OIL
OPEC+ does enough to lift the oil market for now
Ben Geman, Axios, December 4, 2020
Crude prices are trading at nine-month highs after a protracted OPEC+ meeting ended with plans to just slightly boost output and fresh signs emerged of a potential Beltway deal on new stimulus.
Driving the news: OPEC+ yesterday avoided a breakdown that would have led to a large output boost in January.
- That’s helping move prices out of the rather narrow band where they’ve been stuck for almost six months, but they’re still pretty low and hardly soaring.
- While a months-old plan called for easing their joint production curbs by 2 million barrels per day (bpd) in January, the new agreement calls for a smaller 500,000 bpd boost.
- The group of OPEC, Russia and allied producers now plans monthly meetings starting in January, a packed schedule that reflects the uncertain path of the pandemic and vaccines.
- Those monthly meetings will discuss moving production another 500,000 bpd.
Why it matters: The market movement is a proxy for wider optimism about a light at the end of the pandemic tunnel, even as the virus is tragically raging right now.
“The market rallied to multi-month highs on demand expectations from the vaccine and stimulus, not from OPEC’s management of supply,” Mizuho Securities analyst Robert Yawger said in a note.
OPEC’s deal fractures group unity, sets up future struggles
Salma El Wardany, Dina Khrennikova, Javier Blas & Grant Smith, World Oil, December 4, 2020
After five days of difficult talks that exposed new rifts between core members, OPEC+ agreed to gently ease output cuts next year. The deal appeared to satisfy the oil market and most of the cartel’s members but strained the group’s unity and set up testing times ahead.
Saudi Energy Minister Prince Abdulaziz bin Salman, de facto leader of the group alongside his Russian counterpart, was frank that the deal was hard-won.
“It’s very excruciating, it’s very tiring,” Prince Abdulaziz told reporters after the meeting on Thursday. “If you want to work with 23 countries, you have to be very congenial to the idea of flexibility.”
For all his talk of fatigue, the prince had just signed up to an even more grueling schedule of meetings between the Organization of Petroleum Exporting Countries and its allies, which will define the trajectory of crude prices for months to come.
GAS
Trump administration rule would reduce environmental reviews of LNG projects
Reuters Staff, December 3, 2020
The Trump administration’s Energy Department on Thursday issued a rule to exclude some licensing of liquefied natural gas (LNG) projects from environmental reviews that have been required by U.S. law, in a show of support for the fossil fuel industry.
The rule, which the Department of Energy issued in a pre-publication notice in the Federal Register, frees LNG export and import license applications from including environmental reviews that have been required under a bedrock environmental law, the National Environmental Policy Act.
The rule is expected to be overturned by President-elect Joe Biden’s administration and challenged by environmental groups in the courts, analysts said.
MINING
Chinese rare earth metals surge in price
Northern Miner Staff, Mining.Com, December 3, 2020
BMO Capital Markets says that a surge in the price of Chinese rare earth metals in November is a reflection of the geopolitical tensions between that country and the developed world.
Commenting on the sudden price gains in a research note, BMO’s commodity analyst Colin Hamilton also said that as nations around the world consider self-sufficiency in rare earths and other critical minerals, while also enacting more trade restrictions and economic protectionism, the market “is set for long-lasting transformation over the coming years, one that we believe will likely lead to a gradual erosion of Chinese dominance in processing capacity.”
POLITICS
Russian, Chinese intelligence targeting Norwegian oil secrets: report
Oil & Gas 360, December 3, 2020
Russia, China, and other countries are using espionage to glean secrets of Norway’s petroleum industry and plans by its government to cut or increase production, the Norwegian counterintelligence service PST said. In a report dated Nov. 5 but published on Thursday, the service warned of possible attempts to recruit sources or hack computers, as in a major cyber-attack six years ago, and said renewable energy could become a focus for foreign spies.
“PST expects that the use of economic tools and network operations will increase in the next 18 months,” it said.
The warning comes less than four months after Norway expelled a Russian diplomat on suspicion of espionage and detained his contact, a Norwegian citizen. Risk management and quality assurance consultancy DNV GL has said the Norwegian suspect worked at its oil and gas unit, specialising in 3D printing and materials technology.
Spies are after oil and gas technology which could have both civilian and military uses, commercial secrets, and any details of plans by western Europe’s largest oil producer for new exploration licenses or regulation of oil production, PST said.
CLIMATE CHANGE CONVERSATIONS
From the Washington Examiner, Daily on Energy:
MONIZ STANDS BY GAS AS TRANSITION FUEL: Former Obama administration Energy Secretary Ernest Moniz, the top target of liberal climate activists, is sticking to his position that natural gas has a key role to play in transitioning to a net-zero economy.
“My opinion has not changed in terms of natural gas remaining important in the transition, because of maintaining reliability and resilience of the system,” Moniz told Politico yesterday.
Environmentalists have sought to block Moniz from being considered by Biden to take over DOE again because of work on the board of Southern Company, a utility that uses a lot of natural gas, and his support for an “all of the above” approach to cutting emissions to net-zero that also includes carbon capture and nuclear.