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EIA Lifts Oil Price Outlook, Sees WTI Averaging $50 This Year https://oilprice.com/Latest-Energy-News/World-News/EIA-Lifts-Oil-Price-Outlook-Sees-WTI-Averaging-50-This-Year.html
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<span class=”article_byline”>By <a href=”https://oilprice.com/contributors/Charles-Kennedy”>Charles Kennedy</a> – Feb 10, 2021, 6:30 PM CST</span>

<p>WTI Crude spot prices are expected to average $50.21 per barrel this year and $51.56 next year, the Energy Information Administration (EIA) <a href=”https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf”>said</a> in its monthly Short-Term Energy Outlook (STEO) for February, raising its average price forecast for both WTI and Brent.</p><p>In the January <a href=”https://www.eia.gov/outlooks/steo/archives/Jan21.pdf”>outlook</a>, the EIA hadn’t expected <a href=”https://oilprice.com/oil-price-charts/45″>WTI Crude</a> spot prices to average above $50 per barrel either this year or next year. EIA’s call early last month was for an average $49.70 WTI spot price in 2021 and $49.81 per barrel price in 2022.  <!– /192633929/OilPrice-300×250-ATF-Mobile –>
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<p>For <a href=”https://oilprice.com/oil-price-charts/46″>Brent Crude</a> prices, the EIA now sees the average spot price at $53.20 a barrel this year and at $55.19 per barrel next year. These projections are higher than in the January outlook, which had forecast Brent to average $52.70 this year and $53.44 in 2022.</p><p>Despite the increased outlook for the average annual spot prices, the EIA expects Brent Crude prices to be lower later this year compared to this quarter, as a result of rising oil supply, which is set to slow the global inventory drawdown. According to the EIA, Brent crude will average $56 per barrel in the first quarter this year, and $52 a barrel over the remainder of 2021.<!– /192633929/OilPrice-300×250-BTF-Mobile –>
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<p>“EIA also expects that high global oil inventory levels and spare production capacity will limit upward price pressures. EIA expects Brent prices will average $55/b in 2022,” the administration said.</p><p>The EIA expects WTI Crude prices to remain close to $50 a barrel or higher, which will incentivize more U.S production, and output from new wells will exceed the declines from legacy wells at some point in the latter half of this year. Overall crude oil production will increase in the second half of 2021 and in 2022, EIA said, estimating that U.S. oil production will average 11.0 million bpd in 2021—down from 11.3 million bpd in 2020—and will rise to 11.5 million bpd in 2022. </p><p>By Charles Kennedy for Oilprice.com</p><p><strong>More Top Reads From Oilprice.com:</strong></p>
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<p><strong><a href=”https://blockads.fivefilters.org”></a></strong> <a href=”https://blockads.fivefilters.org/acceptable.html”>(Why?)</a></p> Thu, 11 Feb 2021 00:30:00 +0000 Charles Kennedy
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https://oilprice.com/Latest-Energy-News/World-News/EIA-Lifts-Oil-Price-Outlook-Sees-WTI-Averaging-50-This-Year.html

The Most Fragile Oil Price Rally In History https://oilprice.com/Energy/Energy-General/The-Most-Fragile-Oil-Price-Rally-In-History.html
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<p class=”authorBox__authorBio”>Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.</p>
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<span class=”article_byline”>By <a href=”https://oilprice.com/contributors/Irina-Slav”>Irina Slav</a> – Feb 10, 2021, 6:00 PM CST</span>

<p>Brent crude could hit $70 or even $80 a barrel by the end of this year, one hedge fund manager says. It could top $100 next year, an energy analyst forecasts. Oil is on a tear, and suddenly, everyone is bullish. But this is probably the most fragile oil price recovery in history. Something as tiny as a virus could kill it.</p><p>Herd immunity is the big factor for hedge funds, according to a recent Reuters report. According to them and several banks, the United States—the world’s biggest oil consumer—will reach herd immunity by the middle of the year, which will coincide with summer driving season to the benefit of oil producers.</p><p>“By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” one hedge fund manager, David D. Tawil of Maglan Capital, told Reuters.</p><p>Government stimulus will also help. In fact, it could even push prices to $100 and over,<a href=”https://oilprice.com/Energy/Oil-Prices/Could-Oil-Prices-Break-100-Next-Year.html”> according</a> to Energy Aspects’ Amrita Sen.</p><p>“We’ve always called for $80 plus oil in 2022. Maybe that is $100 now given how much liquidity there is in the system. I wouldn’t rule that out,” Sen told Bloomberg this week.</p><p>Central banks and governments have been more than generous with stimulus to weather the effects of the crisis caused by the pandemic, and while some are skeptical about the long-term benefits of some measures, the overall sentiment towards them is positive.<!– /192633929/OilPrice-300×250-ATF-Mobile –>
