Series of bearish news changes sentiment in oil markets

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Oil prices fell below $ 40 for the first time since June as demand concerns grew and stock markets collapsed.

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Friday, September 4, 2020

Oil prices have had a tough time this week, retreating in concert with broader financial markets. The dollar strengthened, which also pushed down crude. The rebound in demand is also sizzling. WTI was driven below $ 40 for the first time since June.

Iraq requests an OPEC + exemption. Iraq is seeking an exemption from the OPEC + deal for the first quarter of 2021, raising concerns that the group’s compliance may start to decline. Another report says Iraq wants a two-month extension of the additional production cuts it agreed to implement in August and September.

Kuwait’s oil economy runs on fumes. Kuwait’s budget deficit is expected to reach $ 46 billion this year. But oil revenues collapsed after the 2014-16 slowdown and never recovered. Now the country is grappling with the exploitation of its sovereign wealth fund as the days of huge oil revenues seem over.

EU warns of lack of critical metals. A new report from the European Commission warns that the shortage of critical materials could threaten the EU’s drive to become climate neutral by 2050. The EU estimates it will need 18 times more lithium and five times more cobalt in 2030, a figure that rises to 60 times more lithium and 15 times more cobalt by 2050. Related: Goldman Expects Oil To Hit $ 65 Next Year

American LNG is undergoing a flashback in Europe. The Trump administration’s aggressive use of Nord Stream 2 sanctions risks backfiring on angry European policymakers. “This is not how you treat your allies and your friends. From now on, the European Union must show unequivocally that it will not be subject to blackmail, ”said Klaus Ernst, chairman of the German Parliament’s Committee on Energy and Economic Affairs. “If diplomacy fails, we will need tariff penalties on fracking gas or even an import ban as a painful counter-sanction, as the US gas industry appears to be a major driver of sanctions policy.

Merkel under pressure on Nord Stream 2 after the poisoning of Navalny. The poisoning of Russian opposition leader Alexei Navalny is putting pressure on Germany to cancel the Nord Stream 2 project in retaliation against Russia.

Schlumberger quits fracking. Schlumberger (NYSE: SLB) has agreed to sell its fracking operations in North America to Liberty Oilfield Services (NYSE: LBRT), marking a sort of exit from shale for the oil services giant.

Only 14% of public services prioritize renewable energies. A new study from the University of Oxford has found that around the world, only around 14% of utilities favor renewables over gas or coal. “This research highlights a disturbing gap between what is needed to stop global warming and the actions taken by the utility sector,” said the author.

The glut of refineries continues. Overcapacity in the downstream sector is a global problem, and some aging European refineries face the prospect of closure. Energy Aspects estimates that the refining sector needs to reduce capacity by 10 percent. Total (NYSE: TOT) and Eni (NYSE: E) have already converted three refineries to material handling biodiesel, with more to follow.

Imperial cuts oil sands after pipeline leak. Imperial Oil (TSE: IMO) halted production at the Kearl oil sands site, with a capacity of 220,000 bpd, following the diluent leak from the Polaris pipeline. The pipeline provides diluent for the mixture, but spilled 566 barrels near Fort McMurray. According to Reuters, the outage will likely remove 240,000 to 270,000 bpd from the market for at least a few weeks.

Australian gas is losing because of the batteries. Batteries are becoming more attractive than gas powered electric capacity in Australia. Energy AGL (ASX: AGL) New COO Markus Brokhof recently said that “there is a clear business case for large batteries”. New electrical capacity is increasingly coming from renewables and batteries, and as natural gas prices rise around the world from recent lows, this momentum is expected to continue.

Fossil fuels are here to stay. The future looks bright, emissions-free and electric. But a recent IEA report offers a reality check. The world is still heavily dependent on oil and gas – and even coal – for its continued energy supply. The world of 100% renewable energy is still decades away, and more than two.

US demand for jet fuel is rebounding. Demand for jet fuel in the United States is recovering faster than in Europe or the rest of the Americas. Related: What Are Solar Panels?

Saudi Aramco slows down diversification plans. Saudi Aramco (TADAWUL: 2222) exploits breaks on large investment projects in Texas, China, India and Pakistan, according to the Wall Street Journal. It is also delaying plans to increase domestic crude production capacity.

California oil and gas is up 190%. California issued 190% more oil and gas drilling permits in the first six months of 2020 compared to a year earlier.

The battery company backed by Bill Gates will go public. QuantumScape, a 10-year-old battery company backed by the Volkswagen Group, is seeking an IPO through a reverse merger with SPAC Kensington Capital Corp.

Growth of plastics not assured. A new report from Carbon Tracker reveals that if the oil and petrochemical industries bet their future growth on demand for plastics, demand is likely to peak as the world begins to shift from a linear plastic system to a circular one. The report warns that disappointing growth in demand will lead to $ 400 billion in stranded petrochemical assets.

By Tom Kool for Oil chauffage

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