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Here are some more selected news articles for the week ending 24 April 2021. Go here for Oil, Gas, And Fracking News Read 25April 2021 – Part 1.
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Enbridge settles with shipping firm after 2018 Line 5 anchor strike – Enbridge Inc has settled a lawsuit with a shipping firm and owners of a vessel which damaged its Line 5 pipeline under the Straits of Mackinac. Settlement funds were wired to Enbridge by the Van Enkevort Tug & Barge and MOM Erie Trader on Thursday, April 15, according to filings in U.S. District Court in Grand Rapids. Van Enkevort and MOM Erie Trader also settled in December with American Transmission Co., which owns power cables severely damaged on April 1, 2018 when the shipping firm’s vessel combo dragged an anchor through the straits. According to the lawsuits, the Clyde S. Van Enkevort tug and Erie Trader barge (which operate as one connected vessel), dragged a 12,000-pound anchor across the underwater utility corridor, severing two submerged power cables that spilled 600 gallons of dielectric fluid. The anchor also damaged the controversial Line 5 pipeline. The incident happened amid intense scrutiny and discussion about the risk posed by the dual oil lines and helped lead to a deal with former Gov. Rick Snyder to replace them in a utility tunnel.The U.S. Coast Guard later determined an anchor brake pad on the vessel was improperly installed. That, coupled with an unexplained loss of backup breaks and other communications errors in rough weather, caused the anchor to release.Although toxic to aquatic life, the Coast Guard said the dielectric fluid release was not determined to have significant impact on the environment. According to the Detroit News, vessel operators did not discover the anchor was dragging until they neared port at Indiana Harbor at the south end of Lake Michigan. In a 2020 filing, the shipping firm and vessel owners argued that Enbridge was at fault for the incident because it failed to locate its dual underwater pipeline in a location that was protected against anchor strikes and did not apply protective armoring to cover the lines.Consumers Energy also sued but later dismissed its case against the vessel operators. The company had decommissioned power cables that were also damaged. Consumers removed those cables from the straits last year.
US oil, gas rig count drops for first time this year, losing 11 rigs – The US oil and gas rig count took a step back, falling 11 to 530 on the week, rig data provider Enverus said April 22 – the first rig count drop this year, even as improving confidence in oil fundamentals continued to percolate ahead of first-quarter 2021 E&P earnings. Oil rigs fell steeply to 404, down 15 for the week ended April 21, while natural gas-oriented rigs gained four to 126. And the much-watched giant Permian Basin of West Texas/Southeast New Mexico shed five rigs, leaving 231. The 11-rig exodus from domestic fields in the past week, after months of weekly increases, was “somewhat surprising,” S&P Global Platts Analytics analyst Taylor Cavey said. “Until we start to see a trend, it will be hard to determine whether or not it is a [mere] blip.” While the rig count has trended up this year, a drop of the current week’s magnitude may not be unexpected given rig additions among the conventional plays in recent weeks, Cavey said. Also, the week’s decrease was split between vertical oil rigs and horizontal oil rigs, indicating more conventional and unconventional plays. “From an operator perspective, its hard to say what’s going on as the decline was widespread (large-caps, small-caps and privately-held operators),” Cavey added. “Majors remained flat week on week. Meanwhile, horizontal gas rigs increased by four, led by the Marcellus and Utica,” two Appalachian-area gas-weighted shale plays. 600-plus rigs by year-end? Platts Analytics is forecasting that total rigs will breach the 600 level by the end of 2021. Also, the US hydraulic fracturing spread, or unit, count is 220 this week, compared to 315 operating pre-coronavirus pandemic. The “frac” count indicates well completions ahead of placing the wells on production. Rig counts in other large US basins mostly moved up or down by a single rig, although the Marcellus Shale, mostly in Pennsylvania, gained three rigs for a total 35. Otherwise, the gas-prone Haynesville Shale of East Texas/Northwest Louisiana, and the Utica Shale largely in Ohio, each gained a rig for respective totals of 48 and 14. Losing a rig each were the Eagle Ford Shale of South Texas, the SCOOP-STACK play of Oklahoma, the Bakken Shale of North Dakota/Montana and the DJ Basin of Colorado. That left the Eagle Ford with 43 rigs, the SCOOP-STACK with 16, the Bakken with 15 and the DJ with 12.
Rig and Frac Spread Counts Near Benchmarks – Metrics tied to U.S. drilling and hydraulic fracturing activity are approaching important benchmarks. U.S. rig and active frac spread counts are closing in on required levels to keep overall crude production flat with Fourth Quarter 2020 exit rates, which was the consensus target heading into the year. Current oil prices in the mid-$60-per-barrel range remain above levels baked into operators’ annual spending plans, setting up the question heading into earnings season as to whether those original capital budgets will be revised. So far, E&P companies have stuck to the mantra of “fiscal discipline.” We expect that will continue as the companies report 1Q21 results, which would support crude prices in the near-term. Drilling activity has picked-up and more previously drilled-but-uncompleted wells are being completed. The market will look for signs of this trend continuing. It appears that privately owned E&P companies have the most freedom to start new activity as publicly traded companies are staying disciplined in capital expenditures in deference to maintaining “free cash flow” for dividend distributions and stock buybacks. And, while the bullish signals of the past week have overshadowed the spreading of COVID-19 variants, the market will have to keep a close watch on this.