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<p>There are some flies in the stimulus ointment, however. In Europe, some analysts are warning that government support for businesses is<a href=”https://www.ft.com/content/9b304e20-49cf-4fba-81a0-4d06f930d7a1″> creating</a> so-called zombie companies that will collapse the moment the stimulus end, which it will eventually have to do. In the United States, some analysts have<a href=”https://finance.yahoo.com/news/the-risk-of-biden-overstimulating-the-economy-214119643.html”> questioned</a> the need for President’s Biden $1.9-trillion stimulus program saying the economy is already picking up, however slowly, and a stimulus package as huge as this one could lead to excessive inflation, which could have unexpected consequences.</p><p>And then there are the oil producers, many of which have been struggling to stay afloat since the pandemic hit the global scene. With rising oil prices, the struggle will end, but it will also tempt many to start producing more, especially as demand recovers thanks to mass vaccinations.</p><p><span><strong><a href=”https://www.youtube.com/watch?v=62qb_5PgwFs&ab_channel=OilpriceVideos” target=”_blank” rel=”noopener”>Related Video: The Painful Death Of Coal</a></strong></span></p><p>This is the dominant expectation: that by the summer, there will be enough people vaccinated for life to begin to return to normal, including in oil demand. Analysts and financiers note that oil companies are much warier about production growth this time and will hold off returning to growth mode for longer. This may or may not be the case, but what most analysts and financiers seem to be brushing off is the possibility of a resurgence in Covid-19 infections.</p><p>It is not a thought many would readily entertain, not after the months of lockdowns and travel restrictions that decimated air travel and oil demand alike. Yet medical experts in senior positions such as the director of the U.S. Centers for Disease Control are<a href=”https://www.cnbc.com/2021/02/08/covid-variants-cdc-director-warns-strains-could-reverse-drop-in-cases-hospitalizations.html”> warning</a> that the new variants of the coronavirus that caused the pandemic could indeed lead to new spikes in infections. These variants appear to be spreading faster than the original virus, medics have said, but the bigger problem is that the vaccines we have available may not be effective against them.<!– /192633929/OilPrice-300×250-BTF-Mobile –>
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<p>“They’re more virulent, can cause more death, and some of them may even escape the immune response, whether it’s natural or from the vaccine,” said Dr. Celine Gounder, member of the Biden-Harris Transition Covid Advisory Board last week.</p><p>This is all it would take for bullish oil price forecasts to crash and burn: another resurgence in cases and the news that available vaccines don’t work against the new virus variants. It may well be this risk that is making producers so unusually wary about their return to production growth. This wariness, coupled with OPEC+’s continued cuts, would likely limit oil’s downside potential for a while, even if new Covid-19 cases do start to rise again in any of the biggest oil markets. <span><strong class=”related”> <a href=”https://oilprice.com/Energy/Energy-General/Oil-Prices-Post-Longest-Winning-Streak-In-Two-Years.html” target=”_blank” rel=”noopener”>Related: Oil Prices Post Longest Winning Streak In Two Years</a></strong></span></p><p>Interestingly enough, the hedge funds Reuters interviewed don’t seem to factor in the shift to renewable energy that is expected to depress oil demand permanently. On the contrary, despite many a government’s green transition plans, financiers expect a bright future for oil, not just this year and next.</p><p>“Oil companies, for the first time in a long time, are likely to make a big comeback,” Jean-Louis Le Mee, chief of hedge fund Westback Capital Management told Reuters. “We have all the ingredients for an extraordinary bull market in oil for the next few years.”</p><p>It is an interesting situation: governments and environmental groups are pushing for less oil and more renewables as soon as possible, touting the falling costs of solar and wind, and the breakthroughs in storage. Those who trade oil, on the other hand, expect a recovery in demand strong enough to lift prices to where they were before the pandemic and before the announcement of all these energy transition plans. It would be fascinating to watch who ends up correct.</p><p>By Irina Slav for Oilprice.com</p><p><strong>More Top Reads From Oilprice.com:</strong></p>
