in the report, the source said. The company did not immediately respond to a request for comment. The $11 billion pipeline, one of Russia’s most important projects in Europe, has sparked tensions between Washington and Moscow. The Trump administration opposes Nord Stream 2, which would deprive Ukraine of lucrative transit fees, saying it would increase Russia’s economic and political leverage over Europe. The administration has also pushed exports of U.S. liquefied natural gas to Europe, a fuel that competes with pipelined gas from Russia. The Kremlin says Nord Stream 2, led by state energy company Gazprom, is a commercial project. Germany, Europe’s biggest economy, also says the pipeline is simply commercial. It needs gas as it shuts coal and nuclear plants on environmental and safety concerns. U.S. President-elect Joe Biden opposed the project when he was vice president under Barack Obama. It is uncertain whether he would be willing to compromise on the project after Jan. 20 when he takes over.
NS2 Set to Finish Bulk of Work on One Line in June— Nord Stream 2 AG plans to complete major construction work on one of two branches of the controversial Russian gas link in the first half of 2021, despite U.S. sanctions that have threatened its completion for over a year. The section of pipe could be largely finished as soon as June, as the operator of Nord Stream 2 starts some testing in Danish waters on Friday, according to a schedule seen by Bloomberg that was confirmed by people familiar with the process. Construction of the 1,230-kilometer (764-mile) gas pipeline that will deliver Russia’s natural gas to Germany was halted after U.S. sanctions in December 2019, when all but 160 kilometers of the link had been put in place. The U.S. — which has tightened restrictions — maintains that the gas link, owned by a unit of Gazprom PJSC, gives Moscow too much leverage over Europe. Construction of a 2.6-kilometer section in German waters resumed and was finished last month amid risks of tighter U.S. restrictions. Recovery of the already laid pipes in Danish waters will start in the second half of January and the new laying operation there will start around the same time, according to the schedule. The pipelaying vessel Fortuna is expected to complete works in Danish seas by the middle of the last week of May, and then start in German waters with construction going through to June, according to the document. While the assumed speed of Fortuna’s pipelaying is 0.4 kilometers per day, completing the first line may take longer as it depends on the results of a drilling survey and weather conditions. Germany’s Maritime and Hydrographic Agency is still evaluating the request of Nord Stream 2 to move forward with works in German waters, according to a spokeswoman. The Danish and German regulators declined to comment on the schedule. Nord Stream 2 didn’t immediately respond to Bloomberg requests for comments.
Big freeze exposes Asia’s underlying energy crisis: Kemp – Northeast Asia has been hit by a midwinter energy crisis as an extended period of temperatures much lower than normal across the region has strained supplies of coal, gas and electricity to breaking point. China has been forced to restrict power in multiple provinces, Japan has appealed for voluntary restraint, and LNG prices have surged to record highs as generators and utilities scramble for spot cargoes. Freezing temperatures may have been the trigger for the crisis, but it reveals a deeper lack of resilience in regional energy systems caused by the rapid transition to gas for space heating and power generation. Japan has failed to restart or replace nuclear generation a decade after the Fukushima disaster, which has left the country with too little generation capacity and excessive reliance on imported gas. China’s rapid transition from coal to gas for urban heating systems has tightened gas supplies while the rapid growth in household and industrial electricity consumption is straining the electrical grid. More broadly across Asia, rapid growth, rising incomes and surging electricity demand is stretching generation systems and availability to import enough LNG at peak times. Every energy crisis has four elements: 1) pre-crisis erosion of spare production capacity and/or inventories in the face of rapidly increasingly consumption; 2) failure to appreciate the increasing risk and take timely preventive action; 3) a short-term trigger that turns potential shortage into actual shortage; and 4) panicked over-reaction when the shortages finally arrive. The energy crisis that has hit Asia in 2020/21 exhibits many of the same characteristics as crises that hit Britain in 1946/47 and the United States in 1973/74. The common thread in all three is that abnormal weather or a supply disruption aggravated an underlying energy shortage and brought the crisis to a sudden head; signs of a crisis had been evident months earlier but were not acted upon with sufficient urgency.
Venezuela Refuels Its Territorial Dispute With Guyana in Area With Massive Offshore Oil Find – Political tensions between Guyana and Venezuela are escalating in a longstanding border dispute over an area that comprises two-thirds of the smaller English-speaking South American country. The area in question is the resource-rich Essequibo province, where energy giant ExxonMobil began oil exploration in 2008. The company recently discovered significant oil and gas reserves in Guyana, placing the country on the threshold of an economic boon.On January 9, Venezuelan president Nicolfls Maduro announced that he would “reconquer” the province, which is situated to the west of Guyana’s Essequibo River. While the area’s riches include gold, diamonds and timber, the focus of Venezuela’s claim is offshore – the location of ExxonMobil’s massive Liza oil field, which the company estimates will produce approximately 120,000 barrels of oil per day. In its project overview, ExxonMobil describes the area as part of the Stabroek Block, calling it “the first significant oil find offshore Guyana.”The discovery of Guyana’s oil and gas resources has made the country the newest kid on the block in the global energy industry, whereas Venezuela is a well-established player. Despite the fact that Venezuela enjoys the largest oil reserves in the world, with more than 300 billion barrels, the nation has been teetering on the brink of socio-economic collapse for the past several years. The crisis grew deeper in 2017, after the country’s Supreme Court of Justice nullified its National Assembly.In 2019, President Maduro ordered that charges of treason be slapped on opposition leader Juan Guaidó for allegedly agreeing to forego Venezuela’s claim to the Essequibo province. The renewed push from Venezuela follows the inauguration, on January 5 this year, of a pro-Maduro National Assembly, the legitimacy of which is being questioned by the opposition.Meanwhile, Guyana’s president Irfaan Ali called Maduro’s claim “a legal nullity,” On the heels of joint United States/Guyana coast guard exercises on January 8, Admiral Craig Faller, Commander of the US Southern Command, arrived in Guyana on January 11 for a three-day visit – a signal that the outgoing Trump administration’s interest is firmly aligned with Guyana’s.