Legendary Trader Sees ‘Seismic Shift’ in Houston’s Oil Patch – For John Arnold, the billionaire philanthropist who made his fortune betting on natural gas prices, Houston’s fossil-fuel industry seems finally ready to move on. A year ago, talk in the Texas energy hub was mostly about defending oil and gas and denouncing renewables, Arnold, 47, said Monday on his Twitteraccount. Now, much of the discussion has shifted to clean-energy topics including wind, solar and batteries.There’s been seismic shift in the Houston energy industry of late. A year ago, there was a lot of defending the oil & gas sector and denouncing renewables. Anecdotally, about 75% of the talk was O&G and 25% clean energy. It feels like those numbers have reversed. – John Arnold (@JohnArnoldFndtn)April 19, 2021 “Even those who are not ideological believers are taking the cues from the financial markets, which have no interest in oil production growth anymore,” said Arnold, the former head of natural-gas derivatives at Enron Corp.He also said capital available to oil and gas has dried up while “every” private equity firm in Houston is raising money for clean energy. “The markets are rewarding those in a growth industry (zero carbon energy) vs one in secular decline.” Arnold said the shift has made him more optimistic about the speed of decarbonization, which requires the scale and financial resources that large companies possess. “The fossil fuel industry has that expertise and is now focusing on a low carbon future.”One example of the energy industry moving itself forward is a recent proposal by Exxon Mobil Corp. for a $100 billion hub to capture carbon dioxide emissions along the U.S. Gulf Coast in Texas, said Houston Mayor Sylvester Turner.The leader of America’s fourth-biggest city, which bills itself as the energy capital of the world, said Houston isn’t trying to move away from the energy industry that the city was built on — but rather, move forward with it. “This is an example of the city of Houston leading in energy transition, and for the energy industry — our hydrocarbon companies, this is a seismic shift,” said Turner, who is chairman of the national nonprofit group Climate Mayors. “The recognition that we can’t continue to do business as we have done it in the past is sinking in.” Arnold founded hedge fund Centaurus Advisors LLC in 2003 after leaving Enron, and the Houston-based fund gained fame betting against Amaranth AdvisorsLLC, which collapsed in 2006 after losing $6.6 billion on bad bets in the natural gas market. He closed the fund in 2012 at age 38 to pursue philanthropy with his wife Laura Arnold, a lawyer and former oil company executive, with the couple extending their influence through Arnold Venturesout of Houston.
Small Companies Rush To Buy Up Big Oil’s Assets – Big Oil is shedding assets like a dog sheds its winter coat. In a rush to prove their emerging environmentally conscious credentials, the supermajors are pledging billions in low-carbon energy investments and committing to net-zero goals over the next decade. Meanwhile, smaller oil and gas companies are snapping up the shed assets. The Wall Street Journal reported this week that small energy independents are happy to relieve Big Oil of its unwanted assets as they bet on the long-term future of oil and gas despite the seemingly ubiquitous ambition to eliminate oil and gas from the world’s energy mix. “While I agree that the direction of traffic is one way, toward renewables, I think it’s going to take longer than people think,” says Blair Thomas, chief executive of UK-listed Harbour Energy, as quoted by the WSJ. “Capital that is not being spent now, is production that the industry won’t have two or three years from now. The question is, will renewable penetration happen fast enough so that as demand comes back you don’t create a pinch? I tend to think it won’t.” Thomas is not alone in thinking this. In fact, analysts expect the world’s thirst for oil and gas to continue rising, especially in Asia. Wood Mackenzie, for one, recently forecast that demand for crude oil there could jump by as much as 25 percent by 2040. Given that Asia is currently the biggest oil guzzler globally, 25 percent would be quite a sizeable increase. Meanwhile, production on a global scale will probably be lower because of all the low-carbon commitments of Big Oil.Other analysts have noted the capital spending cuts that virtually every oil company in the world implemented during the pandemic, which affected their exploration activity. This could have implications about their long-term production outlooks, and these implications would be negative, potentially tipping the market into a shortage. In all fairness, there were warnings along the same lines during the 2014-2015 oil price crash, and they never materialized.
Greta Thunberg: U.S. fossil fuel tax incentives a ‘disgrace’ – Swedish climate advocate Greta Thunberg urged a House subcommittee on Thursday to end tax breaks for fossil fuel producers, saying their existence was a “disgrace,” and she accused lawmakers who have failed to remove them as “proof that we have not understood the climate emergency.” “How long do you honestly believe that people in power like you will get away with it? How long do you think you can continue to ignore the climate crisis, the global aspect of equity and historic emissions without being held accountable?” she testified virtually to the House Oversight Environment Subcommittee hearing. “You get away with it now, but sooner or later people are going to realize what you have been doing this time. That’s inevitable. You still have time to do the right thing and to save your legacies, but that window of time is not going to last for long,” she said. Thunberg’s comment comes as the U.S. Treasury Department has proposedeliminating some tax provisions used by oil, gas and coal producers to help pay for President Joe Biden’s $2.2 trillion infrastructure and climate plan.
ENERGY TRANSITIONS: Oil and gas companies release 5-year plan to slash CO2 — Thursday, April 22, 2021 — Gas utilities and oil companies released plans this week for technology that could advance their low-carbon agendas, as political pressure builds on them to cut greenhouse gas emissions.
BP to Stop Flaring of Natural Gas in Permian Basin by 2025: WSJ – BP Plc will spend about $1.3 billion to build a network of pipes and other infrastructure to collect and capture natural gas produced as a byproduct from oil wells in the Permian Basin of Texas and New Mexico, the Wall Street Journal reported.The plans, to be announced Monday, will eliminate routine flaring of natural gas in the oil field by 2025, the paper said. The burning of gas in this way is prevalent in the Permian because most producers there drill for more profitable oil and often incinerate the gas that comes as a byproduct, it added. “We will be producing oil and gas for decades, but it will be a certain kind of oil and gas,” Dave Lawler, the chairman of BP America Inc., is quoted in the WSJ. “It’s a highly profitable barrel and it’s a responsibly produced barrel.” The investment reflects the ever-growing pressure on the industry to reduce its carbon footprint and contributions to climate change. At the end of March, BP announced it had lowered its Scope 1 and 2 emissions, those associated mostly with production, by 16% in 2020.
