Industry Trends ///
Oil closed lower Thursday, yet its underlying market structure firmed, as investors assessed the challenges to a global economic recovery.
With the U.S. unlikely to ever reach previous crude production levels, OPEC+ is moving to roll back part of their oil supply cuts in the coming months.
“A carbon tax would be bad for a lot of the industry, a carbon tax would be bad for the consumers and especially for those consumers who are more disadvantaged from an economic standpoint,” Occidental CEO Vicki Hollub said at a conference hosted by Texas Independent Producers & Royalty Owners Association.
The monthly Oilfield Services and Equipment Employment Report, compiled and published by the Energy Workforce & Technology Council, estimates a peak of 102,000 pandemic-related job losses. Since then, the industry has gained back more than 23,000 jobs.
North America’s biggest oil pipeline company, which for years has invested in wind and solar power projects, is also looking at gaining scale and becoming competitive in technologies such as hydrogen production using renewable electricity.
Imports jumped 5.8% in March from a year earlier, the biggest increase since March 2020. Demand for the fuel used in heating and power generation had been steadily growing before Covid-19, as nations shift away from coal-fired power over climate concerns.
One day after the U.S. energy secretary phoned Saudi Arabia on the "importance of affordable and reliable energy for consumers," Interior Secretary Deb Haaland called the domestic fossil fuel industry "fundamentally broken," suggesting that Biden's oil and gas leasing moratorium will be anything but temporary.
Optimism has also been buoyed by expectations that global crude supplies won’t grow fast enough to satisfy demand as Covid-19 vaccinations proliferate and economies that shut down for the better part of a year begin reopening.
Defying market expectations for the second time in less than a month, the group agreed to add more than 2 million barrels a day to global oil supplies from May to July. That will return about a quarter of the crude they are still withholding after making deep cuts a year ago in response to the pandemic.
Craig Fleming, World Oil
Despite a modest reduction in the DUC inventory, there are still 7,086 wells waiting on completion. With the industry in disarray, it has become increasingly likely that many of these horizontal boreholes may never be completed.
The $2.25 trillion, eight-year proposal is a follow-up to the $1.9 trillion economic relief bill passed earlier this month. To cover the costs, Biden wants to raise corporate taxes to 28% from 21%. The plan also seeks a minimum tax on profits U.S. corporations earn overseas, increasing the rate to 21% from roughly 13%.
The coalition led by Saudi Arabia was widely criticized three weeks ago when it rebuffed calls to revive some of the crude production halted during the pandemic. As OPEC prepares for another decision on oil output, the producers believe their defiantly cautious approach is paying off.
Beijing plans to invest in Iran while buying oil from the Islamic Republic, further straining its relationship with the U.S. which has already been frayed by China’s imports of covertly-shipped Iranian crude.
On March 29th, when Abu Dhabi begins selling futures contracts for its oil and then shipping the barrels from Fujairah, it will mark an aggressive shift by the emirate. It hopes to change the way nearly one-fifth of the world’s crude is priced.
The backlog of drilled but uncompleted shale wells called DUCs is rapidly shrinking as oil prices rise, signaling that producers are ready to put drilling crews back to work as the industry rebounds from its pandemic-driven downturn.
While the Suez blockage is complicating trade, a long-term realignment of global crude flows has seen westbound shipments from Persian Gulf producers fall, limiting the impact on oil prices.
Leslie Beyer, Energy Workforce & Technology Council; Kurt Abraham, World Oil
Serving as CEO of the Energy Workforce & Technology Council, formed from a merger of PESA and AESC, Leslie Beyer says the new association is strongly positioned to advocate for member companies on a host of workforce, regulatory and technological issues.
Girish K. Saligram, Weatherford; Kurt Abraham, World Oil
Having taken over the top spot at Weatherford last October, President and CEO Girish Saligram is positioning the firm for post-Covid-19 excellence. Editor-in-Chief Kurt Abraham spoke with Mr. Saligram about his priorities for the future.
The oil demand recovery in Europe, a region that accounts for about 15% of global consumption, looks set to take a fresh hit as the continent struggles to deal with another wave of coronavirus cases that could curb summer travel plans.
Chief executives of some of the largest U.S. oil companies promised to collaborate with the Biden administration in its campaign against climate change during a meeting Monday with White House National Climate Adviser Gina McCarthy.