Exxon’s Mega Oil Finds In Guyana Are Just The Beginning – Like many global oil majors ExxonMobil is under considerable pressure because of the significant fallout from the COVID-19 pandemic, sharply weaker oil prices and the threat of peak oil demand. There are growing fears that Exxon, because of its tremendous debt burden, is a zombie company. These are generally companies that are not generating sufficient operating income to cover its interest expenses. While Exxon is struggling because of the prolonged slump in oil prices reporting a $2.4 billion loss for the first nine months of 2020 and deteriorating cashflow it is not yet a zombie company. The global oil supermajor has several levers at its disposal to boost profitability and cash flow, key being the improved outlook for oil prices along with Exxon’s globally diversified portfolio of quality energy assets. In response to sharply weaker oil prices and the need to boost profitability Exxon announced during November 2020 that it intended to prioritize capital spending for high value assets, key among them being its operations in the Guyana-Suriname Basin located in offshore South America. Exxon made its first Guyana oil discovery in the offshore Stabroek Block during May 2015. By December 2019, the integrated energy major had commenced production at the Liza oilfield with the capacity to pump 120,000 barrels daily. During September 2020, Exxon made its 18th oil discovery in the Stabroek Block and upgraded its estimate of recoverable oil resources to more than 8 billion barrels. That month Exxon announced it will proceed with developing the Payara oilfield, in the Stabroek Block, which will come on-line in 2024 possessing the capacity to pump 220,000 barrels daily. By December 2020 Exxon had achieved its production goal for the Liza field and the company anticipates producing more than 750,000 barrels daily from the 6.6-million-acre Stabroek Block by 2026. This is a highly profitable asset for the integrated oil major, even with weaker oil prices, because of its particularly low breakeven costs. According to partner Hess, which has a 30% interest in the block alongside Exxon’s 45% and CNOOC’s 25%, the Liza oilfield is pumping crude oil at a breakeven price of $35 per barrel, and this will fall further. Hess claims that the breakeven price for the second FPSO to be deployed, Liza Unity which is scheduled to commence operations in 2022, will pump crude at an even lower breakeven price of around $25 per barrel. With an API gravity of 32 degrees and 0.58% sulfur content, the crude oil produced from the Liza field is relatively easily and cost effectively refined into high quality low sulfur content fuels. That will ensure that it does not sell at a significant discount to the international Brent price benchmark.
Total Makes Significant Oil Find -Total has announced that it and Apache Corporation (Nasdaq: APA) have made a “significant” new oil and gas discovery at the Keskesi East-1 well in Block 58 off the coast of Suriname. The well was drilled at a water depth of about 2,380 feet and was said to have encountered a total of 206 feet of hydrocarbons, comprising 190 feet net of black oil, volatile oil, and gas pay in good quality Campano-Maastrichtian reservoirs, and 16 feet of net volatile oil pay in Santonian reservoirs. Drilling is still ongoing for deeper Neocomian aged targets, Total revealed. The company’s latest find follows previous discoveries at Maka Central, announced in January last year, Sapakara West, announced in April last year, and Kwaskwasi, announced in July last year, Total highlighted. “We are delighted to announce this new discovery, which confirms this first exploration campaign as a full success and adds to the proven resource base” Kevin McLachlan, the senior vice president of exploration at Total, said in a company statement. Pursuant to the terms of its joint venture agreement, Apache transferred operatorship of Block 58 to Total S.A. on Jan. 1, 2021. Back in December 2019, Total announced that it had signed an agreement with Apache to acquire a 50 percent working interest and operatorship in the “highly prospective Block 58 offshore Suriname”. In addition to its discoveries offshore Suriname, Total has also made notable finds in other areas of the globe recently. At the end of October last year, for example, the company announced a significant gas condensate discovery on the Luiperd prospect, which is located on Block 11B/12B in the Outeniqua Basin off the southern coast of South Africa. Total also made a gas discovery with the Bashrush well on the North El Hammad license in July 2020 and a gas and condensate discovery in the North Sea in March 2020
The Most Important Oil Find Of The Next Decade Could Be Here – A potential high upside opportunity in the oil and gas sector is unfolding that offers one of the most attractive risk/reward profiles this industry has seen in quite a while.This opportunity is with a small oil explorer sitting on a supermajor-sized oil and gas basin…and yet the company is still currently flying very much under Wall Street’s radar. Reconnaissance Energy Africa is a small $300+ million company that has secured petroleum licenses for an entire sedimentary basin in Namibia and Botswana…two extremely resource-friendly countries with very low royalties fees.This basin – as deep as the Permian – could prove to be one of the world’s last-ever giant onshore oil discoveries. And as a new basin, the potential is likely for Conventional Oil and Gas. No Fracking, normal production profiles, low water requirements which means low cost per barrel.And Recon Africa has secured the petroleum licensing rights to the entire basin.With one of the world’s largest onshore, undeveloped hydrocarbon basins – whose potential has been analyzed and acknowledged by some of the industry’s most sought-after experts – the oil that is hoped to be discovered by Recon Africa could ultimately prove to be worth tens of billions.This isn’t an investment with simply ordinary profit potential. We’re talking about a true “lottery ticket” – potentially the largest oil discovery in the last 20 to 30 years. They just have to make that big discovery. And, again, one small-cap company has secured the rights to all of it.
Nigeria’s Forcados crude exports on force majeure due to pipeline closure: Shell – – Loadings of Nigeria’s key export grade Forcados are on force majeure due to the shutdown of the Trans Forcados pipeline, terminal operator Shell said late Jan. 14. The force majeure took effect from 1000 local time (0900 GMT) on Jan. 14, a Shell spokesperson said. A representative at Heritage said the Trans Forcados pipeline had initially shut down for “maintenance services” but “community disturbances” had disrupted the exercise. The pipeline therefore remained shut for longer than scheduled, leading to Shell declaring force majeure, the source said. Forcados is a gasoil-rich sweet crude blend and is one of Nigeria’s top export grades. Output has averaged around 250,000 b/d over recent months. Nigerian oil output has fallen sharply in the past six months as it has come under pressure to adhere to its OPEC+ cut obligations. Some of the country’s key grades have had faced outages. Exports of Qua Iboe are also currently on force majeure due to production issues triggered by a fire at the Qua Iboe terminal in mid-December. Exports of Brass River were on force majeure from late November to mid-December after a sabotage attack on an oil and gas pipeline. Nigeria’s crude and condensate production slumped to around 1.66 million b/d in 2020 from 2.04 million b/d in 2019, according to S&P Global Platts estimates. This was its lowest annual output figure since 2016 when militancy in the Niger Delta pushed output to as low as 1.60 million b/d. Last week, a coalition of former oil rebels in the Niger Delta, now known as the Reformed Niger Delta Avengers, threatened to resume attacks on oil installations in the country’s main oil producing region. A presidential amnesty program for militants to maintain peace in the Niger Delta remains in place but there are concerns that militancy might be picking up again.
