Goff Heating Oil Market Price Information
Oil Market, Exchange Rate and Heating Oil Price Information May 2021.
Brent Crude Dated ($ per Barrel)
Price at Start of Month: $66.93 Price at End of Month: $69.58
Highest Price in Month: $69.58 Lowest Price in Month: $66.37
Pound £ to US Dollar Rate $ Exchange Rate FT:
Start of Month: 1.3884 End of Month: 1.4179
Kerosene (Heating Oil) Cargo Price $ per tonne
Start of Month: $574.50 End of Month: $591.00
Highest Price in Month: $587.50 Lowest Price in Month: $563.00
Resulting in a Heating Oil Price (Pence Per Litre) Monthly range: 1.50 ppl
Market Commentary on the Newsfeeds:
Money managers intimate a growing confidence that oil prices have room to run higher this year, thanks to expectations of a robust economic rebound and rising global demand for crude.
Last week, hedge funds added the most bullish positions in the oil complex in more than two and a half months, with the net long in crude oil futures jumping to the highest in six weeks.
Rising mobility, the reopening of the economies, and the stimulus packages all point to strong economic growth and consequently, strong oil demand growth. The low-interest rates and the tolerance of the Fed to let inflation run at a moderately above-2-percent level for some time also suggest that investors and speculators will buy more commodities, including oil, as a hedge against inflation.
Hedge funds are looking beyond the immediate COVID crisis in India toward economic recovery in the coming months. This has prompted them to add bullish bets on oil for a third consecutive week in the week to April 27.
During that week, portfolio managers added the equivalent of 30 million barrels in the six most important petroleum futures and options contracts, according to data from exchanges compiled by Reuters columnist John Kemp. This was the biggest weekly bullish wage on oil prices since the start of February.
The combined net long in crude oil reached a six-week high, with WTI Crude leading the increase, while speculators kept an almost unchanged position in Brent Crude, primarily due to an increased amount of naked short selling, Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote in his commentary on the Commitment of Traders reports for the week to April 27.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Overall, commodities are at their highest in ten years. The Bloomberg Commodity Spot Index tracking prices for 23 different commodities, including oil, hit on Tuesday the highest since 2011. The index has rallied by over 70 percent since it hit a four-year low in March 2020.
Although talk of a supercycle in oil has subsided in recent weeks, major investment banks such as Goldman Sachs continue to be very bullish on oil and commodities as a whole, expecting strong economic growth and easy monetary policy to help oil demand to realize its biggest jump ever over the next six months. Goldman sees oil prices hitting $80 a barrel this summer and expects the entire commodity complex to rally by another 13.5 percent over the next six months.
Economies reopening and increased travel this summer are set to boost demand for all major fuels globally, including gasoline, diesel, and even jet fuel, which has shown the slowest recovery so far.
“For the first time in my life, I think traffic jams are beautiful,” Jim Teague, Director and Co-Chief Executive Officer at Enterprise Products Partners, said on the Q1 earnings call earlier this week.
“While economic recoveries aren’t uniform, when you look at the world’s largest economies, demand has moved up, and all indications are that even Europe isn’t far behind,” he added.
Optimism that demand will rebound strongly seem to be shared by hedge fund managers, who have shown with their bullish bets in recent weeks that oil consumption will rise despite the setbacks in large developing economies such as India and Brazil.
Inflationary expectations are also likely to attract more buyers into oil contracts as investors are set to buy more commodities to hedge against inflation risks in their portfolios.
“With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer?term inflation expectations remain well anchored at 2 percent,” the Fed said in its Federal Open Market Committee (FOMC) statement last week.
Oil demand recovery is uneven across economies, but most of those, including the United States, China, and now Europe, are showing signs that they are on track for a major rebound this year, rekindling confidence among money managers that oil prices still have room to rise beyond $70 a barrel.
By Tsvetana Paraskova for Oilprice.com 5th May 2021
The European Commission intends to ask EU Member States to make an additional effort to increase their share of renewable energy in the power mix, according to a leaked draft of an official document revealed by Euractiv on May 4th. Brussels wants to upgrade its current 32% renewable energy target for 2030 to at least 38%, the document says. By the same deadline, the Commission aims to have 55% less greenhouse gas emissions compared to 1990 levels, and a 32.5% improvement in energy efficiency. Hence, increasing the renewable energy target is logical as energy is one of the main contributors to GHG emissions on the continent. But Europe is already on the right path, as its energy-related CO2 emissions decreased by 8% during the first quarter of 2020 (compared to 2019 levels).
