Oil, Gas, And Fracking News Reads: 06February 2021 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles for the week ending 06 February 2021. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening or Tueday morning.

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Biden Revokes Oil Drilling Permits for Additional Review -The Biden administration is revoking dozens of invalid drilling permits issued by agency workers without the approval of political appointees, despite a temporary order for such reviews.The Interior Department on Friday notified affected oil and gas producers that roughly 70 permits governing onshore wellswere improperly issued and that the companies need to seek new approvals.Although the companies may swiftly obtain the new authorizations, the move is likely to further sour relations between the Biden administration and the oil industry, which is bearing the brunt of the president’s early efforts to fight climate change. President Joe Biden canceled a permit for the Keystone XL oil pipeline his first day in office, and on Wednesday he ordered a pause in the sale of new oil and gas leases on federal land.The drilling permits fell afoul of a temporary Interior Department order that for two months puts those decisions in the hands of top agency officials, rather than delegating them to workers in Bureau of Land Management offices around the country. “Approximately 70 permits were approved without proper review following the issuance of a department directive that temporarily elevates review of permitting activities,” said Interior spokeswoman Melissa Schwartz. “Operators have been notified that those applications for permits to drill must be resubmitted for appropriate and timely review. Interior continues to approve permits and will transmit final decisions as soon as possible.” The approvals were invalid under the Interior Department’s Jan. 20 secretarial order requiring agency brass to authorize drilling permits, easements, hiring and other decisions, according to a notification letter seen by Bloomberg News.Companies also are being assured they do not face penalties for any drilling or other activities they started under the invalidated permits, though they are being ordered to cease those operations while seeking new approvals.Top Interior Department officials have used the temporary new process to approve dozens of drilling permits since Jan. 20, when Biden was inaugurated. At least 33 have been authorized for offshore oil and gas wells in the Gulf of Mexico, according to a Bloomberg News review of government data. The permit changes are separate from agovernment pause on new oil and gas leasing that was ordered by Biden on Wednesday. That leasing moratorium doesn’t affect permitting and other activity on existing oil and gas leases.

U.S. Oil Executives Pushing ‘Clean Shale’ as Joe Biden Mounts Climate Attack – American oil executives began a pushback against some of President Joe Biden’s climate policies by making the case that fossil fuels from U.S. shale have a lower carbon footprint than imports. Since taking office this month, the Biden administration has made swift moves to pause sales of oil and gas leases on federal land, cancel the Keystone XL pipeline and expand the government’s fleet of clean-energy vehicles. The U.S. oil industry, already under pressure from low prices and investor pessimism, is particularly concerned about limiting access to resources on federal acreage in New Mexico, Wyoming, Alaska and the Gulf of Mexico. “We don’t think it’s good policy to be overly restrictive on federal land,” Chevron’s Chief Financial Officer Pierre Breber said in an interview with Bloomberg TV on Friday. “That will just move energy production to other countries. We know that we can develop energy in this country responsibly.” America is the world’s biggest consumer of crude and any restrictions of domestic production will mean more will have to be shipped in from other countries, which may produce higher-carbon oil and have less stringent environmental laws, the argument runs. U.S.-produced shale emits less carbon per barrel than the global average for both onshore and offshore, according to Rystad Energy. “Reducing domestic production will not only raise costs at the pump, but will also ensure international producers, operating with fewer environmental regulations, will meet the global demand for petroleum products,” Pioneer Natural Resources Co.’s Chief Executive Officer Scott Sheffield said by email. “That scenario is inconsistent with the administration’s choice to rejoin the Paris Accord.” The Oil-Climate Index, a 2016 model funded by the Carnegie Endowment, shows that shale plays including the Eagle Ford in South Texas and the Bakken in North Dakota have some of the lowest emissions per barrel globally. But key to shale’s climate impact is how operators manage natural gas that is produced alongside the crude and the industry has come under intense criticism for excessive flaring and venting of methane, an extremely harmful practice.

Steil says he has introduced a bill to overturn Biden’s halting of construction on Keystone Pipeline expansion – As he indicated he would, U.S. Rep. Bryan Steil, R-Wis., on Tuesday announced that he had introduced a bill in Congress that, if passed, would overrule President Joe Biden’s executive order and allow construction on the Keystone XL Pipeline expansion to continue.However, with House Speaker Nancy Pelosi, a Democrat, in control of what comes up for a vote, it is unlikely the bill will see a vote any time in the near future. According to the company that owns the pipeline, TC Energy, as many as 13,200 jobs (more than 10,000 of which were American) equaling more than $2 billion in total payroll were immediately lost and/or will never be created because of the order.”I’ve spoken to Wisconsin workers who were laid off by Joe Biden on Jan. 20. These men and women just want to do their jobs, and President Biden’s order has put them out of work. If the President will not reverse course and allow the Keystone XL Pipeline’s construction to continue, Congress must act. Today, I am taking action,” Steil said in a statement Tuesday. “The Keystone XL Pipeline provides good-paying jobs for Wisconsin workers, employs thousands across the country and shores up American energy production. I am working to ensure these men and women receive a paycheck and get back to work. At a time when unemployment is far too high, we need to put in place policies that create jobs. I urge Speaker Pelosi to bring this bill to a vote immediately.”

GOP moves to save Keystone XL, sink Democrats on energy — Wednesday, February 3, 2021 —House and Senate Republicans readied legislation yesterday to resurrect the controversial Keystone XL pipeline from Canada into the United States by granting the needed approvals, which President Biden moved to scrap last month.

Oil, Gas Experts Differ on Effects of Closed Pipeline – Spectrum News 1 – As the pandemic keeps oil supply high and demand low, the U.S. continues its reign of energy independence for the first time since the 1950s. However, new actions by President Joe Biden have some in the industry concerned. “We are facing some really strong headwinds from the new administration out of Washington. We fear that there’s going to be additional things that are going to come down the pike that are not going to be pro-industry. And as much as we advocate and make the case that natural gas is clean, and abundant and reliable, that message may not resonate in Washington,” said Mike Chadsey of the Ohio Oil and Gas Association. On his first day in office, Biden signed an executive order that included revoking a permit for the Keystone XL pipeline. The pipeline delivers as much as 800,000 barrels of oil a day from Alberta, Canada to refineries along the Texas Gulf Coast. Even without the Keystone pipeline, the U.S. relies on Canada for more than half of its imported oil.Here in Ohio, Chadsey said 200,000 people work in the state’s oil and gas industry and in the last 10 years, $86 billion in private funds has been invested in our state to help in drilling, leasing, pipeline and fracking. The Buckeye State currently ranks 5th in the nation in oil production with 60,000 active oil and gas wells according to the U.S. Energy Information Administration.Dr. Brent Sohngen is a Professor of Environmental and Resource Economics at Ohio State University. He said stopping the Keystone pipeline is not expected to reduce current oil output below what we need, and that the U.S. will maintain its independence. “They XL Keystone pipeline is really a long time proposition aimed at a world there’s really high oil prices. It seems like there’s a lot of oil that’s a lot lower cost in other parts of the world. Off the coast of Guyana, in the Gulf of Mexico, which is a lot lower cost than that, and a lot closer to those same refineries in Houston,” said Sohngen. The oil and gas industry is also concerned about another of Biden’s executive orders, one that sets a moratorium on leasing federal land. Chadsey said that will restrict energy development, increase prices, impact low income families and may lead to layoffs.”And there’s certainty talk about, oh well folks can just go and find another job. That sounds good but that may not be a reality. Particularly when you have generational folks who are in t his business for years and years and this is really what their passion is. This is what these communities rely on,” said Chadsey.

