Today’s Key Takeaways: $90 oil in 2023 – $120 when China reopens. ExxonMobil larger than Tesla in terms of market cap. Russian plans for Turkish gas hub faces obstacles. Teck generates $1.1. billion in economic contributions to Alaska. Stidolph in as Governor’s legislative director.
NEWS OF THE DAY:
Dan Yergin says there’s a chance oil could go as high as $121 a barrel when China fully reopens
Lee Ying Shan, CNBC, December 21, 2022
- S&P Global’s base case forecast for oil prices is $90 a barrel for 2023, but Dan Yergin warns there are major uncertainties looming over markets.
- For example, he said there’s a chance prices could retake $120 when China fully reopens — that would be around the same level as March highs after Russia invaded Ukraine.
Dan Yergin expects oil at $90 in 2023 but says there’s a chance it could go as high as $121 when China fully reopens but warned there are three major uncertainties looming over the market.
“Our base case for 2023 is $90 for Brent but you have to look at other cases,” the S&P Global vice chairman said, adding there are three major uncertainties: the Federal Reserve’s decisions, China demand and Moscow’s reaction to the price caps.
“If China gets over Covid … then you add a lot of demand to the market,” Yergin told CNBC’s “Street Signs Asia” on Tuesday.
That could be “one big boost” and push prices to $121 a barrel, building on strains caused by underinvestment in oil and gas, Yergin said. That would be near highs set in March after Russia invaded Ukraine.
On the flipside, Yergin said prices could fall to around $70 per barrel in a recession.
In the past three weeks, local and central government authorities in China loosened several strict Covid measures that had required people to stay home and businesses to operate mostly remotely.
Oil demand from the world’s top importer could reach 15.7 million barrels per day in 2023, which is around 700,000 barrels higher than 2022, S&P said in its most recent forecast.
Other considerations include Russian President Vladimir Putin’s response to the price caps imposed by the European Union, as well as further rate hikes undertaken by the Fed.
EU energy ministers on Monday agreed to cap natural gas prices at 180 euros per megawatt hour, but the European Commission cautioned that the measure could be suspended if the “risks outweigh the benefits.” The decision came on the heels of an oil price cap of $60 per barrel at the start of December.
Yergin said he thinks the recently imposed gas price cap “probably will work. He said it also acts as an anticipation of higher gas prices in subsequent winters due to a lack of Russian gas and competing demand between Europe and Asia for LNG.
In Asia’s Wednesday morning trade, Brent crude futures added 0.40% to $80.31 a barrel, while U.S. marker West Texas Intermediate futures traded up 0.33% at $76.48 per barrel.
Clarification: This story has been updated to clarify that Dan Yergin expects oil at $90 in 2023 but says there’s a chance it could go as high as $121 when China fully reopens.
OIL:
ExxonMobil Now Larger Than Tesla
Andreas Exarheas, Rigzone, December 21, 2022
ExxonMobil is now larger than Tesla in terms of market cap, according to companiesmarketcap.com, a list of the world’s largest companies by market capitalization which excludes non-publicly traded companies and updates rankings daily.
Exxon jumped up to ninth in the list, with a market cap of $439.38 billion, while Tesla dropped down to 10th, with a market cap of $435.13 billion, companiesmarketcap.com showed Wednesday. The largest company by market cap is currently Apple, with a market cap of $2.10 trillion, and the largest oil and gas company by market cap is currently Saudi Aramco, which is second overall in the list with a market cap of $1.81 trillion, companiesmarketcap.com highlighted.
Back in June, ExxonMobil was ranked 16th in the companiesmarketcap.com list with a market cap of $362.84 billion. Saudi Aramco was the largest company by market cap at the time, with a market cap of $2.16 trillion, while Apple was the second largest company by market cap at the time, with a market cap of $2.12 trillion, the list showed in the summer.