New Mexico’s bold plan on methane pollution should serve as a model — While the U.S. and Russia may not agree on much, together they lead the world as the top emitters of methane, a dangerous greenhouse gas that is soaring to record levels in the earth’s atmosphere. But New Mexico, the third-biggest U.S. oil producer and a leading methane emitter, just finalized ambitious new rules to curtail methane pollution. It means other states and the Biden administration, which has promised to take on methane, can now look to the Land of Enchantment for the way forward.New Mexico’s rule, which follows over a year of public debate and is part of Gov. Michelle Lujan Grisham‘s (D) aggressive climate plan, calls for the oil and gas industry to capture 98 percent of its methane by 2026. This will require staunching the wasteful venting and flaring of natural gas, which is comprised almost entirely of methane. Today, it is discharged from thousands of wells as a cost-savings measure.New Mexico is also preparing a companion rule to address widespread leaking of methane from across the state’s oil and gas supply chain, which includes part of the mammoth Permian Basin it shares with Texas. The leaking occurs at well pads, pipelines, compressors, storage facilities and more, a system-wide problem that creates methane plumes large enough to detect from space. The draft rule on leaking, expected in May, would require regular inspection and repair of leaky equipment, which today goes largely unmitigated as another cost-savings measure.Controlling methane is a climate imperative. The gas has 80 times the heat-trapping potential of carbon dioxide, making it a potent driver of climate change. NASA says it has fueled a whopping 25 percent of human-caused global warming to date, a proportion projected to climb. And Environmental Protection Agency estimates, which are increasingly panned as too low, show methane pollution has been rising roughly since the U.S. oil boom began in the early 2000s.Research also shows that methane increasingly enters the atmosphere from biogenic sources such as wetlands or thawing permafrost. In the latter, warming tied to methane begets more methane. It is the ominous type of feedback loop that global warming alarmists have rightfully warned about for decades.But potentially hopeful news is that methane only survives in the atmosphere for about 10 years, in contrast to the centuries-long lifespan of carbon dioxide. Consequently, methane rules today could produce swift returns on climate as the world grapples with the harder problem of carbon dioxide emissions.
U.S. appeals court denies Dakota Access rehearing request, environmental review to continue (Reuters) – A U.S. appeals court on Friday denied Dakota Access LLC’s petition for a rehearing of a court decision that canceled a key permit for its oil pipeline and ordered an environmental review, court documents show. The decision by the United States Court of Appeals for the District of Columbia means the Dakota Access Pipeline (DAPL) technically is still trespassing on federal land because it does not have a permit to cross under the Dakotas’ Lake Oahe. The line is currently operating indefinitely but will be reassessed once the environmental review of the line is completed in March 2022. The 570,000 barrel-per-day DAPL began operating in mid-2017 but drew controversy during construction as Native American tribes and activists protested its route under Oahe, a critical drinking water source for the tribes. Last summer, a U.S. district court judge threw out a federal permit for the line to operate under the lake and ordered an environmental review for that section of the pipeline. A three-judge panel at the circuit court in January upheld the lower court’s decision to vacate the permit and require the review. The pipeline’s operators wanted the circuit court to reconsider the panel’s decision, but the court unanimously denied the request. The decision leaves only the U.S. Supreme Court for Dakota Access to oppose the environmental review and permit denial, but it’s not certain the nation’s highest court will take up the case. “This is a pretty definitive statement that the legal issues in this case do not warrant attention from the Supreme Court,” said Earthjustice attorney Jan Hasselman, who represents the Standing Rock Sioux in the case. “Here, not only didn’t we see dissents, not a single judge called for a vote.”
Approximately 126,000 gallons of water spill from pipeline in Bowman County – Approximately 3,000 barrels, or 126,000 gallons, of water often used in oil production spilled near Marmarth on Monday, April 19, according to the North Dakota Department of Environmental Quality. The agency says the spill came from a pipeline leak likely caused by external corrosion. The owner of the pipeline is Delaware corporation Denbury Onshore LLC. Marmarth is about 100 miles southwest of Dickinson on the far western edge of the state. The water that leaked from the pipeline was source water, which is higher in dissolved minerals than freshwater, according to the Department of Environmental Quality. Source water is lower in chlorides than produced water, which is created through oil and gas extraction. The Department of Environmental Quality said its personnel are inspecting the spill site and are also conducting an investigation.
Alaska oil industry still reeling from pandemic crash – The price of North Slope crude largely recovered months ago from the unprecedented fall it took a year ago, but if a recovery is also going to occur in Alaska’s oil workforce it has yet to materialize. Preliminary employment data for March from the state Labor Department indicates the industry is continuing in the other direction. Approximately 6,300 people were employed in the state’s oil and gas sector last month, which was in line with February but did not reverse a declining trend that has persisted since the start of the pandemic. Following a near-term peak of 10,200 oil and gas jobs in February 2020, the industry has shed nearly 40 percent of its workforce; it is the largest drop among all of the industries the Labor Department tracks. But the recent decline in one of the state’s trademark industries is not an isolated incident. Alaska’s oil and gas workforce has contracted by 57 percent since peaking at an average of 14,800 jobs in 2014. Alaska Oil and Gas Association CEO Kara Moriarty emphasized that while the operating companies would relish the ability to hire more workers again, what has happened in Alaska is reflective of the national picture. Nationally, the industry peaked at nearly 199,000 direct jobs in 2015 and has had 133,000 through the first few months of 2021, a one-third drop in employment. “When you have a price fall like we have from 2014 to today the companies just don’t have as much money to spend and it does force efficiencies and you just can’t drill as many wells when prices are where they’re at today compared to 2014,” Moritarty said. The price for Alaska crude stood at $66.62 per barrel on April 19, according to the state Revenue Department and it has remained greater than $60 per barrel since early February – a return to where it started 2020 – but still far from the $100 per barrel-plus regime the industry enjoyed early last decade. State labor economist Neal Fried said the simple price of oil is consistently the best indicator of pending employment trends in the industry. While shale production in the Lower 48 requires more constant and labor-intensive drilling activity, there is clearly no correlation between oil production and jobs in Alaska. Pre-pandemic employment levels are in line with the size of the industry when more than 1 million barrels per day were being produced on the North Slope.
