(Bloomberg) -- Oil headed for a back-to-back loss after posting the biggest weekly advance since March, with the pandemic sweeping key importer India and the global case count hitting a weekly record.West Texas Intermediate dropped 0.3, while Brent shed 0.3%. Last week, crude futures were boosted by a wave of positive economic data from the U.S. and China, another drawdown in crude stockpiles, and optimistic assessments about prospects for consumption over 2021 from both the Organization of Petroleum Exporting Countries and the International Energy Agency.Oil has risen almost 30% in 2021 in a stuttering advance as progress on vaccines to combat the coronavirus outbreak aids demand, but virus flare-ups in some countries act as a substantial drag. After OPEC and its allies presided over supply cuts to drain bloated stockpiles, the cartel now plans to start restoring barrels from May. Still, global Covid-19 cases hit a record last week, casting some doubt on the hope that the end of the pandemic is in sight.The global picture is mixed, complicating assessments of how energy demand will be affected over the northern hemisphere summer. Highlighting progress, half of Americans 18 years or older have now received at least one vaccine dose. At the same time, however, the outbreak is rampant in Brazil and India.“Prices are going through a temporary correction, since demand is proving to be unpredictable,” said Will Sungchil Yun, a senior commodities analyst at VI Investment Corp. in Seoul, noting that there were still concerns surrounding a global virus resurgence.India is battling a new variant that’s threatening oil demand, with fuel sales sagging in the first half of April. That contributed toward weaker prices in the final trading session of last week. The Asian nation’s latest case daily count is more than 270,000, heightening the odds of further curbs and lockdowns.Investors are also following high-level talks between Iran, the U.S. and other nations in Vienna aimed at ending the standoff over the nuclear deal abandoned by former President Donald Trump. Washington described negotiations as “constructive,” while the Islamic Republic signaled it was ready to debate the details of reviving the accord. An agreement may see U.S. sanctions on Iranian oil exports lifted, potentially boosting supplies.There will be further pointers on the outlook this week when the IEA unveils its Global Energy Review on Tuesday, which will lay out the pathway for worldwide demand over 2021. Also of note, oil-service giants Baker Hughes Co., Halliburton Co., and Schlumberger all release quarterly financial results.Brent’s prompt timespread was 47 cents a barrel in backwardation compared with 42 cents a week ago and 40 cents at the start of the month. That’s a bullish pattern, with near-term prices trading above those further out.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
TOKYO (Reuters) -Oil prices were lower on Monday as rising coronavirus infections in India and other countries prompted concerns that stronger measures to contain the pandemic will hit economic activity, along with demand for commodities such as crude. West Texas Intermediate (WTI) U.S. oil was down 10 cents, or 0.2%, at $63.03 a barrel, having gained 6.4% last week. "The progress of vaccination drives in the developed markets can be seen in road traffic levels, but resurging case numbers have reversed the recovery in the emerging countries," such as India and Brazil, ANZ Research said in a report on Monday.
The direction of the June WTI crude oil market on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at $63.47.
India may build new coal-fired power plants as they generate the cheapest power, according to a draft electricity policy document seen by Reuters, despite growing calls from environmentalists to deter use of coal. Coal's contribution to electricity generation in India fell for the second straight year in 2020, marking a departure from decades of growth in coal-fired power. Environmental activists have long rallied against India adding new coal-fired capacity.