Exxon describes itself as one of the world’s largest publicly traded energy providers and chemical manufacturers. The business, which traces its roots back to 1859, produces more oil and gas than any other U.S. energy company, according to its site. In its third quarter results statement, Exxon reported total revenues and other income of $112.07 billion and a net income of $19.66 billion.
Tesla is building a world powered by solar energy, running on batteries, and transported by electric vehicles, according to its website. The company was co-founded by Elon Musk, who recently took control of Twitter in a multi-billion-dollar deal. In its third quarter results statement, Tesla reported total revenues of $21.45 billion and a net income of $3.33 billion.
GAS:
Russia’s Plans for Natural Gas Hub in Turkey Facing Obstacles
Therese Robinson, Natural Gas Intelligence, December 21, 2022
Russia is turning to Turkey as a potential natural gas hub partner with a new sense of urgency to find new export outlets for volumes left stranded by damages to the Nord Stream pipelines in September.
But any hub would likely face political, financial and supply issues that are compounded by the Kremlin’s war in Ukraine, said Maximilian Hess, a Central Asia fellow at the Foreign Policy Institute.
Russian President Vladimir Putin and Gazprom PJSC head Alexei Miller met President Recep Tayyip Erdogan in Kazakhstan in October to revive gas hub plans. Erdogan and Miller met again last month in Istanbul. Russia could divert gas planned for the Nord Stream pipeline to the Black Sea, Putin told Erdogan.
“Turkey will be a hub for natural gas,” Erdogan said in Ankara last month. “In our last meeting, we agreed with Putin on this issue. We will create a hub here with Turkish gas coming from Russia.”
Turkey has not joined western sanctions against Russia and has continued to trade with the country. However, Turkey faces its own problems with the Kremlin, including a dispute over the prices it pays for Russian natural gas imports, which “could stall regional hub talks,” Hess said.
MINING:
Teck Outlines Economic Contributions to Regions in Alaska
Vancouver, B.C. – Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) released its annual Economic Contribution Report today, outlining how Teck generated $1.1 billion in total economic contributions to Alaska where Teck’s Red Dog Operation is located; created or sustained over 4,110 jobs; and contributed $359 million in taxes and government revenues to governments across the world at direct, indirect, and induced levels.
“Our people are proud to contribute to the communities and jurisdictions where we operate, including Alaska, through creation of family-supporting jobs, economic activity, and revenue to governments to support essential services like education and healthcare,” said Jonathan Price, CEO. “These economic contributions are directly linked with our work to responsibly provide critical minerals essential to modern society and for the global transition to a low-carbon economy.”
Prepared by Deloitte, Teck’s annual Economic Contribution Report details the economic benefits created in the communities and jurisdictions where Teck operates, including payments to suppliers, employee wages and benefits, and payments to governments. It captures not only Teck’s direct economic impacts, but also the indirect impacts which arise from generating demand for goods and services provided by our suppliers and the induced impacts which arise from the spending of salaries and wages earned as a result of our operations.
For more information and to download Teck’s 2021 Economic Contribution Report, click here.
POLITICS:
Governor Dunleavy announces Laura Stidolph as Legislative Director
KINY, December 20, 2022
Governor Mike Dunleavy today announced Laura Stidolph has accepted the position of Legislative Director in his office.
Stidolph returns to the Dunleavy Administration after serving as Deputy Legislative Director from 2020 to 2021.
“The legislative director’s role during the legislative session can’t be overstated,” said Governor Dunleavy. “Laura has a strong grasp of the legislative process, and over the course of her career, cultivated longstanding relationships with Alaska’s lawmakers and policy leaders. I look forward to many productive sessions with her as my legislative director.”
Ms. Stidolph spent a decade in the Alaska Legislature as an aide in the House for legislators on both sides of the political aisle. The past year and a half she served as GCI’s Government Affairs Manager. Born and raised in Alaska, she lives with her family in Juneau on Douglas Island.
Her first day will be January 2, 2023.