This revision comes as the European Commission is examining its Sustainable Investment Taxonomy, and is expected to come up with an updated version of the Renewable Energy Directive (RED II) by July 2021.
As renewable sources currently meet 20% of European energy needs, achieving the new target set by the Commission would mean doubling this proportion in only ten years. It currently has an installed solar capacity of 137 GW, of which 19 GW were added in 2020
However, this goal appears ambitious while some countries struggle with their current renewable energy targets. France, for example, has not succeeded in achieving its goal of 23% renewable electricity which it set in 2009. Instead, it displayed a modest 19%, mainly driven by hydroelectricity generation, and failing at making its offshore wind industry take off.
In January 2021, a report by the International Energy Agency and the French utility RTE, titled “Conditions and requirements for the technical feasibility of a power system with a high share of renewables in France towards 2050”, shook the French nuclear industry. It envisioned the possibility of a 100% renewable energy mix by 2050, throwing nuclear out of the game.
Next to this, it is worth noting that EU countries present high discrepancies in terms of renewables potential. Denmark is leading the race with a massive wind industry, providing over 47% of its electricity in 2019. On the other hand, countries like Poland and Hungary are still very reliant on coal, and are rather planning to replace it by switching to natural gas, and nuclear energy. The latter displays higher capacity factors than renewables, and solves their intermittency issue. Following that intent, several Ministers of Eastern European countries wrote a letter in February 2021 calling for the European Commission not to discriminate against nuclear over renewables.
An emphasis on transportation and heating sectors
Among the concrete options brought by the Commission for the achievement of the new target, there is an increase of clean energy use in the heating and cooling sectors: the policy options suggest that the share of renewables in those sectors should increase by 1,1 percentage point every year. An emphasis is also put on decarbonized transportation, based on the forecast of growing EV sales and the proliferation of biofuels. A system of certifications will be implemented to guarantee those fuels’ low carbon intensity, and more stringent rules will be imposed on the aviation sector. This last measure is only a continuation of a trend that has been going on for the past year, with companies such as Total actively investing into bio aviation fuels.
Another bone of contention is the status of biomass in the Taxonomy, which currently draws a lot of criticism. In fact, wood biomass is a strategic energy resource for Nordic countries such as Sweden and Finland, which have been actively lobbying for looser criteria on its sustainability. Addressing that issue, the leaked document says it will consider implementing national caps on the use of stem wood.
Finally, to facilitate the process of investment into renewables, the European Commission is also reconsidering the rules for corporate renewable PPA’s, according to Montel News reports.
Cost-effectiveness and networks adaptation
This increase in targets was however deemed insufficient by renewable industry players. SolarPower Europe and Wind Europe told Euractiv that more could be done to enhance the European renewable competitiveness.
The cost-effectiveness of this new ambition also remains questionable. In fact, a substantial adaptation of electricity networks will be required to provide an adequate response to the variability of renewable energy sources, and the EU has not yet provided detailed sources of funding. Europe will also have to develop a regional supply chain for battery manufacturing, of which components are mostly imported from carbon-intensive China.
By Tatiana Serova for Oilprice.com 9th May 2021
There was a slight pullback in oil prices following Wednesday’s highs, but the rally is still very much on and bullish sentiment is palpable as summer driving season nears.
Brent tested $70 per barrel on Wednesday 5th May but fell back on Thursday 6th. 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.
By Tom Kool for Oilprice.com 7th May 21
The global push for clean power generation and increased electrification in transportation is creating a new world order in energy where new winners and losers may emerge.
If the world moves toward predominantly renewable energy sources, the influence of a small number of oil-producing petrostates concentrated in a conflict-prone region is set to wane. At the same time, new power players will emerge, analysts say. These will be the countries holding reserves of the key energy transition minerals or hosting sites for the production of batteries, solar panels, and such with interconnectors for export and import of electricity.
In a world described by the International Energy Agency’s bombshell report from last week—in which it was explained that no new investment in oil and gas is needed, ever, if we are to achieve net-zero emissions in 2050—the energy warfare and the war for resources could shift from large-scale conflicts about oil to potential conflicts about electricity supply, including via cyber warfare.