LNG-Asian spot prices rise to record high = (Reuters) – Asian spot prices for liquefied natural gas (LNG) jumped nearly 50% this week to a record high, based on available data going back to 2009, as logistical issues disrupt supply to the world’s top consuming region. The average LNG price for February delivery into northeast Asia LNG-AS is estimated to be around $21.45 per million British thermal units (mmBtu), according to pricing agency S&P Global Platts, up 47% from the previous week ($14.60). The price is a record high since Platts started assessing the Japan-Korea-Marker (JKM) in Feb. 2009, which combines deals from some of the world’s biggest consumers and became the reference price for spot deals. Spot Asian LNG prices led the global energy complex last year, gaining more than 140% on booming demand and outages in key suppliers. The rally this week – eight months after the JKM fell to an all-time low of $1.82/mmBtu – partially results from strong demand for heating during a colder-than-average winter and a shortage of supply in key producing countries such as Malaysia. Japanese power generators are reducing run rates on their gas plants as they compete with LNG buyers across northern Asia. Demand is also expected to grow in China. In addition, there have been logistical constraints in bringing supply from the United States and Europe to the Pacific.
Winter LNG Boom Means Most Expensive Cargo Ships in History – An unprecedented shortage of liquefied natural gas tankers has made them the most expensive ships ever hired to ferry commodities. Spot rates have more than tripled in the past month, with BP Plc last week paying $350,000 a day to charter an LNG tanker to pick up a cargo from the U.S. The previous high for any kind of commodity carrier was set in late 2019 when a crude supertanker was booked for daily earnings of $308,000, according to data compiled by Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker. Bullish factors have struck the LNG shipping market: robust Asian spot gas demand in a cold winter, record-high exports from U.S. projects and — perhaps most importantly — delays to traverse the Panama Canal. Vessels have been forced to take longer routes to Asia, increasing transport time and significantly curbing the amount of available vessels in the Atlantic. “These are historically high levels,” said Per Christian Fett, global head of LNG at shipbroker Fearnleys A/S. “We are getting a lot of requirement where we really struggle to find a suitable vessel.” Spot LNG tanker rates in the Atlantic basin rose to a record $322,500 a day on Friday, up $99,000 from Jan. 5, according to Spark Commodities, which takes assessments from LNG shipbrokers. Meanwhile, the Pacific spot tanker rates increased to $221,750 a day, according to Spark. The high in daily earnings recorded by Clarkson Research is for commodity-carrying vessels, not container ships that transport finished goods. The same factors have pused prices for prompt cargoes to records. Japan-Korea Marker, the regional benchmark, rose almost 32% to $28.221 per million British thermal units on Monday, according to S&P Global Platts.
Trucked LNG Prices Spiked in China as Cold Gripped Region in December, Says Wood Mackenzie – Cold weather and a scramble to secure natural gas supplies in Asia are impacting more than only power generators, as spot prices for trucked liquefied natural gas (LNG) in China skyrocketed last month, according to Wood Mackenzie. The consultancy said spot prices in the LNG transport space nearly doubled in only three weeks in the Hebei, southern Jiangsu and southern Guangdong regions. According to delivered price indices, trucked LNG peaked at $28.00/MMBtu on Dec. 21 in the Hebei and Jiangsu regions. Prices then dropped sharply and increased with another cold snap in late December, Wood Mackenzie said. China has worked to increase domestic natural gas production and implement more flexibility on the demand side following shortages in recent years, establishing seasonal pricing, winter gas contracts and interruptible demand, Wood Mackenzie added. The national oil companies also said heading into the winter that the country would be well stocked with natural gas supplies, but a perfect storm in Asia was building starting in late November, leaving the gas market stretched. “The price spike came as a huge surprise to market participants,” said Wood Mackenzie research director Miaoru Huang. “Before winter started, consensus was that there would be a well supplied market with subdued trucked LNG prices, as was the case for most of 2020. As a result, trucked LNG supply had been tightened to make room for piped gas in the current winter season.” Winter gas demand has increased due to a strong economic recovery following the outbreak of Covid-19 in China. Continuing coal-to-gas switching among residential users and extremely cold weather this winter, where temperatures have dropped to some of their lowest in decades, also have contributed to the rise. Finally, logistical issues contributed to the spike as roads were frozen and an import terminal in southern China was knocked offline until late December after a fire. Wood Mackenzie said LNG makes up less than 20% of China’s gas demand each year. However, the firm said prices are highly sensitive to market balance, especially during the winter.
China’s Bohai Bay energy terminals on alert as sea ice slows ships (Reuters) – Chinese ports and marine safety authorities are on high alert as an expansion of sea ice makes it tougher for ships to berth and discharge at key energy product import terminals along the coast of northern Bohai Bay. A cold wave sweeping the northern hemisphere has plunged temperatures across China to their lowest in decades, boosting demand for power and fuel to historic highs in the world’s largest energy consumer. “The sea ice situation is more severe this year than the same period in previous years,” said Wang Jun, a professor specialising in transport issues at Dalian Maritime University. “It could impede sailing and docking for vessels, no matter how big they are.” Weather officials warned against severe frost this week in the region, with sea ice stretching 45 to 55 nautical miles at Liaodong Bay and 10 to 20 nautical miles at Bohai Bay, close to levels that could prompt temporary bans on shipping. Last weekend, the marine safety bureau in northern Hebei sent several tugboats to the aid of vessels, such as LNG tanker Clean Planet and coal bulk tanker Agia Eirini Force, trapped in sea ice that was 1 meter (3 ft) thick, to help bring them to Caofeidian and Huanghua ports, state television said. The Agia Eirini Force is seen leaving China on Tuesday but Clean Planet’s latest location has not been updated, shipping data on Refinitiv Eikon showed. Marine authorities and ports in Tianjin, Hebei and Liaoning province are closely monitoring weather conditions and sending drones and ice-breaking tugs to clear the fairway for expected vessels, they said.
Goldman Flips On NatGas, Warns Of Bullish “Perfect Storm” – Goldman Sachs has flipped on their bearish natural gas stance to a bullish one. Goldman’s Samantha Dart’s reasoning behind the view shift is due to a combination of factors including “supply disruptions, shipping delays, and strong LNG demand, supported by heavy nuclear maintenance in Japan and a cold start of the year in NE Asia, have significantly tightened the LNG market.” Prices of the supercooled fuel in especially Asia have reached astronomic heights in recent days. The most critical LNG markets are in Asia and Europe, which comes as a polar vortex split that has dumped Arctic air in both regions, boosting natgas prices. Goldman points out LNG Asian benchmark JKM has jumped to a fresh all-time high of $32/mmBtu today as the “market struggle to ration demand while supply takes weeks to move incremental Atlantic Basin supply into Asia.” While LNG prices are soaring in Asia, cold weather in Europe has led to the Dutch Title Transfer Facility (TTF) physical short-term gas and gas futures contract to soar 29% higher to $9.43/mmBtu in the last two days. Goldman suggests that “even deeper-than-expected drop in NW European LNG deliveries, we now see European balances even tighter.” Colder-than-average temperatures have provided significant support for European natgas demand. “TTF price forecasts skewed to the upside,” Goldman said, adding that it’s due to “weather-driven tightness realized thus far.” We see risks to our revised TTF price forecasts skewed to the upside as, given the LNG and weather-driven tightness realized thus far, we believe that even a warm turn to the weather would not be enough to take this year’s storage path towards a capacity breach. This effectively eliminates the risk that TTF may need to sell off this winter to once again close the US LNG export arb. Hence, with warm weather risks less relevant, we update our weather scenario analysis to focus on colder-than-average scenarios only. Importantly, our previous iteration of this analysis had already shown the explosive potential for TTF prices. -Goldman Colder weather in Europe has also resulted in Spanish natgas prices hitting a record high.
