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Oil Rallies On OPEC+ Agreement

Oil prices rallied on Friday morning as OPEC+ finally came to a compromise, with the group unanimously agreeing to add 500,000bpd to January quotas.

For Global Energy Alert members there are now two new free reports available in your dashboard. The first of these reports is on how to interpret stock charts and the second outlines the three biggest mistakes made by traders today. Make sure you become a member to read these reports and many more.

Friday, December 4th, 2020

Oil prices rose after OPEC+ agreed to partial increases in production beginning in January, preventing a breakdown in the agreement. Brent inched close to $50 per barrel in a sign of confidence in the deal.

OPEC+ agrees to monthly increases. Discord characterized the OPEC+ meeting this week, and concerns grew that the group would fail to agree to postponing the planned production increases. But in the end, instead of allowing cuts to ease by 2 mb/d, the group agreed to monthly incremental production increases of just 0.5 mb/d. They also agreed to meet monthly going forward in early 2021 to assess the health of the market. The deal was not as bullish as market analysts had expected, but neither was it a failure. The reaction in oil prices suggests OPEC+ did enough to maintain market stability. 

Aramco sees higher oil prices. Oil prices are set to see a meaningful recovery in the second half of next year as the worst for producers, and the market is behind us, the CEO of Saudi Aramco (TADAWUL: 2222), said at an industry event this week.

Denmark to phase out oil and gas production by 2050. Denmark’s parliament voted to phase out North Sea oil and gas production by 2050. The plan includes canceling an offshore licensing round, which only had weak interest.  

Report: Appalachian frackers post more red ink. A report from IEEFA found that a group of nine top Appalachian-focused shale gas drillers lost a combined $504 million in the third quarter. That came even after several waves of spending cuts, which brought CAPEX down to a six-year low.

Automakers line up to work with Biden on emissions. The Alliance for Automotive Innovation, an industry group representing automakers, said that wants to work with the Biden administration on emissions, including on EVs. “The long-term future of the auto industry is electric,” John Bozzella, the head of the group, said this week. “We are investing hundreds of billions to develop the products that will drive this electric future, and we are committed to working collaboratively.” Related: A Major Oil Rally Could Be On The Horizon

ConocoPhillips lays off 500. ConocoPhillips (NYSE: COP) said on Tuesday that it would lay off up to 500 Houston employees, about a fifth of its headquarters workforce.

Imperial Oil’s $1.2 billion oil sands write down. Imperial Oil (TSE: IMO) expects to take a write-down of between $900 million and $1.2 billion in the fourth quarter and it is giving up on some of its assets. “Imperial has re-assessed the long-term development plans of its unconventional portfolio in Alberta, Canada, and no longer plans to develop a significant portion of this portfolio,” the company said.

India may resume imports from Iran and Venezuela. India’s oil minister suggests that his country will resume importing oil from Iran and Venezuela, eyeing the change of administration in Washington. 

Venezuela’s oil exports double. Venezuela’s oil exports nearly doubled in November as new buyers linked to a Russian trading firm stepped up purchases. A total of 24 cargoes left Venezuelan waters last month carrying some 639,000 barrels per day, up from 360,000 bpd in October, according to Reuters

BMO won’t finance U.S. shale. The Bank of Montreal will end its investment banking business in U.S. oil and gas and concentrate on Canada. 

Japan to phase out gasoline cars by mid-2030s. Japan announced a plan to phase out gasoline vehicles by the mid-2030s. They are aiming for “100% electrification” over 15 years.

Pioneer announces emissions intensity target. Pioneer Natural Resources (NYSE: PXD) announced a plan to cut emissions intensity by 25%, which is a cut of emissions per unit of oil, rather than an absolute reduction in emissions. 

Chevron cuts spending. Chevron (NYSE: CVX) cut CAPEX to $14-$16 billion annually between 2022 and 2025, down 27% from the mid-point on its previous forecast.     

Gas traders give up on cold winter. Natural gas for January delivery is now trading below February prices, a sign of bearishness and a sense that the U.S. winter will not tighten the market. The EIA also reported a 1 bcf withdrawal from inventories, a weaker-than-expected drawdown.

Sempra Energy to spin off assets to fund LNG growth. Sempra Energy (NYSE: SRE) hopes to attract funding for its North American LNG push, and may spin off natural gas and renewable assets into a package that may be more attractive to investors.  Related: The True Cost Of The Global Energy Transition

Occidental to become a “carbon management” company. Occidental Petroleum (NYSE: OXY) CEO Vicki Hollub talked up the company’s foray into carbon sequestration. “Ultimately, I don't know how many years from now, Occidental becomes a carbon management company and our oil and gas would be a support business unit for the management of that carbon,” Hollub said. Occidental has the most ambitious carbon targets of any U.S. oil producer, aiming to reach net zero by 2050.

Energy transition could cost $40 trillion. If the world is to come anywhere close to limiting global warming to 2 degrees Celsius or below, it will need a bare minimum ofUS$30 trillion to US$40 trillion of investment in energy systems and decarbonization of industries where emissions are notoriously hard to abate such as steel and cement making, according to Wood Mackenzie.

Eni buys a stake in the world’s largest wind farm. Eni (NYSE: E) purchased a 20% stake in the Dogger Bank Wind Farm project from Equinor (NYSE: EQNR) and SSE.

By Tom Kool for Oilprice.com 

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  • jone al sharon biriyani indian on December 05 2020 said:
    The oil market prices is controlled by Bush inc and his commodity traders. this was investigated and published in a book by Kate kelly of CNBC titled as "The Secret Club that runs the world: inside the fraternity of commodity traders."

    Therefore even if OPEC+ are getting wiser and coordinating production to suppport oil prices that aligns with cost of production/supply demand, the Evil network of Commodity Traders will try to suppress the prices.

    There is another report published just this month by Financial advisor Brain perry titled "99 dividend paying stocks to sell now" and this list includes EXXON, big banks wells fargo, utilities and mortgage companies REITs.
    This is indication of the huge debt problem for oil/energy companies due to shale oil projects
    not producing oil. this $100 billion plus scandal is unfolding.
    as reported in this story Chevron has written of 1.5$ billion on shale projects; this write off on shale project has been on going for sometime.

    if not for wallstreet crooks oil prices should rise above $50 soon.

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