Colorado farmers’ land polluted by pipeline leak, bemoan “toxic spaghetti” of underground network – For years, Julie and Mark Nygren have hosted school children on field trips to their farm near Johnstown. But recent visitors to their property saw what looked more like a strip mine than a farm. On a recent day, bulldozers, backhoes and large trucks drove around big piles of dirt, down and out of a pit and through the spot where the Nygrens’ house once stood. Speaking over the roar of the engines, the couple talked about the upending of their lives, starting in 2016 with the dying off of trees in front of their home, worsening health problems and the discovery in April 2019 of green liquid in a ditch 130 feet from their house. The liquid was connected to a widespread underground leak from a natural gas pipeline running below the western Weld County farm. The Nygrens are suing the pipeline’s owner and a construction company that dug in the area to put in a culvert. And the Nygrens, their lawyers and others are calling for more oversight of the thousands of miles of oil and gas pipelines under Colorado homes, schools, roads and farm land. “I call it the subterranean toxic spaghetti,” said Lance Astrella, one of the lawyers representing the Nygrens in their lawsuit against DCP Midstream Operating Co. and Mountain Constructors Inc. The “spaghetti,” or network of oil and gas pipelines, includes flowlines, gathering lines, longer transmission lines that run within the state and transmission lines that cross state lines. Flowlines, typically shorter and smaller in diameter, connect a well to surrounding equipment and are regulated by the Colorado Oil and Gas Conservation Commission. Gathering lines, the kind that spilled on the Nygrens’ farm, generally carry oil or natural gas to a collection point. Along with the larger transmission lines, they are regulated by the Colorado Public Utilities Commission and the federal government in a manner that sometimes seems as much of a labyrinth as the physical structures. A deadly house explosion in Firestone in 2017 led to tougher rules for flowlines. It was an impetus for Senate Bill 181, passed in 2019 to overhaul how oil and gas is regulated in Colorado.

Small oil spill reported near Parshall Sunday; all product recovered – The North Dakota Oil and Gas Division was notified of a spill which occurred Sunday, January 31 at the Parshall 52-1114H well, about 3 miles northwest of Parshall, North Dakota. EOG Resources, Inc reported Sunday that 300 barrels of produced water and 50 barrels of crude oil were released due to an equipment failure within containment on location. At the time of reporting all product had been recovered. A North Dakota Oil and Gas inspector has been to location and will monitor the investigation and any continued remediation.

North Dakota oil spill near Parshall under investigation – North Dakota energy officials are reporting that 2,100 gallons of oil and 12,600 gallons of produced water spilled at a well near Parshall has been recovered. State Oil and Gas Division officials say EOG Resources, Inc. reported the spill on Sunday. It was released due to an equipment failure within the containment system. Produced water is a byproduct of oil extraction and is typically taken from the well to a disposal site. A state inspector has been sent to the site to investigate and monitor the well.

Fracked With 34 Million Gallons Of Water — February 2, 2021 – This was an extended long lateral, three sections long; one section longer than a typical two-section well in the Bakken. The Maddy Federal wells are tracked here. 32070, A/F, XTO, Maddy Federal 24X-34D, North Fork, first production, 7/20; t–; cum 253K 12/20; re-entered on December 4, 2018; TD reached on December 21, 2018; fracked 3/30/20 – 4/20/20; 33.660 million gallons of water; 93.3% water by mass;

After Court Rules Dakota Access Pipeline Operating Illegally, Dems Demand Biden It Shut Down – Five Democratic lawmakers on Friday encouraged President Joe Biden to order an immediate shutdown of the Dakota Access pipeline after the U.S. Court of Appeals for the D.C. Circuit last week delivered a victory to the Standing Rock Sioux Tribe by ruling that DAPL is operating illegally.The three-judge panel upheld a lower court’s ruling that the U.S. Army Corps of Engineers (USACE) violated the National Environmental Policy Act when it granted an easement for DAPL to cross a federal reservoir along the Missouri River, less than a mile from the Standing Rock Sioux Reservation.The court ordered a full environmental impact statement examining the threats posed by the oil pipeline. The Standing Rock Sioux Tribe, as the Democrats’ letter to Biden notes, “rightfully fears an oil spill could disproportionately affect their drinking water, as well as hunting and fishing rights.”Standing Rock Sioux Tribe Chairman Mike Faith said in a statement that “we are pleased that the D.C. Circuit affirmed the necessity of a full environmental review, and we look forward to showing the U.S. Army Corps of Engineers why this pipeline is too dangerous to operate.”Despite mandating the review, the panel did not order DAPL to stop operating. Jan Hasselman, the EarthJustice attorney representing Standing Rock, said after the ruling that “this pipeline is now operating illegally.””The appeals court put the ball squarely in the court of the Biden administration to take action,” Hasselman said. “And I mean shutting the pipeline down until this environmental review is completed.” Five lawmakers are now backing that call: Reps. Nanette Diaz Barragfln (D-Calif.), Raul Ruiz (D-Calif.), and Raul Grijalva (D-Ariz.) as well as Sens. Jeff Merkley (D-Ore.) and Elizabeth Warren (D-Mass.). The Democrats note that Biden has taken “bold early actions … to prioritize climate action and environmental justice,” including withdrawing permits for the Keystone XL pipeline.In addition to urging him to “build on this promising start” by shutting down DAPL during the review, they detail some of the pipeline’s history, including the “egregious environmental racism” in 2016, when “North Dakota law enforcement officials violently removed protestors from the path of DAPL, many of them from the nearby Standing Rock Sioux Tribe.” While former President Barack Obama – under whom Biden was vice president – denied DAPL permission to cross beneath Lake Oahe on unceded ancestral tribal lands, former President Donald Trump, the letter notes, “reversed course and granted the easement while ignoring the concerns of the Standing Rock Sioux Tribe.”

Buoyed by Keystone XL, pipeline opponents want Biden to act (AP) – After President Joe Biden revoked Keystone XL’s presidential permit and shut down construction of the long-disputed pipeline that was to carry oil from Canada to Texas, opponents of other pipelines hoped the projects they’ve been fighting would be next. The Biden administration hasn’t specified what action it might take on other pipelines, but industry experts doubt there will be swift changes like the one that stopped Keystone. They say the Keystone XL move on Biden’s first day fulfilled a campaign promise and was symbolic for a president who has made climate change a national security priority and has called for a dramatic increase in cost-competitive renewable and clean-burning energy. “I think generally we can expect more rigorous environmental reviews, more scrutiny and so forth. But I would be very surprised if Biden were to take any action of the executive order type,” said Ben Cowan, an environmental law attorney who advises clients on permitting for pipelines and other energy projects. A look at some other high-profile pipeline projects and what actions Biden might take: Opponents of the Dakota Access pipeline, which carries oil from North Dakota to a shipping point in Illinois, want Biden’s U.S. Army Corps of Engineers to shut it down. A federal appeals court ruled last week that the project must undergo a more thorough environmental review, known as an environmental impact statement, but it declined to shut the line down while the review is completed. Texas-based pipeline owner Energy Transfer maintains the line is safe. But pipeline opponents say the ruling means it is operating with an invalid permit. The Army Corps faces a Feb. 10 hearing where it must tell a federal judge how it expects to proceed without a permit granting easement for the 1,172-mile (1,886 kilometer) pipeline to cross beneath Lake Oahe, along the Missouri River. The Standing Rock Sioux, who draw water from the river, have said they fear the line will someday fail and pollute the water and land.

Alberta to pursue compensation through NAFTA for U.S. decision on Keystone XL, Kenney says – Alberta Premier Jason Kenney says the province intends to seek compensation for U.S. President Joe Biden’s veto of the Keystone XL pipeline through remaining provisions of the North American free-trade agreement. Mr. Kenney has railed against Mr. Biden’s decision, which he warned sets a dangerous precedent that could imperil other cross-border pipelines. He vowed a continued fight to either convince Mr. Biden to reverse his decision or attempt to recover some of the more than $1-billion the province has committed to the project. The Alberta government would likely need the support of the pipeline owner, Calgary-based TC Energy Corp., to mount such a legal case. The company has yet to say what it plans to do, and the federal government has appeared reluctant to spend any more energy on the Keystone XL file. Mr. Kenney was asked during a Facebook Live question-and-answer session on Tuesday evening whether his government planned to sue under NAFTA. “Yes,” Mr. Kenney said. “We are absolutely going to use every legal tool at our disposal to protect our interests. This was, in my view, a clear violation of the investor protection provisions in the North American free-trade agreement.” While NAFTA has been replaced by the United States-Mexico-Canada Agreement, the previous trade agreement’s Chapter 11 provisions allowing investors to sue the U.S., Canadian or Mexican governments for compensation remain in force for three years, or until July, 2023.

