Energy Week

BP Says the Era of Oil-Demand Growth Is Over
https://finance.yahoo.com/news/bp-says-era-oil-demand-230100653.html
- how is it possible to really believe that oil demand peaked in 2019?
- per capital usage in China, INdia, Pakistan, Africa still so much room for growth
- amount of GDP growth would have to slow at a staggering rate in order for oil demand to have already peaked

Citi, Vitol see oil demand recovery into 2021
https://www.argusmedia.com/en/news/2140866-citi-vitol-see-oil-demand-recovery-into-2021

Oil prices suffer a second weekly fall on demand worries
https://www.marketwatch.com/story/oil-prices-head-for-second-weekly-fall-on-demand-worries-2020-09-11
- Will OPEC made a change? Will they try to shift to a rapid response group?

OPEC Turns 60! Here’s a look at some key moments over the past 60 years.
https://www.forbes.com/sites/ellenrwald/#3a16e053ebaf

Monthly Statistical Report - API
- Demand AND supply increased in August
- 2.5 million bpd of motor gasoline demand above where we were in April But still well below year over year and 5 year average
- Rig count bottomed out but production up. Result of shut in coming online and significant productivity gains
- Petroleum exports: role of China? On again off again. Geopolitical element combined with a business as usual element.
- Crude oil inventories: They’ve been heading down since June but are still above the 5 year average. What’s ahead in terms of seasonality? What about gasoline production?
- 3 million barrel per day increase shows underlying need for liquid fuels is still there.

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Oil steady, Brent slips from 5-mth high amid demand uncertainty
https://www.reuters.com/article/us-global-oil/oil-prices-edge-up-on-stimulus-support-despite-ample-supplies-idUSKBN25R042

Oil prices edge up on stimulus support despite ample supplies
https://www.cnbc.com/2020/08/31/oil-markets-brent-crude-futures-coronavirus.html

- oil prices are waiting for a reason to move higher, demand-wise

About 61 Million Americans Have Stopped Commuting Due to COVID-19
https://www.valuepenguin.com/commutes-plummet-after-coronavirus

- 3/10 people who commute by car said they no longer have to commute either because they lost their job or because they are working from home
- the number of drivers who get gas weekly dropped by 26% in August

U.S. oil and gas auction draws tepid bidding from weakened drillers
https://www.reuters.com/article/us-usa-energy-new-mexico-idUSKBN25N332
- Not just low oil prices but could also be because producers are concerned that a Biden administration might cancel drilling on Federal land
- Was this tier 1 acreage or not so valuable acreage?

Exclusive: Indian state refiners halt oil imports from Chinese companies - sources
https://in.reuters.com/article/india-china-oil-exclusive-idINKBN25N1DL
- potential for China to leverage its consumption power over India. Would it force its suppliers to choose between the two? Saudi Arabia likely to go with China but who would supply India?

Big Oil Is in Trouble. Its Plan: Flood Africa With Plastic.
https://www.nytimes.com/2020/08/30/climate/oil-kenya-africa-plastics-trade.html
- What are the problems? Apparently there is no market for plastic but there is one in Africa?
- Is there still a market for plastic? Plastics makers are lobbying for the US to pressure Kenya to change its import policies for plastics during trade organizations

Mini-Reactors Are Gaining Traction in the Push for Greener Grids
https://www.bloomberg.com/news/articles/2020-08-31/mini-reactors-could-mark-nuclear-power-s-return-in-the-push-for-greener-grids
- SMRs could be very powerful tools in emerging markets or in new industrial spaces or even for server farms

OPEC Countries Further Diversify Exports
https://www.statista.com/chart/18310/petroleum-and-other-export-from-opec-countries/
- countries that used to just pump crude and sell it are now making more money from other exports - raw materials and refined products

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Register for Shale oil Roundtable: https://shor.by/warroomwebinar

Shale oil production's brief comeback
https://www.argusmedia.com/en/news/2133001-shale-oil-productions-brief-comeback
- Can it really be called a “comeback”
- Is this a comeback or a dead cat bounce?
- DUC data from EIA - DUCs are up and to the right
- 800,000 bpd returning August-September
- ExxonMobil is idling but ready to increase activities again
- Permian has 3500 DUC wells which can be brought online fairly quickly

U.S. Recession Likely to End Late 2020 or 2021, NABE Survey Says
https://finance.yahoo.com/news/u-recession-likely-end-2020-040100770.html
- Have we even gotten to the real recession?
- Trickle up recession

