Oil prices have fallen below $ 60, but remain at unprecedented levels since January 2020.
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Friday, February 19, 2021
Texas ’power crisis is easing, but the cuts, damage and human toll were historic. Starting Friday morning, Texas network operator ERCOT dit which would emerge from “emergency conditions” later. After a crazy week, WTI fell a bit, but kept gains close to $ 60, a price not seen since January 2020.
The Texas cut is slowing. As of Tuesday, about 45 gigawatts of electricity generation from renewables, coal and natural gas were offline. More than 4 million people lost power. Until Friday, most of those people saw power restored. The crisis has once again focused attention on several issues related to network policy: the lack of weathering of Texas power generation assets, the lack of a capacity market, and the isolation of the state’s grid network. the rest of the country.
U.S. oil production impacted. About 4 mb / d of oil production in the US was left out due to power outages, freezing of wellhead and failures of other equipment. Most of the interruptions occurred in the Permian basin. Restarting frozen or closed wells is not necessarily easy and some reboots can take weeks.
Related: Is this Oil Rally the beginning of something much bigger?
Texas bans natural gas delivery out of state. Texas Gov. Greg Abbott took drastic action to ban the state’s natural gas exports in order to conserve supply. The measure is highly controversial and potentially illegal, although most analysts point out that any legal challenge would be debatable because the order will have expired by the time a judge reviews them. The governor also personally sent requests to several LNG exporters to stop operations.
LNG uploads have been canceled. According to Bloomberg, at least 10 LNG loads were canceled due to the network crisis.
Refinery restarts can take weeks. According to Bloomberg, four of Texas’ largest oil refineries suffered widespread damage due to the cold. Interruptions could reduce demand for crude oil, but reduce the supply of refined products. The four refineries include ExxonMobil’s (NYSE: XOM) Baytown and Beaumont Plants, Marathon Petroleum’s (NYSE: MPC) The Galveston Bay Refinery iTotal (NYSE: TOT) Port Arthur facility. The result could be $ 3 per gallon gasoline in May.
The US wants to reopen talks with Iran. The U.S. government said it would accept an invitation from the EU to hold talks with Iran. Iran did not jump to the news exactly, saying it would “immediately reverse” recent actions on its nuclear program, but only after the U.S. lifted sanctions.
Gas companies got the Texas freeze “award”. While jeans struggle to keep the lights and heating on, Lone Star state gas producers, or at least those who haven’t frozen wellheads, are having a great time.
Saudi Arabia will increase production. Saudi Arabia is about to reverse its voluntary 1mb / d reduction in the coming weeks, according to the Wall Street Journal, with returned barrels coming to market in April. “A Saudi increase in Saudi production … makes perfect sense given the tension that is starting to emerge in the market,” Ole Hansen, head of commodity strategy at London-based Saxo Bank, told WSJ. “The market will probably do pretty well.”
Shell will sell Alberta assets for $ 900 million. Royal Dutch Shell (NYSE: RDS.A) will sell its slate assets from Duvernay to Alberta for $ 900 million in Crescent Point Energy Corp. (TSE: CPG). Related: Oil prices soar as U.S. oil production falls 30%
Maersk plans carbon-neutral shipping containers. Maritime giant AP Moller Maersk A / S is accelerating plans to transition to carbon-neutral operations, including plans to add the first biofuel-powered container ship.
U.S. slate boards in moderation, for now. With the WTI rising to $ 60 a barrel, the U.S. slate industry could be in a better financial position than previously expected. Recent comments from shale executives suggest that drills will not return to aggressive spending plans, but focus on cash generation.
Canadian gas drilling is on the rise. Canadian shale gas drilling has increased rapidly this year and Canadian gas exports to the US are also increasing. Canadian drills are expected to capture more market share as US drills have shrunk.
The Texas freeze raises the cost of charging a Tesla to $ 900. Electricity shortages in Texas amid the cold caused spot electricity prices to skyrocket so much that rising electricity prices equate to a $ 900 cost to charge a Tesla.
Possibility of $ 100 oil in the commodity supercycle. Several investment bank analysts say oil could rise to $ 100 a barrel because we could be at the start of a new commodity supercycle.
Egypt will restart a second LNG plant. Egypt is about to restart a second LNG facility after being closed for eight years. The restart raises Egypt’s hopes of developing a major natural gas hub and an LNG export industry.
Shell’s Nigerian accounts were frozen in a court dispute. A restricted Nigerian court Royal Dutch Shell’s (NYSE: RDS.A) access to their bank accounts in the country during a legal dispute for years.
By Tom Kool for Oilprice.com
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