As Democrats take charge in Washington, lawmakers introduce bills to stop oil drilling in ANWR – As Democrats take control of the U.S. Senate and House, lawmakers introduced legislation on Thursday to permanently protect the coastal plain of the Arctic National Wildlife Refuge from oil drilling by declaring it a wilderness area.Sen. Ed Markey, D-Massachusetts, Rep. Jared Huffman, D-California and Rep. Brian Fitzpatrick, R-Pennsylvania, introduced the legislation weeks after the former Trump administration held the government’s first-ever oil lease sale in the refuge’s 1.6-million-acre coastal plain.The administration issued leases to three small entities, primarily the Alaska Industrial Development and Export Authority, a state agency. AIDEA said it planned to hold the leases for possible future development if private partners express interest.Democratic President Joe Biden, on his first day in office, issued an order temporarily halting oil and gas activity in the 19-million-acre refuge in northeast Alaska. He has said he hopes to permanently protect the refuge. Major banks also have vowed not to finance oil and gas projects there.Republicans held sway in 2017 when Congress approved drilling in the refuge after decades of attempts by Alaska’s congressional delegation, and Republican President Donald Trump signed the provision into law. Huffman has said Alaska Republican Sens. Lisa Murkowski and Dan Sullivan need to meet with Democrats to discuss how Alaska can receive value from the federal government for the potential state revenue that will be lost if oil development in the refuge is banned.Murkowski, Sullivan and Alaska Republican Rep. Don Young have said they will fight to maintain the oil leasing program in the refuge.

Exxon Mobil reports a $20 billion loss, fourth straight quarter in the red – Exxon Mobil said Tuesday it lost $20.1 billion during the most recent quarter, its fourth-straight quarter of losses as the energy giant grapples with the pandemic’s impact on the industry. Exxon said it earned 3 cents per share excluding items during the fourth quarter, which was ahead of the 1 cent profit analysts surveyed by Refinitiv expected. Revenue, however, came up short of expectations at $46.54 billion. The Street consensus was for $48.76 billion. In the same period a year earlier, the company earned 41 cents per share on an adjusted basis, on $67.17 billion in revenue. During the third quarter of 2020, Exxon lost 18 cents per share on an adjusted basis, while generating $46.2 billion in revenue. Shares of Exxon advanced 1.6% on Tuesday. “The past year presented the most challenging market conditions ExxonMobil has ever experienced,” Chairman and CEO Darren Woods said in a statement. He said the company’s aggressive cost-cutting measures are expected to deliver structural expense savings of $6 billion per year by 2023. “We’ve built a flexible capital program that is robust to a range of market scenarios and focused on our highest-return opportunities to drive greater cash flow, cover the dividend, and increase the earnings potential of our business in the near and longer term,” Woods added. On Monday, Exxon announced plans to invest $3 billion in carbon capture and other emissions-cutting technology. The move is too little too late for fighting climate change, according to some, who say Exxon should have prioritized investing for the future. Peers including BP have also set net-zero targets. Oil has steadily climbed during the last year following the unprecedented demand loss from the coronavirus pandemic. U.S. West Texas Intermediate crude futures advanced more than 2% on Tuesday to trade at high as $54.96 per barrel, the contract’s highest level since January 2020. Still, the energy industry continues to feel the impacts of depressed demand. Shares of Exxon are up 9% this year, but down 27% over the last 12 months through Monday’s close. Rival Chevron on Friday said it lost 1 cent during the fourth quarter on an adjusted basis, compared with the consensus estimate for a 7 cent profit. Revenue also came up short of analysts’ expectations.

BP reports its first full-year loss in a decade after ‘brutal’ year – Energy giant BP on Tuesday reported a weaker-than-expected full-year net loss, following a tumultuous 12-months in which the global oil and gas industry faced a torrent of bad news. The U.K.-based oil and gas company posted a full-year underlying replacement cost loss, used as a proxy for net profit/loss, of $5.7 billion. That compared with a net profit of $10 billion for the 2019 fiscal year. Analysts polled by Refinitiv had expected a full-year net loss of $4.8 billion. BP also posted fourth-quarter net profit of $115 million, missing analyst expectations of $285.5 million. The company said its full-year results were driven by lower oil and gas prices, significant exploration write-offs, pressure on refining margins and depressed demand. It warned the ongoing coronavirus pandemic would continue to impact its performance. “It is definitely a tough quarter at the end, I guess, of a really tough year for everyone. And our full-year results were hit hard by Covid,” Bernard Looney, CEO of BP, told CNBC’s “Squawk Box Europe” shortly after the results were published. “We have had the worst recession, I guess, in the world since the ’40s. It was a brutal year, I think, for the oil business – negative prices, fuel demand down 14%, aviation down 50%, and of course we had adjustments to our planning prices which resulted in impairments and write-offs.” BP’s latest figures come as energy companies attempt to prove to investors that they have gained a more stable footing on stronger commodity prices. The oil and gas industry was sent into a tailspin last year, as the coronavirus pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts. It will likely become known as the worst year in the history of oil markets, the head of the International Energy Agency has previously said. The world’s largest oil and gas companies are now seeking to put it behind them, pointing instead to the prospect of an economic rebound in 2021 and hopes for a fuel demand recovery in the coming months.

Exxon, BP announce billions in losses for 2020 –Both ExxonMobil and BP announced Tuesday that they had sustained major losses in 2020 amid low demand for oil due to the coronavirus pandemic. Exxon posted $22.4 billion in losses for 2020, posting a loss of $20.1 billion for the fourth quarter. According to Reuters, this was Exxon’s first annual loss. BP reported $20 billion in losses for 2020, including nearly $1.4 billion in the fourth quarter. Chevron, meanwhile, announced last month that it had lost $5.5 billion in 2020, including $665 million in the fourth quarter. During the pandemic, oil prices plummeted, particularly early in the year as demand slowed for oil amid a significant decrease in travel and foreign disputes. However, in recent months, oil prices have been recovering, and U.S. crude was selling at about $55 per share on Tuesday afternoon. Demand is expected to recover somewhat if the pandemic is brought under control. “The past year presented the most challenging market conditions ExxonMobil has ever experienced,” ExxonMobil CEO Darren Woods said in a statement. Woods added that “reorganizations” and initiatives “enabled us to respond decisively to permanently improve our cost structure, drive greater efficiencies across our businesses, and emerge a stronger company.” In October, the company announced plans to lay off about 1,900 U.S. employees. Around the same time, it was reported that BP would cut 7,500 jobs after an additional 2,500 took voluntary severance. In a statement, BP CEO Bernard Looney characterized the changes including job losses as “reinventing” the company. “The underlying operations of the company remained safe – one of our safest years – and reliable, and major new projects were brought on line,” Looney added.

Chevron and Exxon discussed merger last year after Covid pandemic devastated oil prices, reports say – The CEOs of Chevron and ExxonMobil last year discussed the possibility of merging the two companies, The Wall Street Journal reported Sunday, citing unnamed people familiar with the talks. The newspaper reported that Chevron CEO Michael Wirth and Exxon CEO Darren Woods spoke about the prospect after the Covid-19 pandemic began to negatively impact oil prices. The talks are not ongoing and were described as preliminary, according to the Journal. Representatives from the two companies declined to comment. The talks were later reported by Reuters. A merger between Chevron and Exxon would be among the largest in history, and would likely face antitrust scrutiny from President Joe Biden’s Department of Justice. Both companies descend from John D. Rockefeller’s Standard Oil, which was broken up by the Supreme Court in 1911. Chevron’s market cap is $164 billion, and Exxon’s is $189 billion, meaning that the combined company would be worth north of $350 billion. The combined firm would be the second largest oil and gas company in the world, after Saudi Aramco. Oil prices have recovered much of their losses since cratering in March, though they have remained somewhat depressed amid a slower-than-expected vaccine roll out and worries of new coronavirus variants.

Oil major Shell reports sharp drop in full-year profit, raises dividend – Oil giant Royal Dutch Shell on Thursday reported a sharp drop in full-year profit as the coronavirus pandemic took a heavy toll on the global oil and gas industry. Shell reported adjusted earnings of $4.85 billion for the full-year 2020. That compared with a profit of $16.5 billion for the full-year 2019, reflecting a drop of 71%. Analysts polled by Refinitiv had expected full-year 2020 net profit to come in $5.15 billion. For the final quarter of 2020, Shell reported adjusted earnings of $393 million, missing analyst expectations of $470.5 million. The company said it would raise its first-quarter dividend to $0.1735 per share, an increase of 4% from the previous quarter. Shell CEO Ben van Beurden described 2020 as an “extraordinary” year. “We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy,” van Beurden said in a statement. Income attributable to Shell shareholders collapsed by 237% to a loss of $21.7 billion in full-year 2020, down from a profit of $15.8 billion in full-year 2019. Shell said this was the first full-year headline loss since the unification of Royal Dutch Petroleum Company and Shell Transport & Trading Company to one parent company in 2005. Energy supermajors endured a dreadful 12 months by virtually every measure in 2020 and the industry faces significant challenges and uncertainties as it seeks to recover. Last year, the Covid pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts. Shell said it had reduced its net debt by $4 billion to $75 billion over the course of 2020. Shares of the company are up more than 3% year-to-date, having plummeted over 44% last year.