Competition Heats Up in the Melting Arctic, and the US Isn’t Prepared to Counter Russia – For decades, the frozen Arctic was little more than a footnote in global economic competition, but that’s changing as its ice melts with the warming climate.Russia is now attempting to claim more of the Arctic seabed for its territory. It has been rebuilding Cold War-era Arctic military bases and recently announced plans to test its Poseidon nuclear-powered, nuclear-armed torpedo in the Arctic. In Greenland, the recent election ushered in a new pro-independence government that opposes foreign rare earth metal mining as its ice sheet recedes – including projects counted on by China and the U.S. to power technology.The Arctic region has been warming at least twice as fast as the planet as a whole. With the sea ice now thinner and disappearing sooner in the spring, several countries have had their eyes on the Arctic, both for access to valuable natural resources, including the fossil fuels whose use is now driving global warming, and as a shorter route for commercial ships.A tanker carrying liquefied natural gas from northern Russia to China tested that shorter route this past winter, traversing the normally frozen Northern Sea Route in February for the first time with the help of an icebreaker. The route cut the shipping time by nearly half.Russia has been building up its icebreaker fleet for years for this and other purposes. The U.S., meanwhile, is playing catch-up. While Russia has access to more than 40 of these ships today, the U.S. Coast Guard has two, one of them well past its intended service life. America’s aging icebreaker fleet has been a persistent topic of frustration in Washington.Congress put off investing in new icebreakers for decades in the face of more pressing demands. Now, the lack of polar-class icebreakers undermines America’s ability to operate in the Arctic region, including responding to disasters as shipping and mineral exploration increase.It might sound counterintuitive, but diminishing sea ice can make the region more dangerous – breakaway ice floes pose risks both to ships and to oil platforms, and the opening waters are expected to attract both more shipping and more mineral exploration. The U.S. Geological Survey estimates that about 30% of the world’s undiscovered natural gas and 13% of undiscovered oil may be in the Arctic.
Russia probes oil spill in Gulf of Finland – Russian investigators on Wednesday said they are inspecting an oil spill in the Gulf of Finland near the city of Vyborg in the Leningrad region, hours after President Vladimir Putin called for stronger action against polluters.The Investigative Committee’s northwestern transport investigation department said it dispatched a team of its investigators and specialists from environmental watchdog Rosprirodnadzor to the scene of the spill near the Tovarnaya-Vyborg railway station.After the team inspected the site and collected water samples, “the body of water’s pollution was established,” the statement said.Investigators said the inspection is taking place under a criminal article against violation of rules for the transport of environmentally hazardous substances and waste.In his annual state-of-the-nation speech earlier Wednesday, Putin proposed allocating state budget funds toward environmental recovery and called for stronger restrictions on pollution and greenhouse gas emissions.”We cannot allow climate catastrophes like the one in Norilsk,” Putin said in his annual state-of-the-nation speech Wednesday, referring to the May 2020 diesel fuel spill that was branded the worst-ever environmental disaster in the Arctic. “If you make a profit from nature, clean up after yourself,” he said. The latest spill comes less than two weeks after a spill of about three tons of oil at the same train station. Local media reported that fuel had spilled onto the railway tracks as it was being transferred from a tank car to the station’s boiler depot.The Gulf of Finland is surrounded by Russia, Finland and Estonia and runs into the Baltic Sea.
Oil spillage occurs in Shells pipeline in Bayelsa, 1.34 hectares of land polluted – An oil pipeline spillage has occurred at the Okordia-Rumekpe 14-inch crude truckline, operated by Shell Petroleum Development Company (SPDC), discharging about 213 barrels of crude oil into Ikarama community in Bayelsa State. This is as the report indicates that about 1.34 hectares of land were polluted by the spillage which followed a rupture on the pipeline. According to a report from the News Agency of Nigeria (NAN), the spillage was confirmed by the Media Relations Manager for SPDC, Mr Bamidele Odugbesan, who said that the probe into the incident had been concluded. A Joint Investigative Visit (JIV) report on the incident on Thursday confirmed that the incident took place on April 7, while the investigation was concluded on April 12. JIV is a statutory probe into the cause of any recorded spill incident involving the oil firm, regulators, host communities and state ministries of environment. The JIV report concluded that the spill was an operational mishap traced to equipment failure which impacted nearby palm trees and fish ponds and subsequently recommended remediation of the site. The JIV report also states that out of the 213 barrels of SPDC’s bonny light crude stream leak, some 110 barrels are recoverable from the ongoing recovery exercise at the site, leaving an estimated spilled volume at 109.12 barrels. The JIV report, which anticipated that oil recovery would be concluded before the end of April, also recommended the replacement of sections of the pipeline to restore its integrity. This new leakage is the latest in a series of oil spillages by Shell which has put the multinational oil firm in conflict with the host communities. A report has suggested that Shell has reported over 1,000 spills with about 110,535 barrels of crude or 17.5 million litres lost since 2011, although some experts and stakeholders believe that the figure could be more in reality.
Search for missing Indonesian submarine finds oil spill – An aerial search found an oil spill near the submarine’s dive location and two navy vessels with sonar capability have been deployed to assist the hunt, Indonesia’s Defense Ministry said. Indonesian rescuers searching for a submarine that went missing with 53 people on board found an oil spill on Wednesday near its dive location, authorities said. The 44-year-old submarine, KRI Nanggala-402, was conducting a torpedo drill in waters north of the island of Bali but failed to relay the results as expected, a navy spokesman said. An aerial search found an oil spill near the submarine’s dive location and two navy vessels with sonar capability have been deployed to assist the hunt, Indonesia’s Defense Ministry said. A ministry statement said requests for assistance had been sent and Australia, Singapore and India had responded. CNN Indonesia reported that Indonesian navy official Julius Widjojono said he suspected the submarine had descended to a depth of 600-700 metres. “We are still searching in the waters of Bali, 60 miles (96 km) from Bali, (for) 53 people,” military chief Hadi Tjahjanto told Reuters in a text message. He said contact with the vessel was lost at 4:30 a.m. on Wednesday. Representatives of the defence departments of Australia and Singapore did not immediately respond to requests for comment. The military chief will hold a media briefing to share further information about the search on Thursday from Bali, a spokesman said. Military analyst Soleman Ponto said it is too early to determine the fate of the submarine conclusively. “We don’t know yet whether the communication equipments were broken or the submarine has sunken. We have to wait for at least three days,” he said. The 1,395-tonne KRI Nanggala-402 was built in Germany in 1977, according to the defense ministry, and joined Indonesian fleet in 1981. It underwent a two-year refit in South Korea that was completed in 2012. Indonesia in the past operated a fleet of 12 submarines purchased from the Soviet Union to patrol the waters of its sprawling archipelago. But now it has a fleet of only five including two German-built Type 209 submarines and three newer South Korean vessels. Indonesia has been seeking to modernise its defence capabilities but some of its equipment still in service is old and there have been deadly accidents in recent years.
