RBC Capital Markets - Oil Market Update on Dec 11
Posted: Fri Dec 11, 2020 1:45 pm
Geopolitics, Oil, Natural Gas, Gold, Clean Energy and MENA Research
Helima Croft, Analyst at RBC Capital Markets
Incoming US National Security Advisor Jake Sullivan reiterated this week the
intention of the Biden administration to re-enter the JCPOA deal. Iran’s recent
nuclear activities will likely add to the urgency, as well as the difficulty of
achieving this key foreign policy objective. Oil prices are rallying, with refinery
margins and time spreads leading the way higher. With physical markets firming
and European demand accelerating out of lockdowns, the FOMO trade is in full
force. US LNG export levels remain at highs, and with strong demand in Asia and
thus healthy netbacks, not only are vessels without reservations waiting longer to
transit the Panama Canal, but some have taken the longer route. While the deep
decline in prices and ETF flows has deteriorated, gold is facing the tumult of US
stimulus negotiations. In our view, while gold prices are humbled we are not out
of the woods yet and allocations may still prove prudent. China’s concerted effort
to maximize control of supply chains is key to its evolving clean energy strategies.
Helima Croft, Analyst at RBC Capital Markets
Incoming US National Security Advisor Jake Sullivan reiterated this week the
intention of the Biden administration to re-enter the JCPOA deal. Iran’s recent
nuclear activities will likely add to the urgency, as well as the difficulty of
achieving this key foreign policy objective. Oil prices are rallying, with refinery
margins and time spreads leading the way higher. With physical markets firming
and European demand accelerating out of lockdowns, the FOMO trade is in full
force. US LNG export levels remain at highs, and with strong demand in Asia and
thus healthy netbacks, not only are vessels without reservations waiting longer to
transit the Panama Canal, but some have taken the longer route. While the deep
decline in prices and ETF flows has deteriorated, gold is facing the tumult of US
stimulus negotiations. In our view, while gold prices are humbled we are not out
of the woods yet and allocations may still prove prudent. China’s concerted effort
to maximize control of supply chains is key to its evolving clean energy strategies.