Oil Prices Bounce Back On Bullish News
While climbing Omicron cases have sparked fear of demand destruction, supply issues in Libya and falling U.S. oil inventories pushed prices higher.
- India needs to add 40 GW per year of renewable capacity to reach the 2030 objective it agreed to at the COP26 summit in Glasgow, but the country seems increasingly unlikelyto do so.
- Renewables currently account for only 11% of India’s aggregate generation capacity, with coal - the country’s main source of energy - still having ample spare capacity.
- With thermal coal prices sliding down below the $100/mt threshold recently and coal plants still using only 55% of their nameplate capacity, the widely anticipated GDP surge over 2022-2023 will trigger further increases in coal utilization.
- With feedstock prices for both wind turbines and solar panels increasing over 2021, it is unlikely that India will be able to add more than its usual 10GW per year in the upcoming years.
Market Movers
- UK-based oil major BP (NYSE:BP) will buy out the remaining stake in its US pipeline venture BP Midstream Partners (NYSE:BPMP) for a total price of $723 million, a structure simplification triggered by authorities no longer providing income tax allowances to master limited partnerships.
- Energy firm Shell (NYSE:RDS.A) signed up to develop Oman’s onshore Block 10 with an operator’s stake of 53%, aiming to produce 500 MCf per day of gas from the Saih Rawl field by 2023.
- Privately owned Presidio Petroleum is reportedly in advanced talks to buy some 5,000 shale gas wells from US oil major ExxonMobil (NYSE:XOM) in the Fayetteville Shale patch in Arkansas, initially assessed around $500 million.
Tuesday, December 21, 2021
The rapidly multiplying count of Omicron cases around the world has sparked fears in the oil market of another period of weak demand, with the new strain already becoming the dominant COVID variant in the United States. Despite early indications of Omicron being less lethal, the market will still have to wait out this period of bearish news before it can regain its bullish sentiment. Acting as temporary support for oil prices, skirmishes in Libya that led to a force majeure on oil exports have provided some upward pressure on prices, as did news of US crude oil inventories apparently falling for the fourth week in a row. These bullish factors helped push oil prices higher on Tuesday morning.
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Chevron Farms Out Suriname Stake to Shell. US oil major Chevron (NYSE:CVX) sold one-third of its 60% equity interest in the Block 5 offshore license in Suriname, just two months after it landed the 30-year production sharing contract at the country’s most recent shallow offshore bid round.
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Toyota Plans Hindered by Supply Chain Disruptions. Japanese carmaker Toyota Motor Corp (TYO:7203) stated it would suspend production at five of its factories in January 2022 due to chip shortages and other supply chain disruptions, having already slowed down US output.
Qatar Sponsors UK Small Nuclear Plant Drive. The Qatar Investment Authority invested $110 million into Rolls Royce’s project to develop small nuclear power plants that could be operating by the early 2030s, allowing the nascent business unit to raise the required capital.
US Fishing Industry Teams Up with Big Oil. United in their drive against offshore wind installations, the US’ fishing and oil industries have teamed up to derail the 800MW Vineyard Wind power plant in offshore Massachusetts, the first large-scale plant in the Americas, arguing the wind farm would interfere with vessel navigation and hurt fishing stocks.
Rosneft Vows to Go Net-Zero by 2050. Russian state-owned oil company Rosneft (MCX:ROSN) approved a new 2030 strategy that sets a net-zero target by 2050 (Scope 1 and 2 emissions), the first time a Russian major has given itself a stringent carbon-cutting deadline.