Perfect Storm Driving Meteoric Rise in Asian LNG Prices Could Happen Again – On the supply side, you’ve had a series of global supply outages rolling on since late summer in Australia, Malaysia, Qatar, Nigeria, Trinidad and Tobago, and Norway. Generally, the supply picture has been underperforming relative to historic levels, and that has basically increased northeast Asia’s call on Atlantic Basin cargoes coming out of the United States and the European market. Those are some of the more expensive supplies for the Asian market, which has been driving prices up. There’s also been growth in Asian demand as the region has handled the pandemic better than countries in the West, which has left economic activity less disrupted. There’s also been very intense cold, which has really been driving things up in the last few weeks. We have been seeing this particularly acutely in Japan in recent days. In the meantime, China has been building up coal-to-gas switching, adding millions and millions of households that have now switched onto the gas market. A lot of the cargoes we’ve seen taken out of the European market have supplied the Chinese market in particular. The freight picture is extremely tight right now, with a recent record rate to charter an LNG vessel of $350,000/day. Last summer, we were around $30,000-40,000/day to charter a vessel. You’re really having to pay through the nose right now to convince another company to sublet you their vessel. There has been a big increase among portfolio players and aggregators buying up shipping capacity, so there’s not that much left over in the spot market when things are very tight. There are people trying to get spot vessels to close this arbitrage to make reloads from Europe to Asia, but they’re having to pay to do so. When you have U.S. cargoes going across the Atlantic to Europe, you don’t need that many vessels to deliver a certain amount of LNG, but when those vessels are going to Asia, you need about double the shipping tonnage. When a large proportion of U.S. LNG is going to Asia, it’s going via the Panama Canal and capacity to get through the waterway is being maxed out. There has been an increase in wait times outside of the Panama Canal of up to 10 days, which then adds to the shipping costs and the Japan Korea Marker (JKM) has to go even higher to attract those cargoes. The cargoes are also bypassing delays at the Panama Canal by going around the Cape of Good Hope, the longest possible way U.S. cargoes can get to northeast Asia. And as a final recourse, that hasn’t been enough to satisfy northeast Asian demand. The market is now unlocking European reloads to go to Asia, which is another very long shipping route. In order for the JKM to price on those deliveries from Europe to northeast Asia, buyers are having to pay a substantial shipping cost. We are so tight right now at the end of January, start of February – and it takes about a month to get a cargo out of the Atlantic Basin – that it is virtually impossible to get a cargo on short enough notice to close the arbitrage. You can only really get a cargo into northeast Asia from the Atlantic Basin by the second half of February into March. The record prices we’re seeing amid this cold snap really represent an inability to get a marginal cargo and a real scramble to convince someone else in northeast Asia to not take delivery of their cargo, but to give it to someone shorter on supply.
Goldman Discovers An Unexpected Source Of Demand For 1 Million b/d Of Oil – Having recently turned even more bullish on the oil market, bringing forward up its year-end $65 Brent price target to the summer on Monday, overnight Goldman’s commodity team turned even more bullish on oil, “discovering” an unexpected source of oil demand in the near term, which could lead to even higher oil prices in coming days. Specifically, according to to Goldman’s Damien Courvalin, global oil demand will be boosted by at least 1 million b/d in the coming weeks as cold weather spurs the use of diesel for power generation.As Courvalin explains, frigid temperatures in Asia and Europe in the face of LNG supply issues have led to a surge in local gas prices. Specifically, the record-high JKM prices we discussed yesterday….. have moved well past diesel substitution in power generation although the rally in TTF this week is still short of fuel oil parity. Goldman believes this substitution-induced price surge could lead to at least a 1 mm b/d boost to global oil demand in coming weeks, with an upside potential of 1.5mb/d (especially if TTF prices rally past $10/mmBtu).Goldman based this estimate on the precedent of the 2017 cold winter, grossing up OECD data to the rest of Asia. As the bank explains, “a simple top-down weather model on Asia and EU winter heating demand confirms that the recent cold wave would boost demand by 1mb/d, even before the impact of additional fuel substitution under such extreme price dislocations (with working-from-home dynamics pointing to a potentially even stronger demand impact).” The steady decline in oil burn power generation capacity in recent years ultimately limits the magnitude of this substitution, likely explaining the magnitude of the JKM gas rally which is now solving for end-demand destruction in the LNG trucking and industrial sectors. This in turn will provide additional support to on-road diesel and LPG demand, according to Courvalin.To be sure, such demand support will be transient, with higher expected LNG arrivals in coming weeks and milder Asian weather forecasts. That said, assuming even a mere three-week impact, this transitory demand spike “will nonetheless help offset half of the c.1.5 mb/d decline in global transportation demand” that Goldman expects in January due to spreading lockdowns (with the split polar vortex potentially leading to additional cold spells).
OPEC maintains 2021 oil demand growth forecast, warns outlook clouded by pandemic fears – Oil producer group OPEC on Thursday kept its 2021 forecast for global crude demand growth unchanged, but warned uncertainties over the impact of the coronavirus pandemic remain high. The closely watched oil market report comes as Covid cases continue to surge worldwide, with new lockdowns imposed in Europe and parts of China. In recent weeks, optimism about the mass rollout of coronavirus vaccines appears to have been tempered by the resurgent rate of virus spread. It has resulted in oil producers trying to orchestrate a delicate balancing act between supply and demand as factors including the pace of the pandemic response continue to cloud the outlook. “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior,” OPEC said Thursday. “These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.” The 13-member group said it expected global oil demand in 2021 to increase by 5.9 million barrels per day year on year to average 95.9 million barrels per day. The forecast was unchanged from last month’s assessment. The group said world oil demand growth in 2020 declined by 9.8 million barrels per day year on year to average 90 million barrels per day. The group noted the fall was marginally less than expected in December. OPEC said its 2021 forecasts “assume a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.” “Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said. OPEC and its non-OPEC allies, an alliance sometimes referred to as OPEC+, cut oil production by a record amount in 2020 in an effort to support prices, as strict public health measures worldwide coincided with a fuel demand shock. OPEC+ initially agreed to cut output by 9.7 million bpd, before easing cuts to 7.7 million and eventually scaling back further to 7.2 million from January. OPEC kingpin Saudi Arabia has since said it plans to cut output by an extra 1 million barrels per day in February and March to stop inventories from building up.
