The U.S. Gulf Coast was hit by Tropical Storm Cristobal yesterday, causing offshore oil production to shut down by almost 24%, equating to more than 430,000 barrels per day. According to the U.S. Bureau of Safety and Environmental Enforcement (BSEE), this was a 140,000 barrel per day improvement compared to June 9th. Occidental Petroleum, BP, and Shell were some of the companies who evacuated employees ahead of the storm. There were a total of 188 platforms and rigs evacuated by those operators. Since the last update, 61 of the 643 platforms had still been evacuated in the Gulf of Mexico. Cristobal battered southern Mexico and shut down ports over the past week, before moving through the Gulf of Mexico and depositing heavy rainfall from Louisiana to Florida.
OPEC+ reached an agreement to cut 9.7 million barrels per day (mb/d) beginning in May which is a record-breaking cut, but it still may not be enough to stabilize the market. U.S. Secretary of Energy Dan Brouillette said that the total number of cuts globally, when you add in all the non-OPEC countries, should be closer to 20 mb/d. In reality, the number is much smaller than that and will still have an impact, even if it’s not the cut some were expecting. The cuts will help prevent a complete meltdown, even if there is no immediate price rally. The deal is expected to stabilize the global oil price and reduce the market volatility according to Bank of America Merrill Lynch.
Over the weekend, it came as a surprise to the oil industry when prices crashed more than 30% after the recent OPEC+ alliance issued an all-out price war between Russia and Saudi Arabia, leading the market with cheaper oil. During the OPEC+ meeting last week, Russia rejected a proposal to cut 1.5 million barrels per day of production.
U.S. shale oil and gas producers are feeling the pressure from the latest panic on the spread of the coronavirus. Impact from the virus has caused West Texas Intermediate to fall below $45 a barrel. In its latest Drilling Productivity Report, released earlier this month, the Energy Information Administration said, “oil production has declined across six of the seven major shale players in the country, by some 21,000 bpd. However, the Permian production is still growing by 39,000 bpd. Good news is for the consumer, prices look to continue to go down whereas the oil and gas drillers feel pressured with the continued slow production “
On Tuesday the United Kingdom’s government announced a ban on the sale of Internal Combustion Engines starting in 2035 (five years earlier than previously planned). Meaning it will eventually be illegal to sell new gas, diesel, and even hybrid powered cars to adhere to this standard. Many governments across the world have plans of internal combustion engine bans in the coming decades. Germany is cracking down on older diesel cars. France wants to ban diesel and gasoline cars by 2040.Norway wants only electric or plug-in hybrid cars to be available by 2025. California’s state government has stopped buying gasoline sedans for fleets, and the state itself seems to be flirting with an eventual ban too.
Yesterday, the Advocates for Highway and Auto Safety (AHAS) released a report of the top states for road safety enforcement efforts. Rhode Island, for the fourth year in a row, was top of the list. Advocates is an alliance of consumer, public health, safety and insurance firms that support policies and programs designed to promote highway safety. On average, about 100 people are killed and 7,500 are injured daily with an annual economic burden of $242 billion, according to the Advocates President Cathy Chase. Advocates’ ranks all 50 states and the District of Columbia on adoption of 16 traffic safety laws. “The 16 optimal laws are precisely the types of recommendations nurses endorse to help prevent crashes and fatalities from happening or to reduce their severity,” said Mary Jagim, former president of the Emergency Nurses Association. “The goal of this rating is not to shame those states but rather to serve as a clarion call to action.”
Qassem Soleimani, the head of Iran’s elite Quds military force and one of the most powerful figures in the Islamic Republic, was killed Thursday night in an airstrike in Baghdad, the U.S. Defense Department confirmed. The death of such a powerful figure in the Iranian landscape raises questions about instability in a region which supplies about 25 percent of the world’s oil. Brent Oil, the international benchmark of crude, surged to nearly $70 a barrel (an increase of 4 percent) whereas West Texas Intermediate, the American oil benchmark for crude, also rose about 4 percent, to nearly $64 a barrel. This is the largest price increase since the attack on a major Saudi oil processing plant back in September.
According to a global energy industry forecast, oil growth will continue to soar until the 2030’s and climate-damaging emissions will keep climbing until at least 2040. The World Energy Outlook is not only closely watched by the oil industry but also the governments due to its relevance to climate policy. The International Energy Agency said that almost 20% of the growth in last year’s global energy use was “due to hotter summers pushing up demand for cooling and cold snaps leading to higher heating needs.” The Internation Energy Agency (IEA) forecast global oil demand to be 106.4 million barrels per day by 2040 (up from 96.9 million last year).
Big Corn and Big Oil have been dueling over the future of the Renewable Fuels Standard, which requires oil refiners to mix biofuels like corn-heavy ethanol into their fuel. The Renewable Fuel Standard requires refineries to blend increasing volumes of biofuels into their fuel each year. The proposed plan would include an increase to biofuels requirements for 2020 of 1 billion gallons (3.8 billion liters) and the agricultural industry wants the administration to force larger refineries to make up for the exempted gallons through reallocation. The proposed plan, discusses 500 million gallons for conventional biofuels and 500 million gallons for advanced biofuels (like biodiesel).
Oil prices edged lower on Tuesday after a key U.S. manufacturing report dimmed the outlook on the manufacturing industry and invoked lingering fears of a global recession.