Russia should rethink its role in new energy economy
https://www.thenational.ae/business/comment/russia-should-rethink-its-role-in-new-energy-economy-1.1067415
- Russia is too focused on natural gas and doesn’t have enough renewables
- Too focused on natural gas exports and ant gas prices very low

Can Biden Fix Climate Change With $1.3 Trillion?
https://www.forbes.com/sites/ellenrwald/2020/08/21/can-biden-fix-climate-change-with-13-trillion/#1bc72e415ea1
- If the economy rebounds, there is no reason not to print $1.3 trillion for whatever they want
- tax the wealthy and get a healthier environment but where is the policy? How will we get there? What’s the role of SMRs? Renewable energy?

Methane Ruling article
https://financialpost.com/pmn/business-pmn/trumps-methane-emissions-rule-rollback-isnt-a-disaster

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Interior Secretary Approves Oil Drilling in Alaska’s Arctic Refuge
https://www.wsj.com/articles/interior-secretary-to-approve-oil-drilling-in-alaska-s-arctic-refuge-11597667400
- Does anyone want to drill in ANWR anyway?
- Is there financial backing for this?
- However, its not a bad idea to have a forward-oriented energy policy that doesn’t assume that current low price conditions will persist years down the line.

Saudi Wealth Fund Moves Billions From Blue Chips to ETFs
https://www.wsj.com/articles/saudi-wealth-fund-moves-billions-from-blue-chips-to-etfs-11597513874
- PIF sold positions in Citi, many oil companies, Facebook, Marriott, etc. and moving to ETFs

How a Texas shale supplier's founders made fortunes as the firm failed
https://www.reuters.com/article/us-usa-oil-hicrush-deals-insight-idUSKCN2591JE
- This is why new companies will continue to be founded and go bankrupt.

Russia's Novak expects no hasty OPEC+ decisions this month: reports
https://www.reuters.com/article/us-global-oil-russia/russias-energy-minister-sees-no-hasty-opec-decisions-this-month-reports-idUSKCN2590U2
- Russia happy to continue pressuring OPEC cheaters into compliance while also increasing its own production as Urals blend is in strong demand in Russia.

API Monthly Statistical Report - July
- Demand is growing, though still 12% below where it should be
- Production is down to 10.3 million bpd
- With supply continuing to rationalize with a lag, that says higher demand, lower supply.
- US has reverted to being a net petroleum importer for the third consecutive month.
- Structural - we are seeing supply looking structurally lower. Drilling permits are lower. Enduring impact for industry.
- Potential turning point for economy even though its deeply negative. Slowing of industrial production for some time, but its starting to turn and means potential upward indicator.
- Gasoline: increased in 4.5% in July, month on month. Change from June to July generally barely positive. This is more than just seasonality, its actual recovery.
Higher refinery throughput.
- Coronavirus accelerated trend that was already in place. 131/132 refineries operating in US. Number going down but capacity is expanding at the remaining refineries - not just domestic demand but also refining products for export.
- Smaller refineries, especially in Texas and Louisiana had advantages of being so close to very low cost feedstock but those advantages disappeared for awhile when the differential between WTI and Brent disappeared. Now, its back, but not as much as before. Lower difference stymied their strategy.
- Refinery maintenance: if you can delay refinery turnaround you will in order to make as much money as you can.
- Rig Count vs. production. Rig count doesn’t necessarily indicate lower production.
- Jet fuel: up A LOT since June, but still way down from last year. Structural changes.
- How can refineries de convert jet fuel to something that can be used? It can be converted to low sulfur marine fuel.
- Trade is down but expectation is that trade will increase. China’s industry is nearly back to pre-pandemic levels. Marine shipping industry is there.
- Light vs. heavy crude: Saudi Arabian exports to US practically evaporated (less than 200,000 bpd) and Mexican and Canadian heavy crude oil exports to US are down. Incentive for heavy crude is still there even American light oil heavily incentivized in the current atmosphere.
- $15 of global stimulus. Everyone is expecting big bounce in the economy next year regardless of politics. From an oil market perspective, as economy improves, oil demand will increase. Good sign that economy is recovering.
- Catch Dr. Foreman speaking on natural gas prorationing for Oklahoma. OK did institute not gas prorationing and Dr. Foreman will discuss data on impact of prorationing.