ANALYSIS: Higher prices lead to better returns, but producers still cautious: Platts Analytics | S&P Global Platts – Stronger natural gas and crude prices have boosted internal rates of return across most US shale plays, but major operators have signified their intent to maintain level production moving forward despite the spike. The average 12-month forward curve for the US domestic crude price benchmark, WTI, sharply increased to $52/b in January as OPEC agreed to reduce production by 1 million b/d through March. With WTI back above the $50/b mark, crude-focused plays saw another strong month of improvement in wellhead internal rate of return. The Permian Delaware, Midland, Bakken, Denver-Julesburg, Eagle Ford, SCOOP/STACK and Powder River all shifted above the 10% cost of capital mark, suggesting new wells coming online should be able to realize cash flow neutrality at a minimum, according to S&P Global Platts Analytics. Platts Analytics IRRs are based on a half-cycle, after-federal corporate tax analysis, which excludes sunk costs such as acreage acquisition, seismic and appraisal drilling. For gas-directed plays, the Henry Hub average 12-month forward curve settled at $2.68/MMBtu for January. At this price point, only the Utica-Dry and Haynesville plays are bringing wells online with an IRR of over 10%, as regional gas differentials continue to hurt the Northeast’s ability to price gas at all close to Henry Hub. Dominion-South and Columbia Gas-App. Hubs, which are associated with the Marcellus and Utica, were discounted on average by 67 cents/MMBtu and 49 cents/MMBtu to the Haynesville’s Henry Hub price point for the month of January, hurting operator’s ability to produce strong revenue results on their new horizontal wells. The jump in crude prices has also closed the profitability gap between the wet and dry pockets of West Virginia and Pennsylvania as IRRs for the Marcellus-Wet and Marcellus-Dry both hovered around 7.5% for January. This suggests more rigs may be reallocated to West Virginia-Wet and Pennsylvania-Southwest Wet plays for 2021, assuming crude prices remain strong, according to Platts Analytics. The Delaware continues to lead all US shale plays as a stronger Waha price has boosted most of the region’s robust wellhead gas revenue, pushing this region’s IRRs into the 25% area. With IRRs of 20% to 30%, operators will likely start to increase their completion activity quickly in the near term, according to Platts Analytics. Hydraulic fracturing of the approximately 200 drilled-but-uncompleted wells will help Texas and New Mexico operators stabilize the region’s production after the reduction in activity experienced in 2020. Other crude plays such as the Midland, Bakken and Eagle Ford are each obtaining 20% IRRs as a solid gas environment with over $50/b oil will drive operators to bring on frack crews in the short term with these favorable economic conditions. While a $50/b WTI environment provides respectable returns for most of the crude shale plays at a theoretical asset level, it would likely take $60/b WTI to change the recovery trajectory of drilling and completion activity in US shale.

EIA estimates that global petroleum liquids consumption dropped 9% in 2020 – Responses to the coronavirus disease (COVID-19) caused global demand for petroleum products to fall significantly in 2020. The U.S. Energy Information Administration (EIA) estimates that the world consumed 92.2 million barrels per day (b/d) of petroleum and other liquid fuels in 2020, a 9% decline from the previous year and the largest decline in EIA’s series that dates back to 1980. A supplement to EIA’s Short-Term Energy Outlook (STEO) describes developments in global oil consumption during 2020, methods for estimating and forecasting global oil consumption, and expectations for oil consumption in 2021 and 2022.In its short-term outlook, EIA forecasts changes in U.S. petroleum consumption in response to variables including economic growth, employment growth, vehicle fleet fuel efficiency, and oil prices. For the rest of the world, EIA uses a combination of available real-time data and models based on the relationship between gross domestic product (GDP) and oil consumption. Because of the unique effects of the pandemic in 2020, EIA relied on a wider set of other indicators to assess non-U.S. energy demand, including third-party indexes that tracked mobility, flights, and government stay-at-home orders and their stringency across countries.A previous Today in Energy article described how EIA uses data series from our Weekly Petroleum Status Reportand our Petroleum Supply Monthly (with a two-month lag in the data) to inform short-term forecasts of U.S. petroleum markets. The United States is the world’s largest consumer of petroleum liquids, accounting for 20% of the global total in 2019.Other countries in the Organization for Economic Cooperation and Development (OECD) provide monthly consumption data after a two- to three-month lag. Collectively, the 37 OECD member countries consumed 47% of global petroleum liquids in 2019.Data from non-OECD countries can vary from a two- to three-month lag (in the case of Brazil and India, for example) to a year or more. For this reason, EIA will have near-final data on about half of world oil consumption for 2020 by the first quarter of 2021, with values from the United States, OECD countries, and some non-OECD countries. EIA will add finalized data to its published estimates as information becomes available throughout 2021 and 2022. The effects of the pandemic continue to present challenges in forecasting global petroleum liquids consumption. More context on these uncertainties is available in the STEO supplement Developments in Global Oil Consumption.

Pipe laying for Nord Stream 2 restarts in Danish waters (Reuters) – The consortium behind the Russia-led Nord Stream 2 natural gas pipeline has resumed laying pipes in the waters of Denmark, it said on Saturday, despite mounting pressure on the project from Washington. Construction of the link, which would double the capacity of the existing Nord Stream pipeline to 110 billion cubic metres of gas per year, was suspended in December 2019 due to the threat of sanctions from Washington.However the German government has stood by the project and late in December a vessel called the Fortuna, which was subsequently put under sanctions by Washington, laid a 2.6 km (1.6 mile) portion of the pipeline in German waters. Construction of the pipeline is mostly complete but around 120 km is left to be laid in Danish waters as well as 30 km in German waters, before it makes landfall at the northern German coastal town of Lubmin, near Greifswald.

Venezuela’s PDVSA seeks to export oil offloaded from floating facility – Venezuela’s state-run oil company PDVSA has begun marketing about 570,000 barrels of Corocoro medium crude recently offloaded from a floating facility that was listing last year, two sources with knowledge of the offer said. Crude onboard the Floating Storage and Offloading facility (FSO) Nabarima, operated by a joint venture between PDVSA PDVSA.UL and Italy’s Eni ENI.MI, started to be transferred to a tanker late last year amid environmental concerns from neighboring countries over a potential spill. About 1.3 million barrels of oil had remained stored at the FSO since early 2019, when sanctions imposed by the United States on PDVSA deprived the joint venture of its main customer for that crude grade, Houston-based refiner Citgo Petroleum. PDVSA-owned tanker Icaro, which received the first parcel of the offloaded crude, earlier this week set sail almost fully loaded to the Amuay ship-to-ship hub off Venezuela’s western coast, according to Refinitiv Eikon vessel tracking data. The sources said PDVSA plans to sell the first parcel of 570,000 barrels to a customer that has not yet been determined. If it cannot allocate the oil for exports in the coming days, it would transfer it to a larger vessel, the Suezmax Rio Caroni, where it would remain until sold or transferred to one of PDVSA’s refineries, the sources said. PDVSA did not respond to requests for comment. Eni said that Nabarima’s crude is owned by PDVSA. “Eni is not involved in decisions pertaining to its commercialization,” the company said in a statement. PDVSA has previously dismissed concerns by environmental groups and the governments of Trinidad and Tobago and Brazil that the facility could be prone to a spill. PDVSA’s oil exports have soared again this month as a growing group of customers with no experience in oil trade have been able to find vessels to carry exports, mainly to Asia. The shipments are poised to increase if the U.S. government authorizes a handful of PDVSA’s established customers to resume trading with PDVSA, after ordering a halt to oil swaps in the last quarter of 2020.