(Bloomberg) -- Credit markets are starting to price in the transition to a low carbon economy.New research from Oxford University that analyzes changes in loan spreads -- a measure of credit risk -- found the cost of financing renewable energy projects shrunk dramatically over the past two decades, while the opposite was true for coal, the most carbon-intensive of the fossil fuels.When comparing average spreads from 2007 to 2010 with those from 2017 to 2020, the researchers recorded a 12% decline for onshore wind and 24% drop for offshore wind farms. By contrast, coal power stations saw a 38% increase in loan spreads and coal mines recorded a 54% jump.“Climate-related transition risks in the energy sector are sometimes viewed as distant, long-term risks,” said Ben Caldecott, co-author of the report and director of the Oxford Sustainable Finance Programme. “Our findings support the conclusion that they are being priced today.”To have any chance of reaching the goals of the Paris Agreement of limiting global warming to 1.5 degrees Celsius, all sectors of the economy will have to cut emissions and retool their operations for a net-zero world. Achieving that monumental feat will require about $2.4 trillion of investment in the energy sector every year and for lenders and debt underwriters to support the transition away from fossil fuels.And while the pivot to a low-carbon world is already having an impact on the cost of capital for energy companies, “the challenge is that this isn’t happening evenly and certainly isn’t occurring at the pace required to tackle climate change,” Caldecott said. One area where financing costs will need to rise, is for oil and gas projects, he said.While loan spreads for gas-fired power stations rose by 68% from 2000 to 2010, they rose by just 7% in the past decade, the Oxford data show. Meanwhile, financing costs for oil and gas production, were stable during the past decade, with loan spreads rising by only 3%. For offshore oil, spreads contracted by 41% in the period.The data suggest that oil and gas companies have evaded the same degree of financial punishment that’s occurred in the coal sector. That’s likely to change, according to Xiaoyan Zhou, lead author of the Oxford study.“If these observed trends continue and we see the cost of capital for oil and gas go the way of coal, this could have very significant implications for the economics of oil and gas projects around the world,” Zhou said. “This could result in stranded assets and introduce substantial re-financing risks.”The Oxford analysis is based on 12,072 loans between 2000 and 2020 from 5,033 borrowers across 118 countries in the energy and utilities sectors.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Iran’s potential reentry to oil markets after a successful JCPOA deal is not the threat to oil markets that many analysts are making it out to be
Technically, the main trend is up. If the upside momentum continues then look for the move to extend into the $2.802 – $2.868 retracement zone.
2020 has been a disastrous year for Colombia’s oil industry, but 2021 is unlikely to be much better as the country faces a quickly deteriorating security situation
The slumping petroleum industry is shifting work from securing drilling rights to lining up properties for wind turbines and solar panels. But the landman profession is shrinking.
This weekend's Barron's cover story discusses why an American entertainment colossus has a bright future. Other featured ...
Oil prices have risen significantly in Q1 of this year, but despite the improving environment, many oil and gas companies continue to face huge debt levels
(Bloomberg) -- 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.”READ: BP Cleans Image With Oil Asset Sales While Emissions Stay BehindThe 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.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The U.K. oil giant burns off more unwanted natural gas than its peers in the Permian Basin, but it is now investing heavily to phase out the controversial practice.
(Bloomberg) -- The unprecedented oil inventory glut that amassed during the coronavirus pandemic is almost gone, underpinning a price recovery that’s rescuing producers but vexing consumers.Barely a fifth of the surplus that flooded into the storage tanks of developed economies when oil demand crashed last year remained as of February, according to the International Energy Agency. Since then, the lingering remnants have been whittled away as supplies hoarded at sea plunge and a key depot in South Africa is depleted.The re-balancing comes as OPEC and its allies keep vast swathes of production off-line and a tentative economic recovery rekindles global fuel demand. It’s propping international crude prices near $67 a barrel, a boon for producers yet an increasing concern for motorists and governments wary of inflation.