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Aramco Posts $6.6 Billion Profit Amidst Dismal Oil & Gas Earnings But Dividend Promise Weighs Heavy
https://www.forbes.com/sites/ellenrwald/2020/08/10/aramco-posts-66-billion-profit-amidst-dismal-oil--gas-earnings-but-dividend-promise-weighs-heavy/#beea33f35018
- Aramco turns a profit but has to pay such large dividend that its profit isn’t that great
- Large dividend and responsibilities to government and public shareholders are eating into the company’s ability to invest in capital expenditures
- Aramco is banking on demand in Asia remaining strong and it sells 70-75% of its oil to Asia

US upstream oil companies downplay Biden risk
https://www.argusmedia.com/en/news/2130976-us-upstream-oil-companies-downplay-biden-risk
- Big oil companies saying they’re ok with a Biden presidency that would limit or prohibit drilling on federal lands because they can substitute with non-federal lands.
- Is that really posturing?

Economic meltdown threatens Europe's war on plastic
https://www.reuters.com/article/us-health-coronavirus-europe-plastic-idUSKCN2531AO
- recycled plastic is too expensive when oil is still so cheap

U.S. court allows Dakota Access oil pipeline to stay open, but permit status unclear
https://www.reuters.com/article/us-usa-pipeline-dakota-access-idUSKCN2512X8

OPEC+ oil cut compliance dips in July, ahead of quota easing: Platts survey
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/081020-opec-oil-cut-compliance-dips-in-july-ahead-of-quota-easing-platts-survey
- OPEC+ producers produced more oil in July even though they weren’t supposed to until August
- Uptick in 1.1 million bpd in July from OPEC+ group

Pandemic shrinks US refining capacity
https://www.argusmedia.com/en/news/2130959-pandemic-shrinks-us-refining-capacity
- 500,000 bpd of US refining capacity has been idled due to cost concerns

Aramco Still Aims for $15 Billion Deal With India’s Reliance
https://www.bloomberg.com/amp/news/articles/2020-08-09/aramco-still-aims-for-15-billion-investment-in-india-s-reliance

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China’s Emerging Middle Eastern Kingdom
https://www.tabletmag.com/sections/israel-middle-east/articles/china-middle-eastern-kingdom 
- can paint both narratives about China: either that its going to take over the world or that its about to fall apart
- When it comes to oil and gas, China gets over half of its imports from the Middle East or through the Suez Canal — but does it? Russia, Central Asia, US and Canada, South America are significant oil suppliers
- China’s power extension actually erodes its power long term because local people will rebel against doing business with China because they don’t want their people detained?
- Saudi Arabia doesn’t mind when Iran sends China oil because Saudi Arabia’s relationship with China is much deeper and has been going on for much longer.

 Drillers Go Remote as Pandemic Reshapes Oil Business
 https://www.wsj.com/articles/drillers-go-remote-as-pandemic-reshapes-oil-business-11596369600
- where are they still drilling?

Oil rises 2% on positive economic data
https://uk.reuters.com/article/uk-global-oil/oil-falls-on-fears-of-glut-as-opec-set-to-boost-output-idUKKBN24Z00R
- Despite the fact that OPEC is increasing production and coronavirus is still a significant problem, oil prices rose on positive economic data
- But, can this last?

Marathon Petroleum to permanently close two U.S. oil refineries
https://www.reuters.com/article/us-refineries-operations-marathon-ptrlum/marathon-petroleum-to-permanently-close-two-us-oil-refineries-idUSKBN24X3XU
- sold their gas station to 7Eleven
- Closing down Two refineries in California and New Mexico due to low fuel demand might convert California facility to a renewable diesel refinery using used cooking oil.

Jet fuel demand outlook sours after fleeting market optimism
https://www.reuters.com/article/us-oil-global-jet-fuel/jet-fuel-demand-outlook-sours-after-fleeting-market-optimism-idUSKBN24Y060
- last year we were talking about Weak distillate demand and the potential for a recession, but jet fuel demand was so strong it was as powerful argument that a recession wasn’t on the horizon.
- Now jet fuel demand is way down and given the news from airline companies and airplane manufacturers it doesn’t look good for a pick up in air travel.

https://thehill.com/opinion/energy-environment/509267-esg-may-be-popular-but-it-could-hurt-your-retirement-portfolio