Oil prices fall on renewed coronavirus concerns as China cases mount – Oil prices fell on Monday on renewed concerns about global fuel demand amid strict coronavirus lockdowns in Europe and new movement restrictions in China, the world’s second-largest oil user, after a jump in cases there. Brent crude oil futures fell 46 cents, or 0.84%, to $55.52 a barrel after earlier climbing to $56.39, its highest since Feb. 25, 2020. Brent rose in the previous four sessions. U.S. West Texas Intermediate (WTI) slipped 21 cents, or 0.4%, to $52.03 a barrel. WTI rose to its highest in nearly a year on Friday. “Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday. Mainland China saw its biggest daily increase in COVID-19 cases in more than five months, the country’s national health authority said on Monday, as new infections in Hebei province, which surrounds the capital Beijing, continued to rise. Shijiazhuang, Hebei’s capital and epicentre of the new outbreak in the province, is in lockdown with people and vehicles barred from leaving the city as authorities move to curb the spread of the disease. Most of Europe is now under the strictest restrictions, according to the Oxford stringency index, which assesses indicators such as travel bans and the closure of schools and workplaces. Still, the oil price losses were curbed by plans for U.S. President-elect Joe Biden to announce trillions of dollars in new coronavirus relief bills this week, much of which will be paid for by increased borrowing. Crude prices remained supported by Saudi Arabia’s pledge last week for a voluntary oil output cut of 1 million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns. “Oil is still pricing in a great deal of optimism linked to the rollout of Covid-19 vaccines,” Innes said. “Demand will always improve as the vaccines roll out, and the supply side is under control thanks to OPEC+ and Saudi Arabia’s continued efforts.”
Oil erases loss to end near unchanged | Morningstar – Oil futures erased an early loss, with the U.S. benchmark eking out a tiny gain to close at a 10-month high as pressure from a rising dollar and worries over a COVID-related hit to demand was overshadowed by optimism over prospects for near-term exports.West Texas Intermediate crude for February delivery rose a penny to finish at $52.25 a barrel on the New York Mercantile Exchange, the highest close for a front-month contract since Feb. 21. March Brent crude , the global benchmark, dropped 33 cents, or 0.6%, to settle at $55.66 a barrel a barrel on ICE Futures Europe.WTI’s outperformance of Brent — the March WTI contract — also rose by a cent to close at $51.51 a barrel– comes as Iraq, Kuwait, and the United Arab Emirates all followed Saudi Arabia’s lead and raised prices to Asia customers in recent days, noted Robert Yawger, director of energy futures at Mizuho Securities, in a note.”The move opens the door for U.S. producers to fill the void and export more barrels to Asia,” he said, noting that Bloomberg reported U.S. Gulf crude exports to Asia rose by 33.8 million barrels in December from 28.6 million barrels in November.Brent, meanwhile, felt pressure on renewed concerns about rising coronavirus cases around the world, resulting in tighter lockdowns, as well as a bounce for the U.S. dollar.Oil surged last week, with both Brent and WTI trading at levels last seen in early February, boosted in part by Saudi Arabia’s surprise decision to cut production by 1 million barrels a day in February and March. The dollar was higher versus major rivals. lifting the ICE U.S. Dollar Index , a measure of the currency against a basket of six major rivals, by 0.4%. The index has fallen sharply since last March and hit a more than 2 1/2-year low last week before beginning to push higher as yields on Treasury notes rose last week.Commodities and the dollar often show an inverse relationship. A weaker dollar makes commodities priced in the greenback less expensive to users of other currencies, while a stronger dollar makes them more expensive. Meanwhile, the U.S. saw at least 208,338 new cases of COVID-19 reported on Sunday, according to a New York Times tracker, and counted at least 1,777 deaths, numbers that may be underreported due to lower weekend staffing. On Friday, the U.S. set a single-day record of more than 300,000 new cases. In the past week, the U.S. has averaged 254,866 cases a day, numbers that experts had warned would materialize if Americans traveled in large numbers during the recent holiday season. February natural-gas futures rose 4.7 cents, or 1.7%, to end at $2.747 per million British thermal units. February gasoline declined 2.15 cents, or 1.4%, finishing at $1.5208 a gallon. February heating oil shed 0.6 cent, or 0.4%, to close at $1.5735.
Oil prices sapped by rising virus cases; anticipated drop in U.S. inventory stems losses – Oil prices slipped on Tuesday as investors remained concerned about climbing coronavirus cases globally, but expectations of a drawdown in crude oil inventory in the United States for a fifth straight week kept losses in check. Brent crude oil futures slipped 10 cents, or 0.2%, to $55.56 a barrel by 0500 GMT, while U.S. West Texas Intermediate (WTI) fell 8 cents, or 0.2%, to $52.17 a barrel. Worldwide coronavirus cases surpassed 90 million on Monday, according to a Reuters tally, as nations around the globe scramble to procure vaccines and continue to extend or reinstate lockdowns to fight new coronavirus variants. In Asia, Japan is planning to widen a state of emergency beyond its capital Tokyo to stem the spread of Covid-19 while China is implementing movement curbs in some parts of the country. “I think the market will be rapid to conclude that yesterday’s modest pullback in price, provided the virus spread in China remains contained, was but a blip on the radar screen,” said Stephen Innes, chief global market strategist at Axi in a note, citing the prospect of increased economic stimulus in the United States. President-elect Joe Biden, who takes office on Jan. 20 with his Democratic party in control of both Houses, has promised “trillions” in extra pandemic-relief spending. U.S. crude oil stockpiles likely fell for a fifth straight week, while refined products inventories were seen up last week, a preliminary Reuters poll showed on Monday. The poll was conducted ahead of reports from industry group American Petroleum Institute later on Tuesday and the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, on Wednesday. Brent could rise to $65 per barrel by summer 2021, Goldman Sachs said, driven by Saudi cuts and the implications of a shift in power to the Democrats in the United States. The Wall Street investment bank had previously predicted oil would hit $65 by year-end.