Libya’s oil output down to 1M 1M barrels: Official – Libya’s oil production has declined from 1.3 million barrels to 1 million per day due to rising debts, the head of the country’s National Oil Corporation (NOC) said on Thursday. Production may fall further as oil companies are unable to work under mounting debts, according to NOC chief Mustafa Sanallah. The reason for the burgeoning debt is the reduction in budget allocation for public oil companies in Libya, the official said. “We have the capacity to raise the daily production of oil to more than 2 million barrels in the coming period, but not allocating budgets has prevented us from reaching that level,” Sanallah said. He urged Libya’s Oil Ministry to help resolve the budget issue, warning that production could go further down. Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), had an average daily production of 1.28 million barrels in March, according to OPEC figures.
Oil Demand Predicted to Jump 6 Percent in 2021 – Rystad Energy has revealed that its latest forecast projects a six percent year on year increase in oil demand in 2021. The company sees demand rising to an average of 95.4 million barrels per day (MMbpd) this year, from 89.6MMbpd in 2020. April 2021 demand is expected to hit 93 MMbpd, with 94 MMbpd projected in May and 95.8 MMbpd forecasted for June. Total oil demand in the third quarter is expected to average 96.8 MMbpd before rising to 98.3 MMbpd in the fourth quarter. Looking further ahead to 2022, Rystad said its estimates show that total oil demand next year will continue to rise, reaching about 99.4 MMbpd. Rystad believes that total global demand for road fuels will rise by nine percent this year to 45.1 MMbpd. In April, road fuel demand is expected to average 44.2 MMbpd globally, before rising to 44.9 MMbpd in May and 45.9 MMbpd in June. Road fuel demand is expected to average 46.2 MMbpd in the third quarter and 46.5 MMbpd in the fourth quarter. In 2022, Rystad forecasts that road fuel demand will hit 47.5 MMbpd. Rystad expects jet fuel demand, which it says has been hit the hardest by the pandemic, to rise 21 percent this year and average 3.9 MMbpd. The company noted however that this is still “a far cry from pre-pandemic levels”. Most of the recovery is expected during 2022, when Rystad anticipates jet fuel demand to average 5.4 MMbpd. The latest oil demand projections released by Rystad are part of the company’s monthly Covid-19 report, which calculates the effect of the pandemic and offers updated estimates for global energy markets. By monitoring recent developments, travel restrictions, quarantine obligations, and new government policies, Rystad says it is able to make frequent fact-based updates to its estimates. As of April 18, 2.35pm CEST, there have been 140.3 million confirmed cases of Covid-19 globally, with three million deaths, according to the latest figures from the World Health Organization (WHO). There have been 792.7 million vaccination doses administered worldwide, as of April 19, the latest WHO figures show.
It’s reasonable for oil prices to be between $60 to $75 in a year’s time, says oil expert Dan Yergin – Demand and supply pressures will offset each other in the oil market, and it’s reasonable to expect prices to be in the $60 to $75 range in one year’s time as countries recover from the coronavirus crisis, said oil expert Dan Yergin. “If we really do have the rest of the world recover, I think it’s reasonable to think that oil would be in that $60 to $75 range,” the vice chairman of IHS Markit said. “That’s what the markets are telling us as the U.S. recovers, and China has already recovered,” he told CNBC’s “Street Signs Asia” on Tuesday. Brent crude futures gained 1.33% on Tuesday afternoon in Asia to trade at $67.94, while U.S. crude futures rose 1.28% to $64.19. While one trader sees prices potentially spiking to $100, Yergin’s perspective is that a lot of supply is still offline, and can meet a surge in demand as global economies recover. “There’s still a big surplus of oil that has to be brought back into the market,” he said, noting that OPEC and its allies helped to lift prices by cutting production by nearly 10 million barrels per day. “There’ll be offsetting pressures, and more supply would come in and we’d start to see the U.S. coming back into production again,” he said. But Yergin acknowledged that it’s difficult to predict where prices would be, and said Europe’s recovery hangs in the balance. “The U.S. is headed into a hyper economic recovery right now, China has a very strong recovery and that will push up demand,” he said. “The biggest uncertainty now is actually hanging over Europe and when Europe will be able to get out of its lockdown and start growing again,” he said. Europe’s Covid vaccine rollout has been slow to progress, and many Covid restrictions remain in place. The emergence of a more contagious variant has pushed the continent’s Covid-19-related death toll beyond 1 million.
Oil down over low demand fears from surging virus cases — Oil prices dropped on Monday due to investor jitters over the recent increase in coronavirus cases across the European continent and India to further dent energy demand. International benchmark Brent crude was trading at $66.48 per barrel at 0707 GMT for a 0.43% decrease after closing Friday at $66.77 a barrel. American benchmark West Texas Intermediate (WTI) was at $62.95 per barrel at the same time for a 0.37% drop after it ended the previous session at $63.19 a barrel. The tight measures following the surge in the number of coronavirus cases in some major economies, especially India, one of the world’s largest oil consumers, fueled concerns over the recovery in oil demand and global economic growth, trimming prices. India recorded over 273,000 coronavirus cases in a single day for the first time since the start of the pandemic, taking the country’s tally to over 15 million, data from Johns Hopkins University showed. According to figures released by the Health Ministry, 273,810 cases were registered. The ministry said they also recorded 1,619 new deaths to stand the death toll at 178,769. Some governments, including Hong Kong, have suspended flights from India. The slow pace of vaccination campaigns and concerns over the fair distribution of vaccines around the world, which are set to hinder the speed of global mass immunity, are adding to existing fears of not achieving a faster demand recovery.