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Oil Trades Near $42 Amid U.S.-China Tension and Weaker Dollar
https://www.bloomberg.com/news/articles/2020-07-26/oil-stable-as-signs-of-easing-virus-offset-u-s-china-tensions
- largest contango structure in Brent since May
- commodities boosted by weak dollar

Iraq increases oil exports in July, still pumps above OPEC+ target
https://uk.reuters.com/article/oil-iraq/update-1-iraq-increases-oil-exports-in-july-still-pumps-above-opec-target-idUKL5N2ES500
- Iraq overshoots its target for OPEC and pumps more
- Exports from Iraq averaged 2.70 million bpd so far in July

Putin Considers Mexico-Style Oil Hedge as Insurance Against Slumps
https://www.bloomberg.com/news/articles/2020-07-22/putin-mulls-mexico-style-oil-hedge-as-insurance-against-slumps
- Putin considering hedging Russia’s oil to prevent against losses
- Only country that hedges to such an extent is Mexico
- How much of Russia’s production would they actually hedge?

China imports more oil from Saudi than any other country in June
https://www.reuters.com/article/us-china-economy-trade-oil/china-imports-more-oil-from-saudi-than-any-other-country-in-june-idUSKCN24R07S
- China imported 2.16 million bpd from Saudi Arabia in June—more than it imported any other country

Russian Oil Grab in Libya Fuels U.S.-Kremlin Tensions inMideast
https://www.wsj.com/articles/russian-oil-grab-in-libya-fuels-u-s-kremlin-tensions-in-mideast-11595772000
- What are Russia’s real goals in Libya? Do they want to take over Libya’s oil resources? Make money?
- Libya is a place where Russia can do the dirty things they want/need to do to make money.
- Does Russia’s expansion into the Middle East may have more to do with the places next to Libya, Syria and Iran than those countries themselves.

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Chevron Agrees to $5 Billion Takeover of Noble Energy
https://www.wsj.com/articles/chevron-nears-5-billion-takeover-of-noble-energy-11595239202
- first major oil deal since shut downs
- will expand Chevron’s footprint in Colorado, Permian and Eastern Med and Africa

Israel approves pipeline deal to sell gas to Europe
https://www.reuters.com/article/us-israel-europe-natgas/israel-approves-pipeline-deal-to-sell-gas-to-europe-idUSKCN24K0FN
- pipeline should be complete by 2025 and will diversify Europe’s source of natural gas

OPEC Has New Competitor as China Ships Oil From Swelling Storage
https://www.bloomberg.com/amp/news/articles/2020-07-17/opec-has-new-competitor-as-china-ships-oil-from-swelling-storage
- China is shipping crude oil out of storage
- why? Slightly higher OSPs from Saudi Arabia
- shipped 500,000 barrels each of Oman crude to two South Korean importers

Oil pipeline explodes in west Iran - report
https://www.jpost.com/middle-east/iran-news/oil-pipeline-explodes-in-west-iran-report-635506

Iran explosion: Blast hits power plant in Isfahan province
https://www.independent.co.uk/news/world/middle-east/iran-power-plant-explosion-blast-isfahan-province-a9626796.html

Companies Set to Chronicle Troughs of the Pandemic as They Report Earnings
https://www.wsj.com/articles/companies-set-to-chronicle-troughs-of-the-pandemic-as-they-report-earnings-11595163601

Two Million Saudis Lose Cash Aid When They Can Least Afford It
https://www.bloomberg.com/news/articles/2020-07-15/two-million-saudis-lose-cash-aid-when-they-can-least-afford-it
- people willing to go on the record criticizing the government’s policies

Russia And Saudi Arabia Are Rooting For Biden. Here’s Why
https://www.forbes.com/sites/ellenrwald/2020/07/20/russia-and-saudi-arabia-are-rooting-for-biden-heres-why/#2d928e1aed61
- A Biden presidency is Russia and Saudi Arabia’s best bet for higher oil prices
- Biden could restrict permitting for new wells on federal land significantly and that would curb oil production significantly.

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OPEC Readies Next Move in Bid to Avoid Oil-Market Taper Tantrum
https://finance.yahoo.com/amphtml/news/opec-readies-next-move-bid-230100213.html

OPEC, Allies Set to Ease Oil Cuts, Anticipating Demand Recovery
https://www.wsj.com/articles/opec-allies-set-to-ease-oil-cuts-seeing-pandemic-recovery-11594510347?

