Renewables versus Fossil Fuels

Over the past year, China has ramped up its energy production and committed to becoming a net-zero emission economy by 2060. While China has led all nations with renewable energy production, at the same time has increased coal production and offset the retirements in coal capacity from the rest of the world. The increase in coal production seems to have a strong correlation with the outcome of the COVID-19 pandemic and pushing China to retreat to easy and reliable fossil fuel. Read More

How much ethanol is headed for China?

Last week, three ships carrying ethanol from the U.S. Gulf Coast were headed to China. Reuters confirmed, from multiple sources, that this is a sign that fuel exports were increasing from the U.S. to China. These ethanol shipments may be enough to surpass the total amount of ethanol exported from the U.S. to China in 2020.

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Forgotten Turmoil?

With COVID-19 still dominating the headlines, this time with vaccination news, it is easy to lose sight of other note worthy incidents that would typically make headlines surrounding the crude industry. According to the Wall Street Journal, Iranian oil tankers have been struck by the Israeli Army, which were headed towards Syria over the last few months. The motivation for such an attack is due to the oil profits are considered to support extremist actions in the middle east. Iran and Syria remain under sanction with U.S. and Europe.

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U.S. Blacklists More Chinese Firms

As President Trump’s term comes to an end, the administration continues to tighten restrictions on Chinese companies as the U.S. Department of Commerce blacklisted CNOOC (China National Offshore Oil Corporation) on Thursday. CNOOC was blacklisted for helping China intimidate neighbors in the South China Sea which threatened U.S. national security. The Department of Commerce stated, “CNOOC has repeatedly harassed and threatened offshore oil and gas exploration and extraction in the South China Sea, with the goal of driving up the political risk for interested foreign partners, including Vietnam.” The Commerce Secretary Wilbur Ross also said, “CNOOC acts as a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes”. The South China Sea has been a lasting point of contention due to the oil contained in that area.

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A Future for Offshore Drilling

During the last quarter of 2020, everyone can agree that economically, we have seen better days. Especially in the energy industry, spending cuts, revised budgets, and slashed investments have played an impact. However, we are starting to see hope for offshore drilling stated by Rystad Energy, a global oil and gas analytics firm. Their analysts anticipate a 40% growth in Floatable Production Storage and Offloading facilities (FPSOs). China has taken an interest in FPSO’s and prepared its shipyards for an increase in new orders.

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Vaccine Concerns

Earlier this month both China and Russia reported that they have developed a Covid-19 vaccine that has been clouded by doubt throughout the world since Phase III testing had not been performed. The vaccines have been developed by CanSino Biologic from China and the Gamaleya Institute in Moscow and are a modification of adenovirus type 5 (AD5). AD5 is currently being used to treat the common cold, and scientists and researchers are now concerned with the effectiveness of the vaccine.

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U.S. and China Relations at a New Low?

United States and Chinese trade relations appear to have hit a new low after White House trade adviser Peter Navarro said that the trade deal was “over” on Fox News last night. Navarro later walked back his comments and said that his comments were taken out of context and, “was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.”

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Will the Oil Rally Lose its Luster?

As we near the end of May, we will put behind us one of the most bullish rallies for the WTI crude oil contract in history with crude jumping almost 75% this month alone. Of course, with WTI prices currently trading at $33.33/barrel, that’s not saying much, as it is widely perceived the breakeven price for domestic crude producers is $32/barrel. The question is: will this rally persist? Let’s review some components to watch out for this summer.

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Oil Freefall Continues

On the morning of Monday, January 6, 2020, WTI crude oil was nearing $64/bbl.  As of 10:31 a.m. EST on Thursday, February 27, 2020, WTI crude oil was trading at $46.36/bbl.  The shocking effects of the coronavirus fear continue to decimate global markets, particularly oil markets.  Fortune.com aptly points out that the coronavirus has done to the oil industry what the U.S. and China trade war, strikes on Saudi oilfields, Libyan supply outages, and a near war between the U.S. and Iran-could not.  The virus has thrown traders and analysts into complete turmoil.

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