Light Crude Ends Session Above $53 | Rigzone — Oil rose to a fresh 10-month high with a weaker dollar providing support to a market already boosted by expectations for tightening global supply. Futures climbed 1.8% in New York on Tuesday as a declining dollar raised the appeal for commodities priced in the currency. The six-day rally, the longest stretch of gains since May, has also been aided by Saudi Arabia’s pledge last week to slice output in the coming months. “It’s been a dynamic bull trend and the market continues to anticipate inventories are going to be drawn pretty sharply as a result of the Saudi production cutbacks,” “But, at some point, when you get into these bull moves, the market tends to overshoot where the equilibrium price is.” Oil has been on a tear after OPEC and its allies agreed to keep curbing their output, building on a rally at the end of last year on Covid-19 vaccine breakthroughs. Yet, the return to normal for both crude and fuel demand remains some ways off, as the world’s vaccination effort is still in the early stages. Global crude consumption will likely stagnate until May, and both vaccine production and vaccination rates would need to be ramped up “massively” if the world is to transition to normality this year, consultant FGE wrote in a report. Meanwhile, gasoline demand next year won’t reach pre-pandemic levels, though diesel should eclipse its 2019 performance, the U.S. Energy Information Administration wrote in a monthly report. Yet, Brent’s rally faces “formidable resistance” from $58 a barrel to $60 a barrel, Bank of America Global Research said in a report. Technical indicators like the 14-day Relative Strength Index signal both oil benchmarks are overbought. West Texas Intermediate for February delivery rose 96 cents to settle at $53.21 a barrel. Brent for March settlement gained 92 cents to end the session at $56.58 a barrel. Oil is also rallying along its forward curve after Saudi Arabia’s announcement to unilaterally cut production. Brent’s nearest contract has grown its premium to the following month to 9 cents a barrel, compared to a discount of 7 cents at the start of last week. The closely-watched spread between its closest two December contracts has also strengthened, signaling growing expectations for the supply and demand balance to improve. “Getting us to April with these cuts puts us at a point where, one, seasonal demand typically starts to pick up and, two, we’ll have had a couple of months of vaccinations under our belt as a global economy, so maybe getting past the worst of the shutdowns,”. “That’s certainly changing the tenor of the market to one of tightness compared to ample supply.”
Oil Algos Confused By Crude Draw, Major Product Build, Weak Demand -After ramping notably overnight (after API reported a big surprise crude draw), WTI tumbled back below $53 this morning as the dollar strengthened, and as Bloomberg reports, even with Saudi Arabia’s pledge to unilaterally cut oil output, the supply picture remains precarious. Oil inventories for the Organization for Economic Co-operation and Development are 160 million barrels above the five-year average, according to OPEC Secretary-General Mohammad Barkindo. API:
- Crude -5.821mm (-1.9mm exp)
- Cushing -232k
- Gasoline +1.876mm
- Distillates +4.433mm
DOE
- Crude -3.248mm (-2.65mm exp)
- Cushing -1.975mm
- Gasoline +4.395mm
- Distillates +4.786mm
Crude stocks fell slightly more than expected last week (though less than API reported), but product stocks saw major builds… Graphics Source: Bloomberg Gasoline Demand is sliding once again, as is its seasonal tendency, but this is significantly worse than last year… With oil prices back above $50, and rig counts on the rise, US production was expected to begin rising (after stagnating at 11mm b/d for a month) but it still has not…
Oil prices extend gains after U.S. inventory drop — Oil prices rose on Wednesday, with U.S. crude gaining for a seventh day, after an industry report showed a further drop in inventories and investors shrugged off worsening developments in the pandemic. U.S. West Texas Intermediate (WTI) was up 40 cents, or 0.8%, at $53.61 a barrel by 0128 GMT after gaining nearly 2% on Tuesday. Brent crude was up 47 cents, or 0.8%, at $57.05, having risen 1.7% in the previous session. Both benchmarks are trading at the highest since February, before the coronavirus outbreak in China began spreading across the world and billions of people went into lockdowns to prevent a pandemic that is now in a deadlier second wave. Prices are shrugging off the latest developments in Europe and the United States where death tolls and new infections keep rising, with the focus on rollouts of vaccines, however patchy, but risks to the market remain. “U.S. shale producers’ response to the rally in oil represents the most significant near-term supply risk for oil,” said Stephen Innes, chief global market strategist at Axi. Falling inventories and rising oil prices are likely to tempt U.S. drillers back into the fray, especially as Saudi Arabia and other major producers cut their output, effectively ceding market share to American producers. Crude inventories in the U.S. dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday. That was more than analysts’ expectations in a Reuters poll for a fall of 2.3 million barrels.
Oil snaps 6-day winning streak as U.S. dollar rises, product inventories build – Oil futures ended lower in a choppy session, snapping a six-day winning streak for the U.S. benchmark, after the U.S. dollar gained ground and inventories of gasoline and distillates rose more than expected. West Texas Intermediate crude for February delivery fell 30 cents, or 0.6%, to $52.91 a barrel on the New York Mercantile Exchange. WTI’s six-day winning streak was the longest since May, according to Dow Jones Market Data. March Brent crude , the global benchmark, fell 52 cents, or 0.9%, to close at $56.06 a barrel on ICE Futures Europe. Both benchmarks finished Tuesday at their highest since Feb. 21. “The decline came just as WTI hit its highest level in around a year, which may have contributed to some profit-taking,” said Craig Erlam, senior market analyst at OANDA. “Near-term risks remain for oil markets, with COVID causing huge problems in many countries which means we’re likely to see more restrictions for longer.” The Energy Information Administration said U.S. crude inventories fell by 3.2 million barrels last week, slightly less than the 3.8 million barrel drop expected by analysts surveyed by S&P Global Platts. It was also smaller than the 5.8 million fall said to be reported by the American Petroleum Institute late Tuesday. Gasoline inventories increased by 4.4 million barrels last week, according to EIA, while distillate stocks rose 4.8 million barrels. The S&P Global Platts analysts had forecast a 3.2 million barrel rise in gasoline stocks and a 2.8 million barrel rise in distillate inventories. The overall trend for supply, and oil production, “still is on a downward trajectory,” said Phil Flynn, analyst at Price Futures Group, in a note. “The oil market trend towards our near-term target of $55 is intact and while we may see a pullback from that area, this summer, prices will be much higher.” The U.S. dollar was on a firmer footing Wednesday, with the ICE U.S. Dollar Index , a measure of the currency against a basket of six major rivals, up 0.3%. The dollar fell sharply in 2020 and extended losses into January, trading at levels last seen in April 2018. Commodities often show an inverse correlation to the dollar. February natural-gas futures fell 2.6 cents, or 0.9%, to $2.727 per million British thermal units. February gasoline dropped 0.42 cent, or 0.3%, to end at $1.5488 a gallon, while February heating oil rose 0.22 cent, or 0.1%, to finish at $1.5989a gallon.
