The IEA made headlines today when it suggested that there should be no new oil and gas investments after 2021… If that were to happen – with a supply crunch already looming – the oil traders at OPC Markets would have a great time.
Chart of the Week
– U.S. residential energy consumption declined by 4% in 2020, despite people spending more time at home during the pandemic.
– Relatively warmer weather reduced heating needs during winter months, offsetting the 2 percent increase in electricity sales.
– Space-heating and water-heating are usually the most energy-intensive uses in the average U.S. home.
Market Movers
– BP (NYSE: BP) is in advanced talks to sell its 28% stake in a North Sea oil field.
– Natural gas stocks rose in concert with prices following new weather forecasts showing hotter-than-average temperatures later this month. Nymex natural gas was up more than 5% on Monday. Coal stocks also rose on the news.
– Gran Tierra Energy (TSX: GTE) announced that it was shutting some of its oil wells in Colombia due to unrest.
Tuesday, May 18, 2021
Oil prices took a breather Tuesday morning, but Brent is once again testing $70 per barrel, with expectations of improved demand on the heels of widespread vaccinations in the U.S.
IEA: No new fossil fuel exploration. The IEA is out with a landmark report on a pathway to net-zero emissions by 2050. Among the many important points in the 200-plus-page report is the call to end fossil fuel exploration. “[N]o exploration for new resources is required,” the agency said. It also listed a series of restrictive policies that are necessary, including phasing out sales of the internal combustion engine and bans on new natural gas hookups in buildings. The conclusion is a dramatic shift in tone.
Supply crisis coming? The steep cuts to capex and the increasingly stringent climate policy have forced the oil majors to lower their growth plans. Some analysts warn that this could set the market up for a supply crunch in the coming years.
India demand takes 500,000-bpd hit in May. India’s oil demand could be off by as much as 500,000 bpd for the month of May, according to Reuters. The negative effects from the Covid-19 spike are expected to extend into June.
Gas industry faces an existential threat from renewables. The Wall Street Journal details the gas industry’s looming decline from renewables. “I’m hellbent on not becoming the next Blockbuster Video,” said Vistra (NYSE: VST) Chief Executive Curt Morgan. “I’m not going to sit back and watch this legacy business dwindle and not participate.” Vistra owns 36 gas-fired power plants but said it will not build anymore, instead it will invest $1 billion in solar and batteries.
Central banks step up climate scrutiny. A coalition of 90 central banks from around the world – the Central Banks and Supervisors Network for Greening the Financial System – is scheduled to meet next month at a major conference to address risks from climate change.
Gasoline shortages ease. Over 1,000 retail gasoline stations were resupplied over the weekend, easing the shortages from the Colonial Pipeline outage.
Iran planning oil export boost. Iran is preparing to boost production and exports of crude oil as talks on the nuclear deal with the United States continue to progress, government officials said.