Oil Prices Edge Upward As Greenback Weakens — Oil edged higher with help from a weakening dollar while a worsening demand picture in parts of the world continued to hold back prices from another breakout. Futures in New York rose 0.4% Monday after trading in a $1 range during the session. Total road fuel sales in France remained lower compared to the same time in 2019, while a key refiner in India is slashing oil processing rates as the virus rapidly spreads and lockdowns pummel fuel use in the country. The Bloomberg Dollar Spot Index headed for the lowest since late February, boosting the appeal of commodities priced in the currency. “Energy consumption in areas that are reopening faster than others is showing the increased demand for oil,” . “Other places will start to reopen one after another. It’s unclear when we’ll get to fully or more than 80% vaccinated, but that’s when crude oil can take off.” While rising momentum in the U.S. vaccination campaign is boosting optimism around a demand rebound there, the market is holding back from testing this year’s highs as it waits for other countries to narrow the gap. Oil’s forward curve is pointing toward growing confidence, with the widely watched spread between the nearest December contracts widening to its most bullish backwardation structure in roughly a month. “U.S. demand seems to be healthy, and that’s giving us support,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. However, “we still have questions around international virus outbreaks, and we’re seeing troubling numbers in India that are forcing them to shut down infrastructure.” West Texas Intermediate for May settlement, which expires Tuesday, gained 25 cents to settle at $63.38 a barrel. The more-active June contract increased 24 cents to $63.43 a barrel. Brent for June delivery rose 28 cents to $67.05 a barrel. In physical markets, U.S. sour crudes are signaling strength as nationwide refineries runs have increased to the highest in over a year in recent weeks. The premium for Southern Green Canyon against Nymex oil futures is near the highest since late February, while other sour grades like Mars and Poseidon have also strengthened in the past couple months. Traders are also following high-level talks between Iran, the U.S. and other nations aimed at ending a standoff over the nuclear deal abandoned by former President Trump. Washington described negotiations as “constructive,” while the Islamic Republic signaled it was ready to debate details to revive the accord. An agreement could see U.S. sanctions on Iranian oil exports lifted.
Oil climbs as dollar slumps; gains capped by pandemic surge – Oil prices edged higher on Monday, supported by a weaker U.S. dollar but gains were capped by concerns about the impact on demand from rising coronavirus cases in India. Brent crude settled up 28 cents, or 0.4%, at $67.05 a barrel, after rising 6% last week. West Texas Intermediate (WTI) U.S. oil ended the session up 25 cents, or 0.4%, at $63.38 a barrel, having gained 6.4% last week. The U.S. dollar traded at a six-week low versus major peers on Monday, with Treasury yields hovering near their weakest in five weeks. A weaker dollar makes oil cheaper for holders of other currencies. However, COVID-19 cases have surged in India, the world’s third biggest oil importer and consumer, dampening optimism for a sustained global recovery in demand. “If today’s broad-based weakness in the U.S. dollar is sustained, the energy complex should be able to maintain the bulk of last week’s gains,” said Jim Ritterbusch, president of Ritterbusch and Associates. “The primary hazard to continued oil price strength is the possible pre-emergence of COVID-19 case counts on a broad scale … large portions of Asia are seeing a renewed increase in cases that could force a re-appraisal of recent upward global oil demand adjustments.” India reported a record rise in infections, which lifted overall cases to just over 15 million, making the country the second-worst affected after the United States, which has reported more than 31 million infections. Deaths from COVID-19 in India also rose by a record 1,619 to nearly 180,000. The capital region of Delhi ordered a six-day lockdown, joining around 13 other states across India that have decided to impose restrictions, curfews or lockdowns in their cities. “This new wave of measures, while so far likely to be less stringent than what we saw in March 2020, when gasoline and gasoil/diesel demand in the country fell by close to 60%, is nevertheless set to weigh on transportation fuel consumption,”
Oil Prices Down Despite Libya Outage – Oil prices posted modest gains on early Tuesday morning following reports of an outage in Libya, but demand concerns sent prices falling as the day progressed. . Rising Iranian oil imports into China had forced other producers, including Russia, Angola, and Brazil, to cut the prices of their crude in order to keep it competitive. The shale boom resulted in a boom for landmen, who find, sell and flip tracts of land to drillers. These days, more landmen arepivoting to renewables. BP ) said it would spend $1.3 billion to build more pipelines in order to capture natural gas in an effort to end flaring in the Permian by 2025.. The inventory buildup during the pandemic is nearing normalization, according to Bloomberg. “Commercial oil inventories across the OECD are already back down to their five-year average,” said Ed Morse, head of commodities research at Citigroup Inc. “What’s left of the surplus is almost entirely concentrated in China, which has been building a permanent petroleum reserve.” IEA expects global greenhouse gas emissions to surge by 4.6% this year, one of the largest annual increases ever recorded. “This is a dire warning that the economic recovery from the Covid crisis is currently anything but sustainable for our climate,” said Fatih Birol, IEA’s executive director, in a statement. The Biden administration is hosting an international climate summit this week, where the U.S. will unveil new climate targets and attempt to woo other nations in stepping up their ambition. Oil industry looks to carbon offsets for each barrel. Occidental Petroleum (NYSE: OXY)has tested the practice of offsetting the carbon that each barrel of its oil holds. Sources told Reuters that Occidental paid $1.3 million in offsets for a shipload of crude, which added about 65 cents per barrel. The company has marketed its oil as carbon-neutral.