Shell ordered to compensate Nigerian farmers affected by oil spills – A Dutch court has delivered a major victory to a group of Nigerian farmers in their 13-year-long effort to hold Shell’s Nigerian subsidiary accountable for oil spills on their lands. The Court of Appeal in The Hague sided with farmers and environmentalists on most of their legal claims, ruling that the Nigerian subsidiary owes the farmers financial compensation for the oil spill pollution in two villages. “The court ruled that Shell Nigeria is liable for the damage caused by the spills. Shell Nigeria is sentenced to compensate farmers for damages,” Senior Justice Sierd Schaafsma said, as reported by Agence France-Presse. The parent company, Royal Dutch Shell, and its subsidiary must also install a leak detection system to one pipeline to prevent further spills. The court is still considering whether to hold Shell responsible for spillage in a third village, which was caused by sabotage. The spills happened between 2004 and 2007. “Three of the four Nigerian plaintiffs and their fellow villagers must now be compensated for the damage caused and Shell must ensure that there is a leakage detection system in the pipelines in Nigeria,” Friends of the Earth, the environmental organization that sued Shell, said in a statement. “It is the first time that a court has held Dutch transnational corporation accountable for its duty of care abroad.” The court has not yet set the amount of compensation the farmers will receive, and the verdict can be appealed to a higher court.

Dutch Court Orders Shell Oil to Pay for Harm Done to Nigerian Farmers — Global environmental justice campaigners heralded a Dutch court’s ruling Friday that Royal Dutch Shell’s Nigerian subsidiary must pay punitive restitution to Nigerian villages for oil spill contamination that brought death, illness, and destruction to Nigerian farmers and communities.”After 13 years, justice!” tweeted Friends of the Earth Europe.The legal effort seeking accountability for the oil pollution in the Niger Delta, as Agence France-Presse noted, was brought forth by the Netherlands branch of Friends of the Earth, and “has dragged on so long that two of the Nigerian farmers have died since it was first filed in 2008.” One of those farmers was the father of Eric Dooh. “Finally, there is some justice for the Nigerian people suffering the consequences of Shell’s oil,” Dooh, who became a plaintiff in the case, said in a statement. “It is a bittersweet victory,” he continued, “since two of the plaintiffs, including my father, did not live to see the end of this trial. But this verdict brings hope for the future of the people in the Niger Delta.” As Reuters reported, Friday’s decision went a step further than a 2013 ruling by a lower court, saying that Shell’s Nigerian subsidiary was responsible for multiple cases of oil pollution. The appeals judge sided with the farmers in four of six spills covered by the lawsuit and postponed a verdict in the remaining cases, where the lower court had previously found SPDC responsible. The appeals court “also held the Anglo-Dutch parent company Royal Dutch Shell liable for installing new pipeline equipment to prevent further devastating spills in the Niger Delta region,” AFP added. The devastation, as Friends of the Earth International (FOEI) has previously described, has been vast: Between 1976 and 1991, over two million barrels of oil polluted Ogoniland in 2,976 separate oil spills. While oil production has ceased, pipelines operated by Shell still traverse the land, creeks and waterways. Leakages – caused by corroded pipelines as well as bandits – mean that the area is still plagued by oil spills. Describing the scene in 2019 at a few of the sites affected by oil spills in the Niger Delta, FOEI added that the “horror of the vast stretch of black, lifeless landscape stretching out in front of us is something that has to be seen in order to be believed.” Nigerian environmental justice advocate Nnimmo Bassey, in a tweet welcoming the new ruling, drew attention to the late Ken Saro-Wiwa, who, along with other Ogoni rights activists, was executed by the country’s military in 1995 after leading an uprising against Shell’s ecological damage in the region.

Oil jumps more than 2% as supply cuts take effect – Oil prices rose more than 2% on Monday, buoyed by falling U.S. crude inventories and rising winter fuel demand as a one of the worst snowstorms in years hits the U.S. Northeast. Brent crude was up $1.22 cents, or 2.2%, at $56.26 a barrel. U.S. crude settled 2.59% higher at $53.55 per barrel. Both benchmarks gained nearly 8% in January. U.S. government data last week showed a 2.3 million-barrel drawdown in stocks at the Cushing, Oklahoma, delivery hub for crude futures. Another 2.3 million-barrel weekly decline is expected since then, analysts and traders said citing a Wood Mackenzie report. “Crude is being supported by many small factors this week – expected drawdowns in Cushing, a sudden rise in winter fuel demand amid colder weather, and further talks on Capitol Hill about stimulus checks,” The U.S. Northeast has been hit by a powerful winter snow storm, pummeling a vast swath stretching from Pennsylvania through New England, causing widespread disruption in New York City and other major urban centers in the region. Goldman Sachs said prices could rise to $65 by July, forecasting an oil market deficit of 900,000 barrels per day (bpd) in the first half of 2021, a higher level than its previous prediction of 500,000 bpd. OPEC oil output rose for a seventh month in January, a Reuters survey found, after the group and its allies agreed to ease supply curbs further, although the production growth was smaller than expected. Russian oil and gas condensate production also increased in January, two sources told Reuters on Monday, but the increase was in line with expectations, following Moscow’s deal with OPEC on output cuts. U.S. oil and gas drillers are gearing up for a pick-up in demand. As higher prices make new wells profitable again, they added rigs for a sixth month in a row in January. U.S. production data from the Energy Information Administration showed output rose above 11 million bpd in November, the first time it has exceeded that figure since April.

Oil settles up more than 2% as U.S. inventories fall, demand picks up -Oil prices settled more than 2% higher on Monday, buoyed by falling U.S. crude inventories and rising winter fuel demand due to one of the worst snowstorms to hit the U.S. Northeast in years. Brent crude settled up $1.31 cents, or 2.4%, at $56.35 a barrel. U.S. crude gained $1.35 cents, or 2.6%, to settle at $53.55. Both benchmarks gained nearly 8% in January. U.S. government data last week showed a drawdown of 2.3 million barrels in stocks at the Cushing, Oklahoma, delivery hub for crude futures. Another 2.3 million-barrel weekly decline is expected, analysts and traders said citing a Wood Mackenzie report. “Crude is being supported by many small factors this week – expected drawdowns in Cushing, a sudden rise in winter fuel demand amid colder weather, and further talks on Capitol Hill about stimulus checks,” said John Kilduff, partner at Again Capital LLC in New York. The U.S. Northeast has been hit by a powerful winter snow storm, pummeling a vast swath stretching from Pennsylvania through New England and causing widespread disruption in New York City and other major urban centers in the region. Goldman Sachs said oil prices could rise to $65 by July, forecasting an oil market deficit of 900,000 barrels per day (bpd) in the first half of 2021, a higher level than its previous prediction of 500,000 bpd. OPEC oil output rose for a seventh month in January, a Reuters survey found, after the group and its allies agreed to ease supply curbs further, although the production growth was smaller than expected. “It looks like OPEC compliance is really pushing the complex higher, as well as the expectation that we will see U.S. inventories tighten over the next few weeks,” said Phil Flynn, an analyst at Price Futures Group in Chicago. Russian oil and gas condensate production also increased in January, two sources told Reuters on Monday, but the increase was in line with expectations, following Moscow’s deal with OPEC on output cuts. U.S. oil and gas drillers are gearing up for a pick-up in demand. As higher prices make new wells profitable again, they added rigs for a sixth month in a row in January. U.S. production data from the Energy Information Administration showed output rose above 11 million bpd in November, the first time it has exceeded that figure since April.

Oil jumps 2% to highest level in a year amid output cuts -Oil prices rose more than 2% on Tuesday, reaching their highest in 12 months after major producers showed they were reining in output roughly in line with their commitments. The U.S. and global benchmarks rallied as optimism about more U.S. economic stimulus added to market bullishness from supply cuts. Brent crude was up $1.22, or 2.2%, at $57.57 a barrel for its third straight day of gains, touching $58.05, the highest levels since January last year. U.S. oil gained 2.26%, or $1.21, to settle at $54.76 per barrel, after touching a session high of $55.26, the highest in a year. The rally began as OPEC production increases were less than expected. OPEC crude production rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found. Voluntary cuts of 1 million bpd by OPEC’s de facto leader, Saudi Arabia, are set to be implemented from the beginning of February through March. Russian output increased in January but is in line with the supply pact, while in Kazakhstan oil volumes fell for the month. The rally picked up steam as the U.S. Congress looked ready to adopt an economic stimulus package, and as cold U.S. weather boosted heating oil demand. “You got the U.S. economic stimulus package that no one thought we would get,” said Bob Yawger, director of energy futures at Mizuho in New York. A cold snap and heavy snow in the U.S. northeast drove the margin for heating oil to an 8-month high of $15.88, lending further support to crude. However, energy giant BP flagged a difficult start to 2021 amid declining product demand, noting that January retail volumes were down about 20% year on year, compared with a decline of 11% in the fourth quarter. Oil demand is nevertheless expected to recover in 2021, BP said, with global inventories seen returning to their five-year average by the middle of the year.