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<p><strong><a href=”https://blockads.fivefilters.org”></a></strong> <a href=”https://blockads.fivefilters.org/acceptable.html”>(Why?)</a></p> Thu, 11 Feb 2021 00:00:00 +0000 Irina Slav
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Is This The Carbon Capture Technology Of The Future? https://oilprice.com/Latest-Energy-News/World-News/Is-This-The-Carbon-Capture-Technology-Of-The-Future.html
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<span class=”article_byline”>By <a href=”https://oilprice.com/contributors/Fernando-C-Hernandez”>Fernando C. Hernandez</a> – Feb 10, 2021, 5:50 PM CST</span>

<p><span>As the world increases its Net Zero and decarbonization efforts, many Energy Transition technologies are being introduced to meet the Paris Agreement’s </span><a href=”https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement#:~:text=Its%20goal%20is%20to%20limit,neutral%20world%20by%20mid%2Dcentury.”><span>global temperature targets,</span> </a><span>an agreement which the U.S has now rejoined. </span><a href=”https://www.iea.org/reports/direct-air-capture”><span>Direct Air Capture</span> </a><span>(DAC) is one such technology that aims to reduce carbon emissions by removing CO2 from the atmosphere. However, this green-friendly technology has a not-so-green side as well, as it can be used to enhance oil and gas production by injecting the captured CO2 into reservoirs: this method has been used by oil producers for years.</span></p><p><span>In November, Occidental (OXY) announced their Net Zero program, becoming the first U.S. oil major to target the complete decarbonization of operations by 2040 and counteract indirect emissions by 2050. It also affirmed OXY’s commitment to developing a DAC plant.</span></p><p><span>In December, OXY </span><a href=”https://www.reuters.com/article/united-arlns-climate-occidental/united-airlines-invests-in-carbon-capture-project-to-be-100-green-by-2050-idUSKBN28K1NE”><span>joined forces</span> </a><span>with United Airlines to specifically remove atmospheric CO2 that comes from sources such as vehicles, industrial complexes, and aircraft. United Airlines, a major consumer of refined petroleum products, sensed the appeal of DAC and shared its plan to invest millions in the technology as a way “to become 100% green by reducing greenhouse gas emissions 100% by 2050.” If successful, this technology would mean United Airlines would not have to rely on purchasing carbon offsets to balance their emissions.</span></p><p><picture><source srcset=”https://d32r1sh890xpii.cloudfront.net/tinymce/2021-02/1613000641-o_1eu758t2u1oq91khckjt1slsk758.webp” type=”image/webp”><source srcset=”https://d32r1sh890xpii.cloudfront.net/tinymce/2021-02/1613000641-o_1eu758t2u1oq91khckjt1slsk758.jpg” type=”image/jpeg”><img src=”https://d1o9e4un86hhpc.cloudfront.net/” alt=”DAC” title=”DAC” data-large=”true” class=”lozad” data-src=”https://d32r1sh890xpii.cloudfront.net/tinymce/2021-02/1613000641-o_1eu758t2u1oq91khckjt1slsk758.jpg”></picture></p><p><span>OXY’s DAC plant capturing atmospheric CO2.</span></p><p><span>A Net Zero Partnership Company</span></p><p><a href=”https://carbonengineering.com/news-updates/new-development-company-1pointfive-formed/”><span>Oxy Low Carbon Ventures</span><span>, </span></a><span>a </span><span>subsidiary of OXY, and Rusheen Capital Management created a partnership</span> <span>via </span><a href=”https://www.1pointfive.com/”><span>1PointFive</span><span>, </span></a><span>allowing companies such as United Airlines to join and bolster DAC technology. Importantly, 1PointFive will license the DAC technology from </span><a href=”https://carbonengineering.com/”><span>Carbon Engineering</span><span>.</span></a><!– /192633929/OilPrice-300×250-ATF-Mobile –>
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<p><span><strong><a href=”https://www.youtube.com/watch?v=62qb_5PgwFs&ab_channel=OilpriceVideos” target=”_blank” rel=”noopener”>Related Video: The Painful Death Of Coal</a></strong></span></p><p><span>OXY envisages this technology as being part of the largest DAC plant ever created. This is a view that United Airlines’ CEO, Scott Kirby, echoed in </span><a href=”https://www.cnbc.com/2020/12/10/united-airlines-turns-to-co2-removal-technology-to-offset-emissions-.html”><span>a CNBC interview</span><span>, </span></a><span>remarking “it is the largest [DAC plant] and sequestration project in the world, and we are a partner in it.”</span></p><p><span>Sequestering, also referred to as CO2 storage, is a crucial component of the DAC plant. Once the CO2 is processed by the DAC plant, the CO2 can then be injected underneath the surface and stored/sequestered in a reservoir. Of course, utilizing a reservoir as the source point for oil and gas production in the context of a global decarbonization effort may be problematic.