Cyberattacks On Electricity Grids Could Intensify
America just got a glimpse of what a cyberattack could do to its energy supply. Although no electricity grids were targeted in the ransomware attack on Colonial Pipeline, the cyberattack on computer systems cut off supply of the main fossil-fuel product used in the United States as it stopped gasoline shipments to the Eastern Seaboard.
As the share of electricity in the global energy mix is set to grow exponentially in the coming decades, along with digitalization of operations and asset monitoring, the new threat to energy supply may not be a skirmish or a full-blown conflict near the Strait of Hormuz in the Middle East. It could be state-sponsored cyberattacks on electricity grids, Amy Myers Jaffe, a research professor at Tufts University’s Fletcher School, argues in an article in The Wall Street Journal.
The higher the digitalization and the adoption of the Internet of Things and Industrial Internet of Things in electricity grids and supply, the more chances hackers—including such backed by governments—could get to target parts of the networks, Myers Jaffe says.
To protect themselves against such threats, countries and companies may not only need to boost investment and defenses against cyber threats, but they may also need to show they are ready to retaliate if need be, Myers Jaffe notes.
Will The Energy Transition Lead To A More Peaceful World?
Some analysts argue that increased electrification and the rising share of renewable sources will lead to a more even distribution of energy resources as many countries either have wind or solar resources. This would compare to the current influential energy players—several oil producers in the Middle East, as well as Russia and Venezuela, which even today are managing global oil supply via the OPEC+ alliance to “ensure market stability.”
Researchers at the Norwegian Institute of International Affairs (NUPI) published last year a review of the existing research on the geopolitical consequences of the energy transition.
“We can distinguish between two camps: the “renewed conflict” camp and the “reduced conflict” camp. The first holds that renewables will not change the extent and frequency of energy conflicts and that they will just come in new forms. By contrast, people in the second camp think that renewable energy will increase energy independence and thereby reduce the level of conflict in the world,” Senior Research Fellow Roman Vakulchuk says.
Increased renewable energy use is likely to lead to increased ‘democratization’ of countries and could make the geopolitics of energy “less conflictual,” Vakulchuk and NUPI Research Professor Indra Øverland argue.
At any rate, the geopolitics of renewable energy will be much different from the geopolitics of oil and gas, where the key weapon is the importing countries’ “fear of resource scarcity”, they say.
Most analyses reviewed by NUPI conclude that big oil exporters will be especially hard hit in a new energy world order, and the oil reserves of Saudi Arabia, Russia, Venezuela, Brazil, and Nigeria could become “stranded geopolitical assets.”
“Countries that have historically enjoyed geopolitical influence because they supply fossil fuels are likely to see a decline in their global reach and influence unless they can reinvent their economy for a new energy era,” a 2019 report from The Global Commission on the Geopolitics of Energy Transformation, an independent initiative launched by the International Renewable Energy Agency (IRENA), concluded.
The Gulf countries such as Saudi Arabia, Kuwait, the UAE, and Qatar are highly exposed to changes in global energy influence, but they are also highly resilient with financial resources “to reinvent themselves and adapt to the energy transition,” the report said.
The question is, will those Middle Eastern oil and gas producers will move to “reinvent themselves” as fast as to willingly lose the still large geopolitical clout that comes from being the world’s major oil-exporting region.
Renewables Transition To Create New Energy Powerhouses
According to IRENA’s report, “No country has put itself in a better position to become the world’s renewable energy superpower than China.”
China, the world’s single largest oil importer, has made early moves into solar panels production, extraction of the key metals of the energy transition, and battery-grade minerals production, also with a view to reduce its reliance on oil and gas imports.
China, as well as countries like the Democratic Republic of Congo, which holds cobalt and copper resources, are set to increase their relevance in the supply chains. This fact is not sitting well with the United States as both the previous Trump Administration and the Biden Administration were and are working to reduce the risks in the supply chain for critical minerals.
The energy transition would shift the fear of resource scarcity away from the Strait of Hormuz and onto the resource holders of lithium, cobalt, copper, and nickel, as well as the security of electricity grids and interconnectors.
By Tsvetana Paraskova 25th May 2021 for Oilprice.com
Additional Oil Market commentary & Market Data available from the BBC here: Market Data
Last month’s oil market report can be found here: Goff Heating Oil Market Price Information April 2021 - Goff Petroleum
The Office for National Statistics record the price of heating oil and publish monthly updates on the average delivered cost of a domestic delivery of 1000 litres of kerosene in the UK . The information held by the ONS is freely available online and can be found here: ONS Price of heating oil