Oil prices crash as Covid does what Biden couldn’t

Renewed Covid fears have managed to do what Biden failed to do, pushing oil prices down as a new wave of demand destruction looms.

Friday, November 26, 2021

Oil prices had one of their worst trading days in recent memory on Friday, plunging more than 10% across the board amid fears that a new variant of COVID-19 discovered in southern Africa could dampen growth economic and triggered another collapse in demand. After the spectacular failure of the SPR release, which instead of pushing prices up has driven them up, new COVID-19 concerns have now led to President Biden’s goal. OPEC + could still have its say on this, as the group’s meeting on December 2 could lead to a reduction in production targets for 2022.

China remains without commitment on the release of SPR. Despite repeated talks with the US government, China has rebuffed President Biden’s calls to “do more” and said it will coordinate its own strategic stock releases according to its needs, dampening the enthusiasm of market bears. .

The OPEC Panel finds the US SPR’s publication superficial. Council of the OPEC Economic Commission estimates that the SPR releases carried out by the United States and its partners will only inflate the global crude surplus in the first quarter of 2022, potentially paving the way for a slower-than-expected OPEC + production rollout.

The US Treasury gives Chevron more time to leave Venezuela. The US Treasury Department expanded the licenses of Chevron (NYSE: CVX) and drilling companies Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB) to cease its activities in Venezuela until June 1, 2022, allowing the American major to continue producing for the time being.

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COVID-related fears are temporarily flattening LNG prices. Spot LNG prices in Asia have stopped climbing amid concerns about the potential impact of the novel variant of the coronavirus, falling to $ 36 per mmBtu (still well above any seasonal average), despite the increase in demand in South Korea and Japan.

Gasoline blend of ethanol hindrance in the United States. Supply chain disruptions, mainly delays in rail transport coupled with high prices of outright ethanol, have bringEthanol inventories on the east coast of the United States are at a low of nearly 7 years, complicating the blending of gasoline for which ethanol is the main component.

Lebanon relaunches second round of licensing. Lebanon relaunched its 2nd offshore license cycle for eight remaining blocks, following several COVID-related postponements, seeking to attract more oil majors, with TotalEnergies (NYSE: TTE), ENI (NYSE: E), and Novatek (MCX: NVTK).

Petrobras is increasing its investments for the next investment cycle. Brazil’s national oil company Petrobras (NYSE: PBR) increase its upstream investment spending to $ 68 billion for the period 2022-2026, seeking to increase overall production to 2.6 million b / d by 2026, up 500,000 b / d from its current production levels.

Argentina’s YPF is looking to expand into lithium. The Argentine state oil company YPF (NYSE: YPF) spear talks to a leading Chinese producer of electric vehicle batteries CATL (SHE: 300 750) with the aim of forming a strategic partnership in lithium production, just weeks after the Chinese company’s bidding up for Argentinian lithium miner Millennial Lithium.

The prices of natural gas in the United States continue to rise. Despite a shorter than usual trading week, US natural gas Henry Hub futures rose 5% on the week – to $ 5.16 per mmBtu – as the outlook for colder weather triggered expectations of higher heating demand.

China is interested in the lithium potential of Afghanistan. Several Chinese companies have begin on-site inspections of potential lithium projects in Afghanistan, Jiangxi Copper (SHA: 600362) having already taken over the country’s largest copper mine at Mes Aynak in September.

The EU seeks to ban routine methane flaring. In a draft regulation due to be released on December 14, the European Commission will establish guidelines for reporting methane in Europe, aiming for maximum transparency, simultaneously banning ventilation and routine flaring in member countries.

China opts for technologies from coal to chemicals. China Energy Group, the Asian power plant’s largest coal producer, has started production at its 400,000-ton-per-year ethylene glycol coal plant in Shaanxi, having already started a nearby methanol coal project.

Indonesia could cut its tin exports by 2024. Indonesian President Joko Widodo declared the Southeast Asian country could halt exports of unrefined tin in 2024, being the world’s second-largest producer, as it seeks to persuade international investors to locate their metal refining plants there.

EU carbon prices are skyrocketing. European Union carbon prices hit a record high this week, reaching € 75 per metric tonne of CO2 on Thursday, following the German government announcement that it would seek to introduce a carbon price floor of € 60 per metric tonne of CO2. metric ton in the coming years.

By Tom Kool for Oil Octobers

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