“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.”The process isn’t quite complete. A considerable overhang appears to remain off the coast of China’s Shandong province, though this may have accumulated to feed new refineries, according to consultants IHS Markit Ltd.Working off the remainder of the global excess may take some more time, as OPEC+ is reviving some halted supplies and new virus outbreaks in India and Brazil threaten demand.Still, the end of the glut at least appears to be in sight.Oil inventories in developed economies stood just 57 million barrels above their 2015-2019 average as of February, down from a peak of 249 million in July, the IEA estimates.It’s a stark turnaround from a year ago, when lockdowns crushed world fuel demand by 20% and trading giant Gunvor Group Ltd. fretted that storage space for oil would soon run out.Stockpile SlumpIn the U.S., the inventory pile-up has effectively cleared already.Total stockpiles of crude and products subsided in late February to 1.28 billion barrels -- a level seen before coronavirus erupted -- and continue to hover there, according to the Energy Information Administration. Last week, stockpiles in the East Coast fell to their lowest in at least 30 years.“We’re starting to see refinery runs pick up in the U.S., which will be good for potential crude stock draws,” said Mercedes McKay, a senior analyst at consultants FGE.There have also been declines inside the nation’s Strategic Petroleum Reserve, the warren of salt caverns used to store oil for emergency use. Traders and oil companies were allowed to temporarily park oversupply there by former President Trump, and in recent months have quietly removed about 21 million barrels from the location, according to people familiar with the matter.The oil surplus that gathered on the world’s seas is also diminishing. Ships were turned into makeshift floating depots when onshore facilities grew scarce last year, but the volumes have plunged, according to IHS Markit Ltd.They’ve tumbled about by 27% in the past two weeks to 50.7 million barrels, the lowest in a year, IHS analysts Yen Ling Song and Fotios Katsoulas estimate.A particularly vivid symbol is the draining of crude storage tanks at the logistically-critical Saldanha Bay hub on the west coast of South Africa. It’s a popular location for traders, allowing them the flexibility to quickly send cargoes to different geographical markets.Inventories at the terminal are set to fall to 24.5 million barrels, the lowest in a year, according to ship tracking data monitored by Bloomberg.For the 23-nation OPEC+ coalition led by Saudi Arabia and Russia, the decline is a vindication of the bold strategy they adopted a year ago. The alliance slashed output by 10 million barrels a day last April -- roughly 10% of global supplies -- and is now in the process of carefully restoring some of the halted barrels.The Organization of Petroleum Exporting Countries has consistently said its key objective is to normalize swollen inventories, though it’s unclear whether the cartel will open the taps once that’s achieved. In the past, the lure of high prices has prompted the group to keep production tight even after reaching its stockpile target.Mixed BlessingTo consuming nations the great de-stocking is less of a blessing. Drivers in California are already reckoning with paying almost $4 for a gallon of gasoline, data from the AAA auto club shows. India, a major importer, has complained about the financial pain of resurgent prices.For better or worse, the re-balancing should continue. As demand picks up further, global inventories will decline at a rate of 2.2 million barrels a day in the second half, propelling Brent crude to $74 a barrel or even higher, Citigroup predicts.“Gasoline sales are ripping in the U.S.,” said Morse. “Demand across all products will hit record levels in the third quarter, pushed up by demand for transport fuels and petrochemical feed-stocks.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The big up move for the week was fueled by positive oil demand growth outlooks by both the IEA and OPEC and a bigger-than-expected draw from the EIA.
It was an uneventful options expiration day on Friday, with the S&P 500 finishing up 35 bps and the QQQ finishing flat. Meanwhile, the VVIX was flat while the VIX fell, and the XBI was smashed again. The market is indeed making little sense.
After years of lackluster drilling results, it looks like China’s domestic shale gas industry is finally taking off as the country looks to diversify its gas supply
A group of U.S. electricity companies wrote to President Joe Biden this week saying it will work with his administration and Congress to design a broad set of policies to reach a near-term goal of slashing the sector's carbon emissions by 2030. Washington should implement policies, including a clean energy standard, or CES, to ensure the electricity industry cuts carbon emissions 80% below 2005 levels by 2030, the group of 13 power interests, including generators Exelon Corp, PSEG and Talen Energy Corp, said in a letter to Biden. The letter, a copy of which was seen by Reuters, did not mention Biden's goal to fully decarbonize the power sector by 2035 as part of his strategy to fight climate change.
There are several well-known large-cap stocks going ex-dividend next week.
The world’s largest oil company and biggest oil exporter, Saudi Aramco, has resumed tendering and development work on major offshore oil expansion projects that would give Saudi Arabia another 1.15 million barrels per day (bpd) of production capacity by 2024