- OPEC+ plans to increase production by 2 million bpd starting in August, but is this too much considering that other than China, oil demand isn’t normalizing.
- Yes, demand is up, but its nowhere near normal levels for this time of year in the US, India, etc.

Power Pioneer Invents New Battery That’s 90% Cheaper Than Lithium-Ion
https://www.bloomberg.com/amp/news/articles/2020-07-08/nissan-pioneer-touts-resin-battery-that-s-90-cheaper-to-make
- Is it REALLY a better battery? Seems like the improvement is in the manufacturing process and safety not in usage.

Fracking Firms Fail, Rewarding Executives and Raising Climate Fears
https://www.nytimes.com/2020/07/12/climate/oil-fracking-bankruptcy-methane-executive-pay.html
- executives often takes bonuses when their companies go bankrupt, not unique to oil companies.

Dr. Dean Foreman and API’s Monthly Statistical Report
- Demand is coming back rather substantially, 85% of the increase has been gasoline. Jet fuel and diesel is still weak
- refinery throughput increasing. Biggest jump coming into June for refinery capacity
- Production in June down to 11 million barrels per day, EIA expects that will go down another million Bpd by end of year.
- Inventories continue to build - new record of stored crude oil.
- Backslid on trade and US is now a net importing again in June
- Price stability in oil prices in June after incredible dislocation in supply and demand information in previous months. Why? Traders aren’t as interested in guessing what’s going to happen so aren’t trading. Volatility to come, perhaps?
- Gasoline demand, measures deliveries not consumption. Rural vs. urban is different. Demand data shows that increase in demand shows more commuting. Supplier delivery is what is being measured and this is inconsistent on a weekly basis.
- 2 million bpd increase in gasoline demand is largest increase in a month.
- With SARS air travel was back to where it was within 7 months. This is different.

A Hopeful House Climate Plan Has a Big Hole
https://www.bloomberg.com/opinion/articles/2020-07-07/pelosi-and-house-democrats-climate-plan-has-a-big-hole

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Americans Face 25% Jump in Power Bills, Adding to Summer Woe
https://www.bloomberg.com/news/articles/2020-07-01/americans-face-25-jump-in-power-bills-adding-to-summer-of-woe
- aggregate power consumption might be lower because offices and businesses are lower but it will be higher for residential because people are staying home and consuming more power

Warren Buffett’s Berkshire buys Dominion Energy natural gas assets in $10 billion deal
https://www.cnbc.com/2020/07/05/warren-buffetts-berkshire-buys-dominion-energy-natural-gas-assets-in-10-billion-deal.html
- Does this mean that Buffet doesn’t think were about to hit peak energy demand?
- He didn’t get burned enough on energy from the Occidental deal to walk away from energy sector.

Dakota Access Oil Line to Be Shut by Court in Blow for Trump
https://news.bloomberglaw.com/environment-and-energy/court-scraps-dakota-access-pipeline-permit-forcing-shutdown
- could bankrupt Energy Transfer?
- Depending on right of way agreements Energy Transfer could lose these agreements if pipeline is offline for certain amount of time, which is much shorter than you’d think.

Companies Cancel Atlantic Coast Pipeline After Years of Delays
https://www.wsj.com/articles/companies-cancel-atlantic-coast-pipeline-after-years-of-delays-11593975601
- Duke and Dominion cancel plans for Atlantic Coast Pipeline over regulatory uncertainty
- $8 billion, 600 mile pipeline would carry natural gas through West Virginia, Virginia and North Carolina

Climate change 'fuelling deadly India lightning strikes'
 https://www.france24.com/en/20200705-climate-change-fuelling-deadly-india-lightning-strikes

Iran admits incident at Natanz nuclear site caused major damage
https://www.theguardian.com/world/2020/jul/05/satellite-image-raises-suspicions-of-attack-at-iran-nuclear-site
- Explosion at Iran nuclear facility causes setback to Iran’s nuclear program

China Is Unlikely to Meet Purchase Targets for U.S. Energy
https://www.wsj.com/articles/china-is-unlikely-to-meet-purchase-targets-for-u-s-energy-11593964801
- China not hitting its dollar number for purchases of US energy products under trade deal
- But oil prices are WAY DOWN and also demand for oil is down due to Covid

https://www.nytimes.com/2020/07/06/business/energy-environment/renewable-energy-natural-gas.html

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com