Oil prices climb on Chinese data, dollar weakness – (Reuters) – Oil prices edged higher on Thursday, boosted by a weak dollar and bullish signals from Chinese import data but pressured by renewed worries about global oil demand due to surging coronavirus cases in Europe and new lockdowns in China. Brent crude oil futures rose 36 cents, or 0.6%, to settle at $56.42 a barrel. U.S. West Texas Intermediate (WTI) ended 66 cents, or 1.3%, higher at $53.57. The U.S. dollar index slumped after U.S Federal Reserve Chair Jerome Powell struck a dovish tone, saying the U.S. central bank is not raising interest rates anytime soon. A weaker greenback makes dollar-denominated oil cheaper for holders of foreign currencies. Raising hopes of increased oil demand was a hefty U.S. COVID-19 relief package, which President-elect Joe Biden is due to unveil on Thursday. “With energy values strengthening as the dollar weakened today, the oil market was able to advance late session in sympathy with stronger equities,” Jim Ritterbusch, president of Ritterbusch and Associates, said. World stocks indexes climbed to record levels and U.S. bond yields edged higher on Thursday as investors focused on Biden’s pandemic aid proposal. “Oil specific fundamentals still appear supportive enough to push the complex into new high territory within the next couple of trading sessions,” Ritterbusch said. China’s total crude oil imports rose 7.3% in 2020, with record arrivals in the second and third quarters as refineries expanded operations and low prices encouraged stockpiling, customs data showed. Still, the world’s second-largest oil consumer reported its biggest daily jump in new COVID-19 cases in more than 10 months. Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months. The Organization of the Petroleum Exporting Countries left its forecast for world demand unchanged, saying oil use will rise by 5.9 million barrels per day this year to 95.91 million bpd, following a record 9.75 million bpd contraction last year due to the pandemic. Oil producers face an unprecedented challenge balancing supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, said an official at the International Energy Agency (IEA). Saudi Arabia, for example, is throttling oil supply to some Asian buyers, refinery and trade sources told Reuters, while Russia plans to ramp up output this year, according to Russian media.
Oil Futures Gain Amid $2T Stimulus Hopes | Rigzone — Oil rose to a new 10-month high in New York on expectations that a potential $2 trillion economic relief packaged could get Americans consuming more fuel. U.S. benchmark crude futures advanced 1.3% on Thursday. President-elect Joe Biden’s advisers recently told allies in Congress about the cost of the package, CNN reported. A weaker dollar also boosted the appeal of commodities priced in the greenback. A stimulus package will be “putting direct money into people’s pockets,” said Josh Graves, senior market strategist at RJ O’Brien & Associates LLC. “In general, it’s going to allow them to travel more and do more things,” helping support crude demand. Crude’s recent gains have stoked concern among some investors that the rally is ahead of itself. Technical indicators suggest oil is likely due for a pullback, with the global Brent benchmark on its longest run of overbought days since 2012. Rising U.S. jobless claims point to the bumpy road ahead for a true recovery in consumption. Europe’s oil demand is also off to a sluggish start to the new year as renewed lockdowns to curb the spread of Covid-19 limit the use of road fuels. There are also signs that physical markets are softening in Asia, with Abu Dhabi’s Murban crude at a discount to its benchmark despite continued OPEC+ cuts. “To the extent the Covid situation is continuing to push back, it’s a weight on the market,” said John Kilduff, a partner at Again Capital LLC. “This is just a bit of a breather, given how we’ve come so far so fast.” West Texas Intermediate for February delivery rose 66 cents to settle at $53.57 a barrel. Brent for March settlement gained 36 cents to end the session at $56.42 a barrel. In Asia, China’s economic recovery gathered pace in December as exports jumped, pushing the trade surplus to a record high. At the same time, Oil imports, however, fell about 15% compared with November. While the China import data “has many traders and analysts scratching their heads,” it seems to be “more of a timing issue rather than a structural change in demand from the world’s biggest oil importer,” said Ryan Fitzmaurice, commodities strategist at Rabobank. Meanwhile, Royal Dutch Shell Plc’s Nigeria unit declared a force majeure on the country’s flagship Forcados crude oil, after the grade’s pipeline was halted in the wake of leaks. Forcados is the country’s biggest crude export system, with shipments through the terminal running at rate of between 200,000 and 250,000 barrels a day.
Oil drops over 2% on China lockdowns, U.S. stimulus concerns (Reuters) – Oil prices fell more than 2% on Friday, with both contracts posting a loss on the week as concerns about Chinese cities in lockdown due to coronavirus outbreaks tempered a rally driven by strong import data from the world’s biggest crude importer. Brent fell $1.32, or 2.3%, to settle at $55.10 a barrel. U.S. West Texas Intermediate crude settled down $1.21, or 2.3%, at $52.36 a barrel. Both benchmarks, which hit their highest in nearly a year earlier in the week, posted their first weekly declines in three weeks, with Brent down 1.6% on the week and U.S. crude down about 0.4%. While producers are facing unparalleled challenges balancing supply and demand equations with calculus involving vaccine rollouts versus lockdowns, financial contracts have been boosted by strong equities and a weaker dollar, which makes oil cheaper, along with strong Chinese demand. These positives were called into question on Friday as the dollar rose and China ramped up lockdown measures. A nearly $2 trillion COVID-19 relief package in the United States unveiled by President-elect Joe Biden may increase oil demand from the world’s biggest crude consumer. Still, some analysts said the move may not be enough to stoke demand. “In terms of being able to talk about demand, Asia was the only bright spot,” . “This renewed lockdown is striking at the heart of the demand picture in Asia. It’s trouble.” Crude imports into China were up 7.3% in 2020, with record arrivals in two out of four quarters as refineries increased runs and low prices prompted stockpiling, customs data showed on Thursday. But China reported the highest number of daily COVID-19 cases in more than 10 months on Friday, capping a week that has resulted in more than 28 million people under lockdown as it suffered its first coronavirus death on the mainland since May. “The COVID-19 pandemic’s spread is taking centre stage again and traders are getting increasingly worried about the long duration of European lockdown and about the new restrictions (in) China,”
Oil Holds Near 10-Month High On Optimism Over U.S. Stimulus Plan — Oil slid by the most in three weeks as a stronger dollar and weak U.S. economic data stoked concerns over an economic rebound. Futures in New York tumbled 2.3% on Friday after a rally in oil earlier in the week pushed the benchmark into overbought territory. The U.S. dollar strengthened, reducing the appeal of commodities priced in the currency. U.S. consumer sentiment cooled more than forecast in January and other economic data such as sluggish retail sales and producer prices also portray the obstacles still facing the country as it emerges from the pandemic. Meanwhile, President-elect Joe Biden said he will ask Congress for $1.9 trillion to fund immediate relief for the U.S. economy that has been pummeled by the pandemic. But the large price tag and inclusion of initiatives opposed by many Republicans set up the aid package for a drawn out legislative battle. “We’ve had a lot of strength in a number of different markets and now we’re getting a pullback,” Ultimately, oil markets need “driving to go up. If people have money and no place to spend it, it doesn’t make any difference.” Despite the pullback in oil futures, vaccine breakthroughs and Saudi Arabia’s pledge earlier this month to deepen output cuts are expected to support prices. JPMorgan Chase & Co. said a “nasty deficit” could emerge in the oil market later this year. Meanwhile, technical indicators had been flashing warnings signs all week. The 14-day Relative Strength Index for both U.S. and global benchmark crude futures traded above 70 this week in a sign they were overbought, though both slipped under that level Friday. A “short-term pullback” is likely in store for “oil prices, given the recent loss of support from a number of key factors,” “With that said, the dips may be shallow as investor appetite for commodities appears to be increasing rapidly following the recent bullish oil calls and talk of a commodity super-cycle from some of the larger and more prominent U.S. investment banks.”
