New vaccines from both Johnson & Johnson and Novavax have added to bullish sentiment in oil markets as hopes of a return to normal grow.
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Friday, January 29th, 2021
Oil prices appear set to close out the week mostly flat, but on Friday prices are up from a day earlier. Hopeful news surrounding the two new vaccines – one from Johnson & Johnson and one from Novavax – raised hopes of more vaccine supply.
Chevron posted surprise loss on refining hit. Chevron (NYSE: CVX) reported a fourth-quarter loss of $665 million, which included poor results from its downstream unit and a $120 million charge related to its takeover of Noble Energy. For the full year, Chevron lost $5.5 billion. Related: Was Saudi Arabia's Surprise Production Cut A Good Idea?
Oil majors earnings preview. While Chevron reported first, the other oil majors will report earnings in the coming days. Helped by OPEC+ and Big Pharma, the world’s largest oil companies are beginning to remember what it felt like to have some ground under their feet. Here’s what we can reasonably expect.
Biden EV order faces questions. President Biden ordered the U.S. government to switchover its 645,000-vehicle fleet to EVs made with union labor and at least 50% American-made parts. But no such EV exists yet. Tesla (NASDAQ: TSLA) is not unionized and GM (NYSE: GM) uses three-quarters imported parts. The EV order may be possible to achieve over time, but will not happen overnight, experts say.
Exxon planning board overhaul. ExxonMobil (NYSE: XOM) is considering a shakeup of its board and increasing investments in sustainability, according to the Wall Street Journal. The changes could be announced next week. The pressure comes from activist shareholders.
GM announces 2035 EV goal. GM (NYSE: GM) made a major announcement on Thursday, saying that it would aim for zero-emissions cars and trucks by 2035 and that the company would be fully carbon neutral by 2040. The announcement will increase pressure on other global automakers to follow suit and it potentially marks a massive change in car and energy markets. Critics point out that the GM announcement sounds aspirational and lacks binding commitments.
Oil lobby seeks alliance with farm belt to fight EVs. Reuters reports that U.S. oil lobbyists are trying to team up with ethanol producers – typically their arch rivals – in order to fight off the Biden administration’s push towards EVs. The American Fuel and Petrochemical Manufacturers (AFPM), an oil refining trade group, has reached out to biofuels and corn groups, but have so far been rebuffed.
S&P puts oil majors on negative watch. S&P warned that it might cut the credit ratings of multiple oil majors, citing climate and “energy transition” risk. S&P Global Ratings believes the energy transition, price volatility, and weaker profitability are increasing risks for oil and gas producers,” it said in a statement on Tuesday. The warning included ExxonMobil (NYSE: XOM), Royal Dutch Shell (NYSE: RDS.A), Chevron (NYSE: CVX) and Total (NYSE: TOT).
Dakota Access loses court case, fate could be decided soon. A U.S. appeals court upheld a lower court decision to throw out a key federal permit this week, ordering an environmental review. The decision is a major blow to the pipeline and while the court allowed the pipeline to continue to operate, the decision also leaves the pipeline’s fate in the hands of the Army Corps of Engineers.
Iran’s oil exports rose. Iran’s oil exports rose to 710,000 bpd in December, from just 490,000 bpd in November. But the U.S. is also trying to seize an Iranian oil shipment, signaling that the U.S. policy has not significantly changed yet.
Equinor takes $982 million write-down. Equinor (NYSE: EQNR) took a $982 million impairment related to its Tanzania LNG project.
Permian flaring could be cut at no cost. A new report finds that 40% of flaring in the Permian basin could be eliminated at “no cost.”
Texas RRC skeptical of flaring permits. In a potential sign of a sea change underway at the Texas Railroad Commission, the commissioners delayed a decision on 121 flaring permits from BP (NYSE: BP) over concerns about the “waste of our precious resources.” Related: Why Saudi Arabia Wants To Sell More Of Its Oil Giant
IEA launches energy transition group. The International Energy Agency (IEA )launched a global commission to handle the impact on societies from the shift towards renewable energy. The global summit will try to address the fallout from the loss of fossil fuels.
Biden ends overseas fossil fuel funding. Another Biden executive order seeks to end the financing of fossil fuel projects abroad. Through the Export-Import Bank, and the Development Finance Corporation, the U.S. has funneled billions of dollars to oil and gas projects in other countries in the past five years. Such projects include LNG in Mozambique, the Vaca Muerta shale in Argentina and financial support for Pemex.
Shale promises capital discipline. As oil prices stabilize in the $50s, shale drillers are promising restraint, although many analysts question how sincere that mantra is. Rystad predicts an increase in drilling could see an extra 310,000 bpd return to the market by the end of the year. But Morgan Stanley says that of the companies they watch, on average they are pledging to reinvest no more than 80% of cash flow, suggesting an increased focus on returning cash to shareholders.
Tiny oil company gets 1000% Wall Street bets bump. An oil company producing the equivalent of 70 barrels of oil daily surged in value almost 1,000 percent to $128 million thanks to a surge in trading activity coming from retail traders.
Tesla reports first annual profit. Tesla (NASDAQ: TSLA) reported earnings of $721 million in 2020, the first full-year profit for the company. But fourth-quarter earnings disappointed and the stock fell 5%.
By Tom Kool for Oilprice.com
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