WTI Slips Back Below $56 After Smaller Than Expected Crude Draw — Oil prices extended their gains overnight, with WTI topping $56 for the first time in a year, as declines in U.S. (API last night)and Chinese crude stockpiles added impetus to a rally driven by tightening global supplies.“The crude oil market is getting close to a frenzy,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.“A reflection of the tightening global crude oil market is the continued strengthening of the Brent crude oil curve.”A big draw confirming API’s report could be enough to extend these gains even further. API

• Crude -4.261mm (-2.4mm exp)
• Cushing -1.885mm
• Gasoline -240k (+1.5mm exp)
• Distillates -1.622mm (-1.3mm exp)

DOE

• Crude -994k (-2.4mm exp, -4.84mm Whisper)
• Cushing -1.517mm
• Gasoline +4.467mm (+1.5mm exp)
• Distillates -9k (-1.3mm exp)

Analysts expected yet another crude draw in the last week, following the prior week’s big drop (and API’s bigger than expected draw)., but were disappointed as crude stocks only fell 994k barrels (vs a whisper number of a huge 4.84mm drop)…

Oil rises to highest level in more than a year after U.S. stock drawdown – Oil prices rose almost 2% on Wednesday and hovered near their highest levels in about a year, after government data showed U.S. crude stockpiles fell to their lowest since March, while OPEC+ maintained its supply cut agreement. Brent crude futures rose 1.74% to $58.46 a barrel. The benchmark earlier hit $58.94 a barrel, its highest since last February. U.S. West Texas Intermediate (WTI) crude settled 1.7% higher at $55.69 per barrel, after hitting a high of $56.33 earlier in the session, the highest level since Jan. 2020. Both benchmarks’ backwardation, where contracts for near-term delivery are more expensive than later supplies, hit their highest in just over a year at around $2.30, indicating expectations of tighter supply. U.S. crude oil stockpiles fell last week to 475.7 million barrels, the Energy Information Administration said on Wednesday, their lowest since March. Refiner utilization rates, meanwhile, rose by 0.6 percentage points. “Refineries are back in business, which is supportive for crude,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “On net, this is a supportive report.” The market has been bolstered by deep supply cuts from the Organization of the Petroleum Exporting Countries and allies, which on Wednesday, maintained their oil output policy. The day before, a document seen by Reuters showed that OPEC+ expects the oil market to be in deficit throughout 2021, peaking at 2 million barrels per day in May. “Underpinning the bullish sentiment are tightening fundamentals. Ahead of today’s ministerial meeting, OPEC+ hinted that global oil stockpiles will decline below the five-year average by June,” PVM analysts said. The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden’s proposed $1.9 trillion coronavirus aid plan without Republican support.

Oil Futures Surge on Assurance from OPEC+ –— Oil climbed to the highest in more than a year in New York as OPEC and its allies pledged to continue whittling down global inventories. Futures in New York surged 1.7% to near $56 a barrel on Wednesday. A committee of OPEC+ ministers said the group will keep pushing to quickly clear the oil surplus left by the pandemic-induced demand slump. The alliance’s effort appears to be working despite a still tenuous recovery in demand: Chinese stockpiles are at the lowest in almost a year and a U.S. government report on Wednesday showed crude stockpiles fell nearly 1 million barrels. There’s a sense that “the risk is much more on the upside than the downside at this point,” “We certainly still have a lot of inventories sloshing around the system, but people feel like that’s going to decline from here on out until we get back to a balanced market.” Alongside OPEC+’s efforts to limit crude supply, driven by Saudi Arabia’s commitment to extra cutbacks, the oil market’s structure has firmed significantly. The premium of West Texas Intermediate’s nearest December contract to December 2022 has widened to more than $3 a barrel. “OPEC is holding the line on production, the vaccine rollout is progressing, Covid cases are rolling over and the stimulus package is making some progress.” West Texas Intermediate for March delivery rose 93 cents to settle at $55.69 a barrel, at the highest since late January 2020. Brent for April settlement advanced $1 to $58.46 a barrel. The contract is at the highest since last February. Despite the downtrend in crude inventories, a recovery in fuel demand remains shaky as lockdown measures limit mobility. The combined refining margin for gasoline and diesel, which provides a rough profit gauge for processing a barrel of crude, fell back toward $14 a barrel on Wednesday. The Energy Information Administration report showed gasoline stockpiles at the highest since June. A rolling average of gasoline demand ticked up slightly last week, but still remains at its weakest seasonally in more than two decades.

Crude Oil Extends Rally — Oil jumped to the highest in more than a year, extending this week’s rally to above $56 a barrel, with investors confident that OPEC+ producers are committed to restraining global supplies. Futures in New York climbed nearly 1% on Thursday, also buoyed by stronger U.S. equities. OPEC+ producers have pledged to keep draining a pandemic-driven oil surplus, while global inventories from China to the U.S. continue to decline. Saudi Arabia is keeping oil pricing unchanged for Asia, while raising prices for all grades for buyers in the U.S. and Europe. “It looks like, at every turn, Saudi seems to want to support the market,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures. “If demand really picks up, we could be short oil pretty quickly, because U.S. production isn’t going to come back fast.” Key technical indicators suggest crude is due for a pullback, though. The 14-day Relative Strength Indexes for both Brent and West Texas Intermediate futures are showing the commodity in overbought territory. Meanwhile, a buying binge in the North Sea market seems to have subsided, with no bids or offers Thursday on an S&P Global Platts pricing window for the first time since late November. The expectation for stronger oil demand is also supporting prices, with governments worldwide distributing Covid-19 vaccines. While a full-fledged recovery still has yet to take shape, oil consumption is poised to return to 2019 levels by the end of the year, according to Citigroup Inc. “At the moment we are seeing pretty good oil prices,” Shell Chief Executive Officer Ben van Beurden said in a Bloomberg Television interview. “Demand is not back where it was a year ago, but then again we see a lot of discipline also from OPEC+ and therefore the market is being held in balance quite well.” West Texas Intermediate for March delivery rose 54 cents to settle at $56.23 a barrel. Brent for April settlement gained 38 cents to settle at $58.84 a barrel, the highest since February 2020. Meanwhile, money is flooding back into the market. Total holdings of WTI crude futures are now at their highest level since July 2018, surpassing levels seen during the frenzied trading of April last year. That influx of funds comes as the crude futures curve continues to indicate strength. The so-called Dec.-Red-Dec. spread, a favored trade of the world’s hedge funds, has topped $3 a barrel this week to reach its strongest level in a year.

Oil climbs after OPEC+ maintains oil output cuts, U.S. stock draw — Oil prices extended gains on Thursday after the OPEC+ alliance of major producers stuck to a reduced output policy, and as crude stockpiles in the United States fell to their lowest levels since March last year. Brent crude futures gained 47 cents, or 0.8%, to $58.93 a barrel, by 0317 GMT, having earlier hit their highest since Feb. 21, 2020 in the wake of the OPEC+ decision. U.S. West Texas Intermediate (WTI) crude futures climbed 49 cents, or 0.9%, to $56.18 a barrel after reaching its highest settlement level in a year on Wednesday. “Crude prices have been rising higher now that OPEC+ has convinced the energy market that they are determined in accelerating market re-balancing without delay,” said Edward Moya, senior market analyst at OANDA. The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, extended its current oil output policy at a meeting on Wednesday, a sign that producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the coronavirus pandemic lingers. A document seen by Reuters on Tuesday showed OPEC expects the output cuts will keep the market in deficit throughout 2021, even though the group cut its demand forecast. Also supporting prices, U.S. crude oil stockpiles fell by 994,000 barrels last week to 475.7 million barrels, their lowest since March, the U.S. Energy Information Administration said on Wednesday. Analysts in a Reuters poll had forecast a 446,000-barrel rise. Continued progress in rolling out COVID-19 vaccines is also an important driver of oil prices, OANDA’s Moya said. “The world now has several effective COVID vaccines that should really force energy traders to upgrade their return to pre-pandemic behaviour forecasts,” he said. The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden’s proposed $1.9 trillion coronavirus aid plan. In a separate development, the United States has filed a lawsuit to seize a cargo of oil it says came from Iran rather than Iraq, as stated on the bill of lading, and contravenes U.S. terrorism regulations.