Oil drops from one-month highs on demand fears as virus surges in India (Reuters) – Crude futures settled lower on Tuesday, pulling back from one-month highs, on fears that India, the world’s third-biggest oil importer, may impose restrictions as coronavirus infections and deaths surge to record highs. Oil prices have risen steadily this year on anticipation that demand would recover, but while the United States and China are rebounding, numerous other countries are not. “Unless major progress is seen beyond the key industrialized nations such as the U.S., the pandemic factor could require some downward adjustments in global oil demand expectations for this year,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. India, the world’s second most populous country and currently the hardest hit by COVID-19, reported its worst daily death toll on Tuesday, with large parts of the country now under lockdown amid a fast-rising second surge of contagion.[nL1N2MD06P] India’s Prime Minister Narendra Modi urged citizens to take precautions to halt the spread of COVID-19, but stopped short of imposing lockdowns. Restrictions continue to hamper travel worldwide. Hong Kong will suspend flights from India, Pakistan and the Philippines from April 20 for two weeks. Brent crude settled down 48 cents, or 0.7%, at $66.57 a barrel. During the session it reached its highest since March 18 at $68.08. U.S. West Texas Intermediate (WTI) crude fell 94 cents, or 1.5%, to $62.44. Crude prices rallied earlier in the session after Libya declared force majeure on exports from the port of Hariga and said it could extend the measure to other facilities, citing a budget dispute. Hariga is scheduled to load about 180,000 barrels per day (bpd) in April. Libya’s production was hit last year after eastern-based forces in that country’s civil war blockaded oil terminals. Overall, oil prices have recovered from historic lows last year spurred by the onset of the pandemic, helped by some demand recovery and huge output cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. A year ago today, WTI sank to minus-$40 due to a massive glut.
WTI Rebounds After Gasoline Demand Jumps, Despite Crude Build – Oil prices are lower this morning, but well off the plunge lows (below $61 for WTI) seen ahead of the US cash equity open as01 and ongoing demand fears from India (and China) weighed on prices.All eyes will be not only on the inventories but also on demand (as gasoline and diesel demand has shown new gains). API
- Crude +436k (-4.4mm exp)
- Cushing -1.286mm
- Gasoline -1.617mm (+800k exp)
- Distillates +655k (-1.3mm exp)
DOE
- Crude +594k (-4.4mm exp)
- Cushing -1.318mm
- Gasoline +85k (+800k exp)
- Distillates -1.073mm (-1.3mm exp)
Analysts expected a 4th weekly crude draw (and were thrown by API’s unexpected build) but the official data also showed a build (albeit a modest 594k)… Graphics Source: Bloomberg Gasoline demand continued to recover to its highest since March 2020… US Crude production remains “disciplined” still as rig counts and prices remain supportive… WTI hovered just below $62 ahead of the official data release and held that rebound after the print.
Oil prices drop on U.S. crude build, rising Covid cases in India — Oil prices on Wednesday fell for a second day to their lowest in a week on a surprise build in U.S. crude inventories and concerns surging COVID-19 cases in India will drive down fuel demand in the world’s third-biggest oil importer. Brent futures fell $1.30, or 2.0%, to $65.27 a barrel, while U.S. West Texas Intermediate (WTI) crude for June settled 2.11%, or $1.32, lower at $61.35 per barrel. That puts both benchmarks on track for their lowest closes since April 13. “Oil prices are declining today as … bearish developments forced traders to ignore a partial but bullish Libyan force majeure on exports,” said Louise Dickson, oil markets analyst at Rystad Energy. She pointed to the build of in U.S. crude inventories and a continuous rise of COVID-19 infections in India and other countries. India, the world’s third-largest oil user, on Wednesday reported another record increase in the daily death toll from COVID-19. U.S. crude oil stockpiles unexpectedly edged higher last week, the Energy Information Administration said on Wednesday, confirming data by the American Petroleum Institute the day before. Crude inventories rose by 594,000 barrels in the week to April 16 to 493 million barrels, compared with analysts’ expectations in a Reuters poll for a 3 million-barrel drop. U.S. East Coast inventories, however, fell to a record low at 7.9 million barrels. Raising the possibility of further oil supply, Iran and world powers have made headway in talks to save a 2015 nuclear accord, which, if successful, could see sanctions lifted and more Iranian barrels return to the market. The Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, are heading for a largely technical meeting next week where major changes to policy are unlikely, Russian Deputy Prime Minister Alexander Novak and OPEC+ sources said. Novak said on Wednesday the group may confirm or tweak output plans following its decision to ease production curbs. In Libya, meanwhile, the country’s National Oil Corp (NOC) declared force majeure on Monday on exports from the port of Hariga and said it could extend the measure to other facilities due to a budget dispute with the country’s central bank.
Oil steady as Libya output decline offsets risks to Asian demand – Oil prices were little changed on Thursday as concerns over lower crude production in Libya offset expectations that rising coronavirus cases in India and Japan would cause energy demand to decline. Brent futures edged up 8 cents, or 0.1%, to settle at $65.40 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to end at $61.43. Libya said its oil production fell to about 1 million barrels per day in recent days and could drop further due to budgetary issues. “The market realized that a global come-back in oil demand cannot come without a come-back of the world’s largest economies,” India, the world’s third-largest oil user, on Thursday reported the world’s highest daily increase to date with 314,835 new coronavirus cases. Indian Oil Corp Ltd’s (IOC) refineries are operating at about 95% of their capacity, down from 100% at the same time last month, two sources familiar with the matter told Reuters. Japan, the world’s No.4 oil importer, is expected to announce a third wave of lockdowns affecting Tokyo and three western prefectures, media reported. Underlying bearish sentiment was also stoked by progress on talks between Iran and world powers to resurrect the 2015 nuclear accord, Any increase in supply from Iran would be on top of extra barrels already expected from the Organization of the Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, which plans to bring back about 2 million bpd of production over the next three months. OPEC+ members are due to meet next week but major changes to production policy are unlikely, Russia’s deputy prime minister and OPEC+ sources said. The European Central Bank, meanwhile, left policy unchanged as expected, keeping copious stimulus flowing even as it predicted a rebound in the euro zone economy in the coming months as pandemic restrictions are lifted. In the United States, the number of Americans filing new claims for unemployment benefits fell to a 13-month low last week. But while the labor market recovery is gaining speed, red flags are emerging in the housing market with sales of previously-owned homes down to a seven-month low in March. Longer term, oil demand is expected to take a hit as more countries adopt policies to combat climate change. The United States and other countries hiked their targets for slashing greenhouse gas emissions at a global climate summit hosted by President Joe Biden, an event meant to resurrect U.S. leadership in the fight against global warming.
