Industry Trends ///
Discussions have focused on a gradual relaxation of output cuts over several months, and according to one delegate there could be a one-month delay before the tapering starts.
Petrobras CEO Roberto Castello Branco's stance more or less echoes those of U.S. oil giants Exxon Mobil and Chevron, which have emission reduction plans but have been outspoken about their focus on crude.
This year’s writedowns exceed even the downturn of 2014-2016 not only because of the severity of the oil-price collapse but also due to the fact that it was driven by falling demand for petroleum.
The 23-nation coalition is debating whether to maintain the output cuts at current levels, deferring the increase scheduled for January. Some members are concerned that global markets remain too fragile to absorb additional barrels -- particularly after Libya’s output soared -- while others are keen to sell more crude.
The proposed tie-up of S&P with IHS Markit, a research firm with more than 5,000 analysts, data scientists, financial experts and industry specialists, is part of a race for scale as the industry’s largest players try to capitalize on surging demand for data and analytics in increasingly computerized financial markets.
“In the future, certainly we believe OPEC will be the swing producer — really, totally in control of oil prices,” Bill Thomas, CEO of EOG Resources, the biggest independent shale producer by market value, said earlier this month. “We don’t want to put OPEC in a situation where they feel threatened, like we’re taking market share while they’re propping up oil prices.”
The nation’s success in warding off a major outbreak during the Golden Week holiday in early October may boost optimism for locals preparing to travel back home during the Lunar New Year break.
Officials in Abu Dhabi privately floated the idea last week that the nation could leave OPEC, a highly unusual step that could destabilize oil markets. Energy Minister Suhail Al-Mazrouei later said the UAE “has always been a committed member,” though he didn’t address the country’s future in the cartel.
The rise of China’s refining industry, combined with several large new plants in India and the Middle East, is reverberating through the global energy system.
Gas futures tumbled Thursday as U.S. forecasts shifted warmer through early December, leaving bullish traders flat-footed after the previous day’s modest gain stoked speculation that the recent rout had run out of steam.
Though a repeat of the negative oil prices seen in April is unlikely, the mounting supply glut brings home how new lockdowns may soon force traders to store oil in every nook and cranny available, including ships and pipelines. Some are already doing that.
In Alaska, Michigan and Norway, partisans on the left and right are sparring in the courts to implement their vision for the future of energy. Operations from small shale plays to multi-billion-dollar offshore installations suddenly hang in the balance as the regulatory outlook becomes increasingly cloudy.
Saudi Arabia and Russia, leaders of the 23-nation coalition, have already indicated publicly that they are thinking twice about easing production cuts in January as the resurgent pandemic hits fuel demand. The presidents of both Russia and the OPEC countries have even mentioned the option of cutting production deeper.
While crude prices rallied to a 10-week high above $45 in London this week on news of Pfizer Inc.’s progress, fuel use won’t experience any “significant” boost from vaccines until the second half of next year, the agency said.
“This is a sigh of relief to some extent by the market,” said Karim Fawaz, who leads the energy advisory service at consultant IHS Markit. “The short-term is still quite challenged, demand is looking quite weak. The second half of 2021 is when we expect to see that demand recovery start to take hold.”
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While headline crude prices notched up percentage gains into the double digits on Monday, there was a broader- based surge in everything from jet fuel premiums, down to more arcane measures that traders use to gauge the health of the oil market.
The monthly Oilfield Services and Equipment Employment Report, compiled and published by PESA, estimates job losses due to pandemic-related demand destruction now total 92,302. OFS employment is down 101,087 jobs since October 2019.
The pipeline giant also established an interim target of reducing the intensity of greenhouse-gas emissions from its operations by 35% by 2030, according to environmental, social and corporate governance targets.
While utilities that already embrace clean energy don’t see much impact, oil and natural gas suppliers are girding for a bigger threat.