Oil prices rise to highest in a year on U.S. growth optimism, crude supply restraint – Oil hit its highest level in a year on Friday, closing in on $60 a barrel on economic revival hopes and supply curbs by producer group OPEC and its allies. New orders for U.S.-made goods rose more than expected in December, pointing to continued strength in manufacturing. The U.S. Congress is also moving ahead on President Joe Biden’s COVID-19 relief plan. Brent crude was up 64 cents, or 1.1%, at $59.48 after hitting its highest since Feb. 20 last year at $59.75. U.S. crude was up 48 cents, or 0.9%, at $56.72, after reaching $57.09, its highest since Jan. 22 last year. “The conditions still remain supportive for oil markets,” said Jeffrey Halley, analyst at brokerage OANDA. “Oil should find plenty of willing buyers on any material dip.” Brent is on track to rise more than 6% this week. The last time it traded at $60, the pandemic had yet to take hold, economies were open and people were free to travel, meaning demand for gasoline, diesel and jet fuel was much higher. The rollout of COVID-19 vaccines, however, is fuelling hopes of lockdowns being eased, boosting fuel demand. But even demand optimists such as OPEC do not expect oil consumption to return to pre-pandemic levels in 2021. Oil also gained support from supply curbs by major producers. OPEC and its allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped to lift prices from historic lows last year. “OPEC+ discipline has been a real positive,” said Michael McCarthy, chief market strategist at CMC Markets. Further boosting the market, a weekly supply report showed a drop in U.S. crude inventories to their lowest since March, suggesting that output cuts by OPEC+ producers are having the desired effect.

Oil rises 1%, hits highest in a year on growth hopes, OPEC+ output cuts (Reuters) – Oil prices rose about 1% on Friday, after hitting their highest in a year and closing in on $60 a barrel, supported by economic revival hopes and supply curbs by producer group OPEC and its allies. people want to get something done, Oil was also supported as U.S. stock markets hit record highs on signs of progress toward more economic stimulus, while a U.S. jobs report confirmed the labor market was stabilizing. Brent crude ended the session up 50 cents, or 0.9%, at $59.34 after hitting its highest since Feb. 20 at $59.79. U.S. crude settled up 62 cents, or 1.1%, at $56.85, after reaching $57.29, its highest since Jan. 22 last year. U.S. crude futures gained about 9% this week, the biggest percentage gain since October, in part due to U.S. inventories last week dropping to levels last seen in March. [EIA/S] Brent rose about 6% for the week. The last time Brent traded at $60 a barrel, the pandemic had yet to take hold, economies were open and demand for fuel was much higher. The rollout of COVID-19 vaccines has fed hopes of demand growth, but even optimists, such as the Organization of the Petroleum Exporting Countries which expects a market deficit throughout 2021, do not expect oil consumption to return to pre-pandemic levels until 2022. “What is really helping the market today, and is a more valid reason for the price rise we see, once again comes from Saudi Arabia and its top firm, Aramco,” Aramco raised its Arab Light official selling price (OSP) to Northwest Europe for March by $1.40 a barrel from the previous month. This could signal Saudi Arabia is more confident in the demand outlook, feeding bullish sentiment, Tonhaugen said. OPEC and allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped lift prices from historic lows last year. “OPEC+ discipline has been a real positive,” said Michael McCarthy, chief market strategist at CMC Markets. The U.S. oil rig count, an early indicator of future output, has risen for five straight months. This week, the number of rigs rose by four to 299, the highest since May, according to energy services firm Baker Hughes Co. The pace of recovery in the world’s top producer, however, is slow. The government this week projected U.S. crude output will not to top its 2019 record of 12.25 million barrels per day until 2023. Production in 2020 tumbled 6.4% to 11.47 million bpd.

Crude Oil Prices up 9%. But Struggle With $60 Resistance — Crude prices rose some 9% on the week but fell short of the $60 per barrel mark targeted by oil bulls, suggesting the market may be overbought in the short-term and could consolidate even if it hits that high point. New York-traded West Texas Intermediate, the key indicator for U.S. crude, settled up 62 cents, or 2.2%, at $56.85 per barrel. For the week, WTI gained some 9%. London-traded Brent, the global benchmark for crude, settled up 50 cents, or 0.8%, at $59.34. For the week, Brent gained about 6%. U.S. gasoline RBOB futures meanwhile traded as high as $1.6729 a gallon, their highest since mid-February last year, when world oil demand began to collapse under the weight of the Covid-19 pandemic. The market has been cheered this week by the way OPEC’s monthly meeting on output policy played out, with no extra output agreed and plenty of evidence of output quotas being observed. Nigerian output in particular has now fallen to a level that almost compensates entirely for its overproduction last summer, partly due to disruptions at some of its export facilities. In addition, another week of clear drawdowns in U.S. and international inventories has convinced many that the market is set to tighten meaningfully as demand picks up in the course of the year, pushing back-month futures contracts sharply higher. “The market is increasingly pricing in a belief that last year’s price crash together with an increased investor focus on environmental, social and corporate governance (ESG) could led to a future shortfall due to lack of investments towards exploration,” Saxo Bank head of commodity strategy Ole Hansen said in a morning note. “However, before we reach that stage, global demand needs to recover from the current 94 million barrels/day and back towards 100 million seen a year ago, while OPEC+ slowly returns 7 million barrels/day of still capped production.”

The end of the Qatar blockade will boost the Middle East economy, IMF says – The International Monetary Fund has raised its economic outlook for the Middle East and North Africa region’s growth in 2020 by 1.2 percentage points to an overall contraction of 3.8%, showing that despite some progress since the coronavirus pandemic began, it’s still been a brutal year by any account. Recovery will be varied and based largely on countries’ investments and strategies for vaccine distribution. But there has been one bright spot for the Gulf states in particular – the lifting of the political and economic blockade of Qatar by other GCC countries, the IMF’s Middle East and Central Asia Director Jihad Azour told CNBC on Wednesday. While the full details of the reconciliation accord between blockading states – Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt – and Qatar are not publicly known, Azour told CNBC’s Hadley Gamble that “any improvement in terms of opening up borders, improving economic relationship will provide an additional potential for growth.” “Of course, this will improve trade, especially at rates in goods and services,” he added. “It will reduce the cost of procuring for example, for Qatar, it will also help the airlines by reducing the cost. Therefore, there is always benefit from improving economic relationships, especially that we are now entering into a new phase in terms of globalization.” The news, which saw a dramatic 3 1/2-year dispute come to an end, is a likely boon for investment as well, Azour said. “I think this is good for business in the short term, but also in the long term, in terms of providing a bigger space for investors. And this is something that will be valued.” Qatar’s Financial Centre alone aims to attract $25 billion of foreign direct investment inflows by 2022 as a result of the rapprochement, CNBC reported in January. Airlines, manufacturing and food production are among the other areas that are likely to see major boosts.

Triple shock of US sanctions, oil price collapse and the pandemic decimates Iranian living standards — Iranian workers and their families are reeling under the combined impact of US sanctions, the oil market collapse and the COVID-19 pandemic. Iran’s GDP had already fallen by 6.8 percent in the financial year before the pandemic-induced recession took its toll, as oil revenues halved following the expiry of the Trump administration’s short-term waivers of sanctions on those countries importing Iranian oil. The Trump administration’s punitive sanctions were imposed in 2018, after the US scuttled the 2015 Iran nuclear accord, with the aim of crashing its economy and provoking “regime change.” The sanctions effectively bar Iran from selling its oil – the lifeblood of the Iranian economy – causing crude oil production to fall to its lowest level in 40 years and oil storage facilities to be filled to capacity and depriving the government of a major source of its revenues. Just five days before leaving the White House, President Donald Trump expanded Washington’s punitive sanctions to other key industries, including Iran’s marine, aerospace, aviation and steel sectors. Revenues fell even further in 2020 following the global oil market collapse, with oil production now less than 2 million barrels per day, about half that in 2018. This contraction, expected to lead to a further 3.7 percent decline in GDP for 2020-21, comes in the wake of a decade-long decline in per capita GDP income. Iran’s currency, the rial, has lost 43 percent of its value against the dollar. This, together with years of austerity imposed by successive governments with the support of all factions of Iran’s political establishment, has led to inflation rising to 46 percent, mass unemployment, with a devastating impact on household budgets as the cost of food and housing soared, and ever-deepening social inequality, with the Gini coefficient of inequality reaching 35.6, according to the Iran Economic Monitor. These rising living costs have eroded wages, driving many young people out of the city centres where rents are high into the outer suburbs, satellite towns or back to their families in the impoverished rural areas. They have decimated the value of the government’s cash transfers to those with little or no income, despite an increase announced last autumn. At least 55 percent of Iranians are poor, with half of these living in extreme poverty, a five-fold increase since the reimposition of US sanctions in 2018, because wages are totally inadequate to meet their basic needs. Last November, a video went viral on Iranian social media showing Bandar Abbas municipal officials demolishing a single mother’s rickety shed, erected without a permit. The destruction of the shack that was home to herself and three children, one of whom is disabled, drove 35 year old Tayyebeh to attempt suicide by setting fire to herself, by no means an isolated phenomenon. The furore that followed forced the municipality to pay for her hospitalisation and local commanders of the Islamic Revolutionary Guard Corps (IRGC) to offer to build her a home if the city provided the land, although such promises are rarely fulfilled.