Oil edges higher as recovery support countered by Asia virus surge – Oil settled higher on Friday, supported by bullish economic data from U.S. and Europe, though a rise in coronavirus cases in India was still pressuring prices. Brent crude settled up 77 cents, 1.1%, to $66.11 a barrel. U.S. West Texas Intermediate (WTI) U.S. crude gained 71 cents, or 1.2%, to $62.14 a barrel. Changing customer demands guide Volvo toward an electrified future For the week, both benchmark crudes fell about 1% due to the resurgence of infections in India and Japan, the world’s third and fourth largest oil importers. “This price consolidation follows a strong four-month price advance that was largely predicated on U.S. vaccine progress that forced some upward revisions in global demand ideas across this year,” Euro zone Purchasing Managers’ Index (PMI) data for April showed a stronger-than-expected recovery and more European states began easing coronavirus lockdowns. France said schools would reopen on Monday. U.S. data added to the upbeat outlook; the number of Americans filing new claims for unemployment benefits fell to a 13-month low last week. “The PMIs across Europe were really off the charts, especially following the strong unemployment report in the U.S.,” U.S. energy firms cut the number of oil rigs operating for the first time since March, as rigs fell by one to 438 this week, according to energy services firm Baker Hughes Co. Before this week, drillers added rigs for five weeks in a row and has been up 80% since falling to a record low of 244 in August 2020. Oil demand concerns weighed as India’s coronavirus cases surged to record highs. Several countries, including Australia, Britain, Canada, and the United Arab Emirates have barred or cut flights from India.
Oil Futures Down for the Week – — Oil fell this week with spreading coronavirus cases in countries such as India tempering optimism around positive signs out of the U.S. and Europe. Futures in New York rose the most in over a week on Friday, but were unable to reverse a 1.6% weekly loss as the market weighed a global economic reopening that’s coming in fits and starts. The U.S. has remained near the forefront of the world’s budding demand recovery from the pandemic, and the latest manufacturing figures out of Europe have stoked optimism around a recovery there. However, India has been setting record numbers of daily coronavirus cases, threatening demand in the world’s third-largest oil importer. The country’s diesel and gasoline consumption could fall by a fifth this month, and traders said the nation’s largest refiner had refrained from buying West African oil this week, defying expectations. Oil is up almost 30% this year, but prices have struggled to reach new heights recently with the coronavirus situation deteriorating in some key oil consuming countries. India’s combined consumption of diesel and gasoline is poised to plunge by as much as 20% in April from a month earlier due to renewed restrictions, according to officials from refiners and fuel retailers. Meanwhile, Japan is facing an increase in cases and a state of emergency will be declared from Sunday to May 11 in cities including Tokyo. “In the short-term, the market is facing an uneven recovery in demand,” “With concerns around India and Japan, which are two of the top five consumers of petroleum products, the market is trying to gauge where we’re going on demand.” WTI for June delivery rose 71 cents to settle at $62.14 a barrel. Brent for the same month gained 71 cents to settle at $66.11 a barrel. The contract fell nearly 1% over the week. While India has so far avoided re-entering a nationwide lockdown, the demand impact would be comparable to the one faced during last year’s initial wave were it to do so, Cornerstone Macro analysts Jan Stuart and Thomas Marchetti said in a note. Still, prices have averted further losses, aided by the rollout of Covid-19 vaccines and vigilant supply management from the Organization of Petroleum Exporting Countries and its allies. OPEC+ is set to start easing deep supply curbs from May, and the group is expected to hold a full ministerial meeting next week to assess the global state of play. Adding to daily gains on Friday was a string of robust economic data out of the U.S. New-home sales in the country rebounded in March to the highest since 2006, while a composite gauge of output at manufacturers and service providers reached a record high in April. The U.S. dollar weakened on Friday, boosting the appeal of commodities priced in the currency, while the S&P 500 Index climbed.
Chad’s French-backed President Idriss Deby dies fighting opposition militia – Chadian President Marshal Idriss Deby Itno died yesterday from wounds sustained Monday while fighting the rebel Force for Change and Concord in Chad (FACT) militia in northern Chad. His son Mahamat Idriss Deby, aged 37, seized power at the head of a military commission staffed with 15 hand-picked generals. Military spokesman General Azem Bermandoa Agouna issued a communique yesterday, declaring: “The president of the republic, the head of state and supreme commander of the armies, Idriss Deby Itno, just breathed his last breath while defending our territorial integrity on the battlefield. It is with deep sadness that we are announcing to the Chadian people the passing on this Tuesday, April 20, 2021 of the marshal of Chad.” It added that Deby, “like each time our republican institutions are gravely threatened, led operations in heroic struggles against the terrorist hordes come from Libya. Wounded in the struggle, he passed away once returned to N’Djamena,” the country’s capital. Deby, who ruled Chad with an iron fist for 30 years after seizing power in a French-backed coup in 1990, was a longstanding tool of French imperialism. Hosting French and US troops at strategic bases at N’Djamena in the heart of the Sahel, Chad’s geopolitical importance surged after the bloody 2011 NATO war in Libya, which toppled Colonel Muammar Gaddafi, in alliance with Islamist militias. Chad’s army has provided troops for French military operations in Nigeria and across the Sahel, including in Niger and Burkina Faso, amid the French war in Mali. Deby’s death comes amid a deepening crisis of French imperialist strategy in the Sahel, shortly after French President Emmanuel Macron rejected mounting calls in February for a withdrawal of French troops from Mali and the region. The Elysee presidential palace in Paris issued a statement endorsing the illegal seizure of power by Deby’s son and praising Deby as a “courageous friend” of France, who “worked ceaselessly for the security of his country and the stability of the region for three decades.” It stressed “the importance that the transition take place in peaceful conditions, in a spirit of dialog with all political actors and civil society, allowing for a rapid return to inclusive governance based on civilian institutions.” This effectively endorsed the moves of Mahamat Deby and the army chiefs, who extra-legally dissolved the National Assembly and announced an 18-month military dictatorship.
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