Iran Will Expel UN Inspectors If US Sanctions Aren’t Lifted — Iranian MP Ahmad Amiribadi Farahani announced over the weekend that if the US does not lift sanctions against Iran, as required under the P5+1 nuclear deal, by February 21, the Iranian parliament is mandating the expulsion of all IAEA inspectors from the country, and will suspend the Additional Protocol.This comes on the approach of president-elect Joe Biden’s inauguration, and with some expectations he’d be looking to engage Iran diplomatically, the ultimatum may be an effort to force Biden to engage early, and make a deal quickly.The US isn’t a party to the P5+1 deal at this point, but there’s been a lot of hope Biden would want to return. There has been no public announcement, and Sen. Menendez (D-NJ) claimed in October Biden would hold out for a tougher deal.Since this comment is coming from an MP and making reference to parliament’s bill to expand the nuclear program, it’s not clear this is being sent on behalf of the Rouhani government, or if it is just hardliners trying to stir things up.Rouhani is more diplomacy-minded than the hardliners, and has resisted parliament’s calls to escalate the civilian nuclear program. Nothing that’s been done has anything to do with a military dimension to the nuclear program, and despite Israeli spin, the inspectors can continue to verify nothing is being diverted outside of civilian use. Expelling the inspectors would be a huge escalation, even though it too would be reversible, and would certainly be presented by US hawks and their supporters as a provocation worth starting a war over. If Biden hasn’t made a deal by then and this expulsion happens, it could put major pressure on him to react negatively, and move away from the diplomatic track. That may be what the hardliners intend, as many of them openly scorn the idea of diplomacy in the first place.
France says Iran is building nuclear weapons capacity, urgent to revive 2015 deal (Reuters) – Iran is in the process of building up its nuclear weapons capacity and it is urgent that Tehran and Washington return to a 2015 nuclear agreement, France’s foreign minister was quoted as saying in an interview published on Saturday. Iran has been accelerating its breaches of the nuclear deal and earlier this month started pressing ahead with plans to enrich uranium to 20% fissile strength at its underground Fordow nuclear plant. That is the level Tehran achieved before striking the deal with world powers to contain its disputed nuclear ambitions. The Islamic Republic’s breaches of the nuclear agreement since President Donald Trump withdrew the United States from it in 2018 and subsequently imposed sanctions on Tehran may complicate efforts by President-elect Joe Biden, who takes office on Jan. 20, to rejoin the pact. “The Trump administration chose what it called the maximum pressure campaign on Iran. The result was that this strategy only increased the risk and the threat,” Le Drian told the Journal du Dimanche newspaper. “This has to stop because Iran and – I say this clearly – is in the process of acquiring nuclear (weapons) capacity.” The agreement’s main aim was to extend the time Iran would need to produce enough fissile material for a nuclear bomb, if it so chose, to at least a year from roughly two to three months. It also lifted international sanctions against Tehran. Western diplomats have said Iran’s repeated breaches have already reduced the “breakout time” to well below a year. Iran denies any intent to weaponise its nuclear programme.
South Korea Seeks Qatari Help to Release Tanker— South Korea has asked Qatar for “maximum support” to secure the release of an oil tanker seized by Iran this month. Deputy Foreign Minister Choi Jong-Kun made the appeal during a visit to Doha, the Qatari capital. He met Foreign Minister Mohammed Bin Abdulrahman Al Thani, the Yonhap News Agency reported on Thursday. Choi traveled to Doha from Tehran after fruitless talks over the South Korean-flagged Hankuk Chemi, an oil-products tanker detained by the Islamic Revolutionary Guard Corps on Jan. 4. He also discussed billions of dollars of Iranian money trapped in South Korea due to U.S. sanctions. Qatar shares the world’s biggest natural gas field with Iran and has maintained close ties with the country even as other Gulf Arab nations such as Saudi Arabia and the United Arab Emirates have backed U.S. attempts to isolate it. Relations between Tehran and Seoul have been strained since the U.S. banned countries, including major Asian customers, from buying Iranian petroleum. Iran says it has at least $7 billion from oil sales stuck in South Korea and that it needs the money to purchase goods including coronavirus vaccines. South Korea has shown a “lack of will” to release the oil funds and should avoid “politicizing” the Hankuk Chemi, Iran’s Deputy Foreign Minister Abbas Araghchi said on Sunday. Iran said the ship was violating marine environmental laws, something its operator has denied. Around 20 crew members are being held with the ship at Iran’s Bandar Abbas port.Chinese Cities in Lockdown as Police Warn People Not to Spread ‘Rumors’ – The ruling Chinese Communist Party (CCP) on Tuesday placed a city of five million people in lockdown amid a resurgence of COVID-19 cases in several locations around the country. All 4.9 million residents of Langfang city in the northern province of Hebei were ordered to stay home, as the authorities prepared to roll out a mass testing program in the city. Langfang’s lockdown follows that of Shijiazhuang, provincial capital of Hebei, whose 11 million population have been under lockdown for several days. In Hebei’s Xingtai city, the CCP issued a directive calling for donations from the private sector to support the healthcare industry during the pandemic. A Jan. 10 directive signed by the CCP’s United Front Work Department, which mobilizes support outside of the ruling party, called on local authorities in nearby Nangong city to “levy pandemic supplies from private entrepreneurs, including single beds, mattresses, quilts, pillows, buckets, medical waste bags, and so on.” An employee who answered the phone at the department confirmed the report. “Our entire supply network has been cut off, so we can’t bring in supplies from elsewhere now,” the employee said. “Some people can drive themselves to Xingtai … and we coordinate to let them in, but most cars aren’t being allowed into Hebei right now, and can’t even get onto the highway without a pass; it’s all blocked.” “That’s why the [truck] drivers don’t want to come here.”
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