Iranian-Backed Forces Receive New Missiles As Tensions Grow In Iraq – The second month of 2021 began with preparations by Iraq’s Popular Mobilization Units (PMU) for new round of hostilities. Kata’ib Hezbollah received short and medium range rockets through Syria, according to the Syrian Observatory for Human Rights. Kata’ib Hezbollah is a key member of the PMU, actively participates in the fight against ISIS since the emergence of the group in Iraq, and is a vocal supporter of the current attempts to oust the US presence from Iraq. At the same time, the PMU are subject to more and more frequent ISIS attacks in recent days. As the terrorists appear to be popping up all around. On January 31st, the PMU said they repelled an ISIS attack in the region of Jurf al-Sakhar in the province of Babil. These apparent appearances by ISIS members coincide with reports by pro-Iranian sources blaming the US for airlifting them. On January 31st, in an interview with the al-Maloumeh news website, Sabah al-Akili claimed that the US military airlifts ISIS units into areas behind PMU positions in the Jurf al-Sakhar region. So far, US President Joe Biden’s policy for the Middle East is incredibly unsurprising. Any potential withdrawals appear to be nothing more than a pipe dream. The first-ever African American Defense Secretary Lloyd Austin said that the Trump Administration’s decision to withdraw was being reconsidered. Not only that, but it is likely that the deployments need to be increased. Attacks on US supply convoys have become commonplace, all of them being blamed on the PMU. However, responsibility for the most recent attack was assumed by the Qasim Al-Jabbarin group, which does not declare its affiliation with the PMU. With the US still leading the way for NATO in the entire region, any exit also from Afghanistan becomes more fiction than reality. This will, in turn, lead to increased Taliban activity, since the peace deal is not being honored.

Biden Orders USS Nimitz Aircraft Carrier Home in Possible Signal to Iran – Secretary of Defense Lloyd Austin instructed the carrier and and the 5,000 sailors and Marines of its strike group to return home after being deployed for over 240 days. Over the course of its deployment, the USS Nimitz was responsible for providing air cover during the troop drawbacks in Afghanistan, running operations and exercises to strengthen US Central Command and US Indo-Pacific Command areas of responsibility, according to the Pentagon. It has also conducted brief missions in Somalia carrying out air raids on extremists in the country and it was involved in training the Indian Navy’s 7th Fleet. The Nimitz is 100,000 tons of power. Laid down in 1968, it is one of the largest American warships. It is one of 10 similar ships in its class: the Eisenhower, Vinson, Lincoln, Roosevelt, Washington, Stennis, Truman, Reagan and Bush. US Naval Institute News says that the Nimitz was operating within the US 7th Fleet off the coast of west India when it got the order to go home after nearly eight months on the water. Just prior to the beginning of the year, the Nimitz was ordered to come “directly” home by the acting US Acting Secretary of Defense Chris Miller. Ninety-six hours later, the carrier got another order to “halt its routine redeployment” and remain in the area of US Central Command following threats from Tehran on the anniversary of the killing of the Iranian Revolutionary Guards Commander Qasem Soleimani.

New U.S. stand on Yemen war can be ‘step towards correcting past mistakes’ – Iran (Reuters) – Iran’s foreign ministry said on Saturday a new U.S. stand on the Yemen war can be a “step towards correcting past mistakes”, after President Joe Biden said this week Washington was ending its support for a Saudi Arabia-led military campaign in Yemen. “Stopping support … for the Saudi coalition, if not a political maneuvre, could be a step towards correcting past mistakes,” Iranian Foreign Ministry spokesman Saeed Khatibzadeh was quoted as saying by state media. Biden said on Thursday that the more than six-year war, widely seen as a proxy conflict between Saudi Arabia and Iran, “has to end.” He also named veteran U.S. diplomat Timothy Lenderking as the U.S. special envoy for Yemen in a bid to step up American diplomacy to try to end the war.

U.N. bid to avert oil spill off Yemen uncertain as Houthis mull review (Reuters) – Yemen’s Houthi group has advised the United Nations to pause preparations to deploy a team to assess a decaying oil tanker threatening to spill 1.1 million barrels of crude oil off the war-torn country’s coast, a U.N. spokesman said on Tuesday. The tanker Safer has been stranded off Yemen’s Red Sea oil terminal of Ras Issa for more than five years, and U.N. officials have warned it could spill four times as much oil as the 1989 Exxon Valdez disaster off Alaska. Houthi authorities gave long-awaited approval in November for a visit to assess the tanker. A U.N. team, which includes a private company contracted by the world body to do the work, was aiming to travel to the tanker early next month. But U.N. spokesman Stephane Dujarric said that time line was now uncertain amid U.N. concerns about signals from the Houthis that they are considering a “review” of their formal approval of the tanker mission. “Houthi officials have advised the U.N. to pause certain preparations pending the outcome of such process, which would create further delays to the mission,” he said in a statement. He said the United Nations had so far spent $3.35 million on preparing for the mission. The world body also has to lease a technically equipped vessel, but needs a letter from the Houthis with security assurances. “We regret that, to date, we have not received a response to our multiple requests for this letter, the lack of which would increase the cost of the mission by hundreds of thousands of dollars,” Dujarric said. Houthi-run Al Masirah TV last week quoted a senior Houthi official as saying the United Nations had made additional requests that had not been part of an agreed framework. “Their new requests are related to their financial relationship with insurance firms and we will not get involved in matters that do not concern us,” the Houthi official said. Last month, former U.S. President Donald Trump’s administration designated the Houthis as a foreign terrorist organization. The United Nations is also reviewing whether that could affect the tanker mission. A Saudi Arabia-led military coalition intervened in Yemen in 2015, backing government forces fighting the Houthis. U.N. officials are trying to revive peace talks to end the war as the country’s suffering is also worsened by an economic crisis, currency collapse and the COVID-19 pandemic.

Biden Ends “Offensive Support” for Saudi War in Yemen – President Biden delivered a foreign policy speech on Thursday and vowed to end US support for Saudi Arabia’s “offensive” operations in Yemen. “We are ending all American support for offensive operations in the war in Yemen, including relevant arms sales,” Biden said. Last week, the administration halted planned arms sales to Saudi Arabia and the UAE. While Biden vowed to end “offensive” support, he promised to keep supporting the Saudis militarily in other ways. “At the same time, Saudi Arabia faces missile attacks, UAV strikes, and other threats from Iranian-supplied forces in multiple countries. We’re going to continue to support and help Saudi Arabia defend its sovereignty.” Framing the move as an end to support for “offensive” operations could give the US some wiggle room to continue some support for the Saudi-led coalition. And since the coalition is more capable now than it was in 2015, when the Obama administration first backed the Saudis in Yemen, operations could still continue.The US often blames Iran for Houthi attacks in Saudi territory. But the reality is, these attacks wouldn’t be happening if it wasn’t for the over five-year US-backed Saudi siege on Yemen, where the coalition’s targeting of civilian infrastructure and the blockade on the country has caused widespread disease, and mass starvation.Biden did mention the humanitarian crisis in Yemen and said USAID will work to ensure that aid is being delivered. He announced the appointment of Timothy Lenderking as the US special envoy to Yemen, a veteran diplomat who will work to end the fighting between the Saudis and the Houthis. Biden said Lenderking will “work with the UN envoy and all parties of the conflict to push for a diplomatic resolution.”One thing Biden did not bring up is the designation of Yemen’s Houthis as a foreign terrorist organization, one of the last moves from the Trump administration. The UN and international charities have warned that the designation will cause mass famine since it criminalizes doing business with the Houthis, who control territory where about 70 percent of Yemen’s population lives.

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