COVID-19 resurgence sends oil prices falling
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Oil prices have trended down in the past two weeks on concerns that the resurgence of COVID 19 cases in Europe and the subsequent lockdowns in France and Germany will have an impact on oil demand.
The UK is also considering a four-week lockdown, leading hedging funds to sell off the equivalent of 53 million barrels of oil in the week to 27 October, according to Reuters.
The West Texas Intermediate crude benchmark is currently trading at $US37 ($52.4) per barrel, down from $US40.03 per barrel two weeks ago.
Other factors impacting on oil demand include the imminent US presidential elections with Shearman & Sterling’s energy group partner Sarah McLean saying a Biden win would spur investment in renewable energy.
Norwegian energy intelligence firm Rystad Energy believes that the impact of the pandemic and the growing shift towards low carbon energy will cause the world to hit peak oil demand of about 102 million barrels per day (MMbbl/d) in 2028.
It had previously estimated that peak oil demand would reach 106MMbbl/d in 2030.
Rystad added that global oil demand will slump to about 89.3MMbbl/d this year and will not return to pre-pandemic levels of about 100.1MMbbl/d until 2023.
This estimate falls between the pessimism expressed by supermajor BP, which said in its annual outlook in September that oil consumption may never recover to pre-pandemic levels, and OPEC’s outlook that global oil demand will exceed pre-pandemic levels in 2022 and grow steadily until it begins to plateau in the late 2030s.
The sale marks the end of a long association with the Copper Basin that stretches back more than 20 years when it was still known as Victoria Petroleum.
“Our hub-and-spoke infrastructure operating model is established in the Surat Basin, and we have a diverse portfolio of low-risk, high-return investment opportunities to pursue from our extensive gas reserves position,” managing director Ian Davies said.
Beach, another long-time Cooper Basin operator, notes that the acquisition will add about 6.8 million barrels of oil equivalent (boe) to its proved and probable reserves while adding about 600,000 boe to its forecast 2021 financial year production.
There is also potential for growth as the assets include more than 10 drill-ready prospects.
Meanwhile, Triangle Energy (ASX:TEG) has said that BP’s decision to convert its Kwinana Refinery in Western Australia into a fuel import terminal will not impact the delivery of crude oil from its Cliff Head field for some time.
BP has advised the company that the refinery will continue operating in its current state for many months while it completes its planning for the conversion and has committed to discussions to reach an understanding of what the conversion will mean for the Cliff Head supply agreement.
Triangle is now assessing alternate opportunities that may be available once the refinery ceases operations.
It produced 579 barrels of oil per day during the September 2020 quarter.