</span></p><p><strong>The Permian Basin and DAC Technology</strong></p><p><a href=”https://www.oxy.com/News/Pages/Article.aspx?Article=6095.html”><span>OXY has designated</span> </a><span>the</span> <span>Permian Basin as the construction area for its DAC plant. This is a prolific oil-producing region that stretches across Texas and New Mexico, an area that accounted </span><a href=”https://www.eia.gov/energyexplained/oil-and-petroleum-products/where-our-oil-comes-from.php”><span>for nearly 50%</span> </a><span>of America’s oil production in 2019. OXY has 3.0 million acres dedicated to oil and gas activities in this basin. The DAC plant’s construction is set to commence in 2022 and is expected to have the ability to capture as much as 1,000,000 metric tons of CO2 per year. While a DAC plant in the Permian Basin makes sense, huge cities like Houston with an international airport and plenty of emissions could be targeted with this tech in the future. </span></p><p><picture><source srcset=”https://d32r1sh890xpii.cloudfront.net/tinymce/2021-02/1613000723-o_1eu75bctm1foo1gip22e1ca4ai78.webp” type=”image/webp”><source srcset=”https://d32r1sh890xpii.cloudfront.net/tinymce/2021-02/1613000723-o_1eu75bctm1foo1gip22e1ca4ai78.jpg” type=”image/jpeg”><img src=”https://d1o9e4un86hhpc.cloudfront.net/” alt=”DAC” title=”DAC” data-large=”true” class=”lozad” data-src=”https://d32r1sh890xpii.cloudfront.net/tinymce/2021-02/1613000723-o_1eu75bctm1foo1gip22e1ca4ai78.jpg”></picture></p><p><span>In the image above you can see our EOR and sequestration would run in parallel at the proposed DAC plant.</span><!– /192633929/OilPrice-300×250-BTF-Mobile –>
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<p><strong>Oil Production via Green Technology</strong></p><p><span>As mentioned, the green-friendly technology that captures CO2 is not entirely green. Case in point: CO2 captured by the DAC plant can be injected into an oil and gas reservoir to increase production, a method known as Enhanced Oil Recovery (EOR), playing a key role in staving off a reservoir’s natural declination. Specifically, EOR is achieved by injecting CO2 into a reservoir that has a path to an oil</span></p><p><span>and gas producing reservoir. Such an approach promotes the movement of immobile oil, as shown in the image in the previous section, resulting in additional production. The injected CO2 can also become entrapped and captured in a reservoir’s caprock. OXY plans to use the captured CO2 to create fuels that have very low carbon, by way of its “Air-To-Fuel” approach. These methods of repurposing CO2 with the sequestering component, fall under the Carbon Capture Use and Storage (CCUS) category.</span></p><p><span>The U.N.’s Framework Convention on Climate Change </span><a href=”https://www.globalccsinstitute.com/resources/publications-reports-research/the-opportunities-to-promote-carbon-capture-and-storage-ccs-in-the-united-nations-framework-convention-on-climate-change-unfccc/”><span>views CCUS as</span> </a><span>a “key technology for the decarbonization of the energy sector in the long term.” The U.N. played a critical role in establishing a global accord to arrest global warming, prompting OXY, United Airlines, and other companies to strive for Net-Zero emissions.</span></p><p><strong>The DAC Plant and the Paris Agreement</strong></p><p><span>To what degree this technology program will adhere to the spirit of the </span><a href=”https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement”><span>Paris Agreement</span> </a><span>won’t be entirely clear until the DAC plant reaches an operational state. The U.S. has rejoined the Paris Climate Agreement, which aims to “limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels,” as outlined by the U.N. Thus, the approach taken by U.S. companies will have to follow the Paris Agreement to the best of there abilities. Only time will tell what bearing DAC technology will have on the global energy transition, but it seems some companies are hopeful.</span></p><p><span>By Fernando C. Hernandez for Oilprice.com </span></p><p><strong>More Top Reads From Oilprice.com:</strong></p>
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<h3 class=”articleAuthorBox__author”>Fernando C. Hernandez</h3>
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Fernando C. Hernandez is the Principal at Hernandez Analytica, he is trilingual and counts with over 15 years of international Oil and Gas experience. He… </p>
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<p><strong><a href=”https://blockads.fivefilters.org”></a></strong> <a href=”https://blockads.fivefilters.org/acceptable.html”>(Why?)</a></p> Wed, 10 Feb 2021 23:50:00 +0000 Fernando C. Hernandez
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