Energy Prospectus

Opening Prices:
WTI is up 53c to $51.95/Bbl, and Brent is up 77c to $57.11/Bbl.
Natural gas is down 0.6c to $1.820/MMBtu.

Closing Prices:
WTI prompt month (MAR 20) was up $0.63 on the day, to settle at $52.05/Bbl.
NG prompt month (MAR 20) was up $0.011 on the day, to settle at $1.837/MMBtu.

Oil prices rebounded in the second half of this week, as markets eyed progress in China on the coronavirus. “The market is getting more comfortable that we’ve hit the bottom,” Rebecca Babin, a senior equity trader at CIBC Private Wealth Management, told Bloomberg. “Oil markets have discounted the worst case and could show more resilience as long as cases outside of China are not spiking.”

IEA: Demand will contract in 1Q. The IEA not only revised down its full-year 2020 oil demand forecast, but it also said that first quarter consumption would contract by over 400,000 bpd, the first year-on-year contraction in more than a decade. The agency said that the market remains in flux, and predicted a steadying of the supply/demand balance in the second half of the year.

Nigeria’s oil could fall by 35 percent. Nigeria’s oil production could decline by 35 percent in the next ten years due to regulatory uncertainty, high costs and low prices.

LISBON (Reuters) – The coronavirus epidemic in China has had a marginal impact on energy markets and it is unlikely to dramatically impact oil prices even if Chinese demand falls by 500,000 barrels per day, U.S. Energy Secretary Dan Brouillette told Reuters on Thursday. < MY TAKE is that once it is confirmed that the death rate is ~2% the FEAR will fade. Just like the regular flu (that kills over 400,000 each year, new cases will drop sharply in the summer.

Brouillette cautioned, however, that there had been some “slowing” of Chinese energy purchases. He said there could be a greater impact if the new virus continued to expand at a rapid pace, affecting flights in and out of the country and hitting China’s economy.

“But at this point it’s marginal,” he said during a visit to Portugal. “If the Chinese market is off by half a million barrels, that is 0.5% of total market, we are not going to see that impact on pricing very dramatically.”

Oil demand is set to fall by 435,000 bpd this quarter, in its first decrease since the financial crisis in 2009 due to the coronavirus outbreak in China, the International Energy Agency (IEA) said on Thursday.

Analysts’ estimates over the hit to global demand from the virus range from 0.2% to over 1%. < Global demand for oil was over 101 million barrels per day in 2019.

Asked about these estimates, Brouillette said “a 1% decrease in consumption worldwide is significant, but it is not material at this point of time”.

He cited a relatively small increase in prices after recent events such as a drone attack on Saudi oil facilities last September.

“Had that happened 10 years ago, 12 years ago, we would have seen prices spike real high,” he added.

Asked about U.S. policies regarding climate change, Brouillette said the administration wanted to develop technologies to allow large wind and solar plants to feed electricity non-stop into the power grid, which should also be equipped with “grid-scale” battery storage. < Bullish news for Nano One.

“If we can reach that, then I think we’ll achieve, at an even faster pace, some of the climate goals we all seek to achieve,” he said.

Brouillette added, though, that the United States would still seek to develop all energy resources, from zero-emission energy to nuclear power and fossil fuels.

“That diversity brings not only strength, but lower pricing to the market as well. If the consumers have those types of options they get better pricing and we get better result on the climate issues that we all care about as well.”

He said his discussions with various European countries had focused on developing infrastructure for U.S. natural gas exports – such as a pipeline connecting Spain and France – and renewable technologies.