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Oil prices rose on Friday morning, fueled by good fuel consumption data in the United States, but held back by continued uncertainty over the OPEC + deal.
Friday, July 9, 2021
Seven straight weeks of stock depletion have not gone unnoticed, and according to the EIA, gasoline demand in the United States rose 870,000 bpd last week as the summer driving season warms up. U.S. gasoline consumption figures hit their highest level since 2019, and yesterday’s crude inventory report helped oil prices return to the dark.
Vienna remains silent in the midst of the OPEC + deadlock. While the OPEC + Joint Ministerial Monitoring Committee (JMMC) has yet to vote on a new official meeting, behind the scenes, senior Russian and US officials are said to be in talks to convince both camps of a reasonable increase in production. .
On the rise for limited oil prices without an OPEC + agreement. Despite strong demand fundamentals in the United States, markets continue to measure the impact of the discord within the OPEC + alliance. Reuters quoted Stephen Brennock of oil broker PVM: “Obviously the US oil markets are tight. However (…) the only way to avoid further losses is to contain the threat of an oil price war. ‘OPEC + “, he added.
Another all-out oil price war seems unlikely. As we mentioned in Tuesday’s newsletter, the risk of a new 2020-style price war is low. The OPEC + group as a whole is currently reaping the benefits of a much tighter oil market and no one has an interest in destroying the current pricing environment. According to Louise Dickson of Rystad Energy: “It is in the group’s best interest to give some leniency to the UAE and other sourcing hawks to produce a little more under the deal instead of trigger a free-for-all scheme and chaos. . ”
Chinese company CNOOC is seeking to exploit a large gas field in ultra-deep water. CNOOC’s recent success in the South China Sea is a milestone for the Asian giant. At the end of June, the company began producing gas from its ultra-deepwater prospect Lingshui 17-2, a field with proven reserves of around 100 billion cubic meters, with a few wells at a depth of more than 4000 meters under the seabed. According to CNOOC, full operational capacity will be reached from 2024 at 3 billion cubic meters per year, which is about 1% of China’s current gas demand.
France calls for a global carbon price floor. At a G20 meeting with his counterparts, French Finance Minister Bruno LeMaire said the world needed a carbon price floor in order to effectively tackle carbon emissions. LeMaire said that if countries cannot agree on a ‘single carbon price’, a ‘global floor could be a good place to start’. Related: Major Oil Drain In Iraq Creates Opportunity For China
The Japanese oil company Japex could withdraw from the Canadian Oil Sands project. Japex, backed by the Japanese state, is considering selling its 75% stake in the Hangingstone project, according to Reuters. The Japanese company said it would consider either selling its entire stake in the 20,000 bpd project or cutting production costs to improve the profitability of the project.
The boom in the US economy leads to a boom in coal production. National coal production in the United States is expected to increase 15% this year from 2020. According to the EIA, coal production is expected to reach 617 million short tons this year, some 78 short tons higher than the last year, due to higher electricity demand. and rising natural gas prices. The production boom, however, is expected to be short-lived, as the agency expects production volumes to decline slightly in 2022.
Almost half of oil and gas emissions could be reduced at no cost. Analysis from the IEA Methane Tracker shows that up to 40% of current methane emissions could be avoided at no net cost. So what is the magic? The IEA suggests that governments and producers focus on reducing methane emissions by replacing pumps, valves and compressors. CBSNews quotes IEA’s Christophe McGlade: “Natural gas is basically just methane, and in many cases, if you can avoid this methane leak, you can sell that gas for a profit,”
Japan remains committed to oil and gas. In an interview with S&P Global, Japan’s Ministry of Economy, Trade and Industry (METI) confirms that it will continue to pursue oil and gas development. Commenting on the IEA 2050 net-zero roadmap, METI’s director of oil and natural gas, Takeshi Soda, said: “It remains extremely uncertain whether the IEA’s 2050 net-zero will be realized”.
India’s new petroleum minister will focus on boosting oil and gas production. Hardeep Singh Puri, India’s new petroleum minister, is seeking to reduce India’s growing energy import bill by increasing domestic production of hydrocarbons. Puri sees a big role for natural gas as India seeks to transform into a $ 5,000 billion economy. Asia’s fast-growing economy is grappling with rising crude prices and declining oil production from its aging domestic oil fields.
EIA: US refining capacity at six-year low. As a result of refinery closures in 2020, total US refining capacity fell to 18.1 million barrels per day in early 2021. The EIA’s Refining Capacity Report indicates that at the start of the year, 129 sites were active or inactive compared to 135 at the start of last year.
Texas Oilfield Services is struggling to find employees. After laying off more than 100,000 employees in 2020, the oil industry is hiring again, and Texas oil service companies are now reporting struggling to find new hands. In order to recruit drivers, derrickmen, ground workers and supervisors, companies are now even offering start-up bonuses of up to $ 20,000.
By Tom Kool for Oil Octobers
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