Oil news:
Friday, May 7th, 2021
Brent tested $70 per barrel on Wednesday but fell back on Thursday. Oil “had a great run, but it got a little bit ahead of itself,” Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago, told
Bloomberg. “We’ve hit resistance and prices pulled back,” but it’s hard to see a summer demand boost “being derailed,” he said. Oil is still set to close out the week with another gain.
Sempra to delay Port Arthur LNG. Sempra Energy (NYSE: SRE) said on Wednesday that it would delay its proposed Port Arthur LNG project until 2022 instead of this year, citing global energy markets and a focus on greenhouse gas reductions.
Exxon to take $200 million charge related to job cuts. ExxonMobil (NYSE: XOM) expects a $200 million charge related to severance costs for laid-off workers.
Copper hits record high. Copper price hit a
record high on Thursday as Chinese investors unleashed fresh demand following a five-day holiday.
Pioneer says consolidation needed. Pioneer Natural Resources (NYSE: PXD) CEO Scott Sheffield
said that the shale industry needs even more consolidation. “I hope other privates are taken out that are growing too much,” Sheffield told investors on an earnings call,” Sheffield said.
Wind costs rise due to the commodity boom. The
rising cost of steel is forcing
Vestas (CHP: VWS) to hike its prices for wind turbines.
Exxon and Chevron cautious in Permian. Neither
ExxonMobil (NYSE: XOM) nor
Chevron (NYSE: CVX) are
rushing to boost production in the biggest American shale play, the Permian, despite the oil price rally this year that has sent WTI prices to above $60 per barrel.
Winners of Texas freeze. Among the biggest
winners of the Texas crisis in February were commodity trading major Vitol, pipeline operators including Kinder Morgan, Enterprise Products Partners, and Energy transfer, and lenders including Goldman Sachs, Bank of America, and Macquarie Group.
Energy Transfer made $2.4 billion in Texas crisis. Energy Transfer (NYSE: ETP) took in $2.4 billion from the Texas
grid crisis, and the stock jumped nearly 5% on Thursday.
India to import more Saudi oil. After Saudi Aramco cut oil prices for June, Indian state refiners
added more orders.
Peak LNG? The viability of LNG import terminals in Europe has dimmed and utilities are looking for alternative uses, according to
Bloomberg. Last month, for example, Uniper SE said waning demand for new LNG led it to switch a project to a hydrogen hub. In Ireland, another project has been transformed into an offshore wind project.
LNG market to see deficit. Rystad Energy said that the global LNG market could see a supply deficit in the coming years due to inadequate investment, made worse by the delays in
Total’s (NYSE: TOT) massive LNG project in Mozambique.
Commodity boom adds inflation risk. Tight inventories for a long list of commodities are pushing up prices, which is
increasing the odds of rising inflation. U.S. Treasury Secretary Janet Yellen rattled markets on Tuesday when she said that interest rates might need to rise.
IEA: metals shortage poses transition risk. The IEA came out with a new report warning that a shortage of critical minerals used in green technologies could slow the pace of energy transition and make it more expensive. The agency urged faster investment in new mining projects.
U.S. shale pre-hedge revenue hits record high. If WTI futures continue their strong run and average at $60 per barrel this year and natural gas and NGL prices remain steady, producers can expect a
record-high hydrocarbon revenue of $195 billion before factoring in hedges, a Rystad Energy analysis shows. The previous record of $191 billion was set in 2019.
UN: World needs to cut 40-45% methane. A new
report from the UN finds that the global increase in methane emissions since 2010 is “primarily attributable” to the surge in oil and gas drilling – i.e., the U.S. shale boom. The report said cuts to methane emissions are actually inexpensive and achievable.
Marathon Oil returns to Oklahoma drilling. Marathon Oil (NYSE: MRO) is
returning to limited operations in Oklahoma and the Permian Basin's western Delaware Basin in New Mexico before ramping up next year.
Michigan’s May 12 deadline for Line 5. Michigan has
ordered Enbridge’s (NYSE: ENB) Line 5 pipeline shut down by May 12 – next week – but the company said it would defy the order.
TC Energy takes $1.8 billion impairment on KXL. TC Energy (NYSE: TRP) announced a C$2.2 billion ($1.8 billion) impairment related to the suspension of the Keystone XL project.
Half of Equinor’s profits came from renewables. Equinor (NYSE: EQNR) reported $2.6 billion in first-quarter earnings, and 49% came from renewables.
Mining majors earn more than oil majors. The top five iron ore miners are on track to earn $65 billion this year, or about 13% more than the top five oil majors, according to
Bloomberg. A big reason for this is the soaring price of iron ore, which has climbed to around $200 per ton, a record set a decade ago.
EQT to buy Alta Resources for $3 billion. EQT (NYSE: EQT) said it would purchase Appalachian rival Alta Resources for $2.93 billion in cash and stock. EQT is already the nation’s largest natural gas producer, and a giant in Appalachia, but the acquisition expands its footprint.
Germany accelerates climate targets. In the wake of a court decision ordering tougher action, the German government
increased its 2030 emissions reduction target from 55% to 65% and moved up its net-zero target by five years to 2045.
Biden admin considers nuclear subsidy. The White House is
considering a subsidy to keep existing nuclear power plants online to avoid a setback in its decarbonization goals if nuclear plants were to shut down.
For the week:
Some headlines/stories:
Mr flippe-floppe-flye:
The important development:
That was a very significant break in yields. What gives?
ATM it looks as if the trend to higher yields is broken. Someone, bought the 10yr in a BIG way. Who (if anyone) would want a still negative (possibly just positive) real yield? The answer is actually very important, although the net result is probably the same.
If and it is a pretty big if atm, yields continue lower, we could see a rotation back into growth stocks, which largely means Tech. and a rotation out of value. Commodities would get even more support and continue their bull move higher. Which leaves everything else in the middle as a bit of a toss-up.
So my interest rate model is now calculating a yield of 1.7%. This is a pretty significant spread and from the chart, that spread could widen further.
Has the Fed. already stepped in and started to buy Bond ETFs? I have no idea. Until Fed. data comes out, I guess no-one (or very few) will actually know.
I don't see any outrageous volume, but as I don't follow volume, I'm probably not the best person to assess it.
Either way, whoever has and is buying, it will be interesting to see, as if the chart of $TNX (yield) continues to decline, whether buying pressure remains, sending yields lower. It could simply be short covering, if there have been large short positions.
As a result, my 'Inflation' chart has reversed:
On a daily time frame, inflation is Thunderbirds go. No wonder Gold & Silver are having good moves atm.
So for the moment, commodities will continue to run hot. Industries that are at 1 higher stage than commodities will potentially run hot as long as the consumer demand at the final stage remains. The closer you get to end demand, the greater the volatility of those stocks as those that cannot pass on price inflation will see declining market share. Cost structures, expressed as margins, will, if this inflationary surge continues, come under pressure with stages of production furthest from raw materials feeling the pain first.
jog on
duc