“The decade of geothermal” is a phrase that is becoming increasingly common in media and energy industry gatherings. This is as the international zero-emission comes into place. It includes one of the most fascinating and clean ways of extracting energy from the earth. It is through geothermal power. Let’s talk more about abandoned oil wells now.

Geothermal companies need to drill—and they need to drill deep. This is to reach the heat that the mantle of the Earth radiates into the core. In fact, one of the biggest challenges for this emerging industry is drilling deep enough to get to the really high temperatures: drilling so deep is risky and costly.

Yet geothermal can do pretty well even at smaller depths. According to a recent analysis by Rystad Energy, to generate electricity from the vaporized water heated up in geothermal wells, a power generation facility needs temperatures of 240 to 300 degrees Celsius. The analysis adds that as much as 70 percent of geothermal output right now is useable for electricity generation.

Indeed, with the urge to electrify everything—whether this is wise or not—it’s all about electricity and, more specifically, emission-free electricity. Geothermal is perfect for this: while the drilling of a geothermal well does involve equipment that uses fossil fuels, from a lifetime perspective, geothermal is fully comparable with wind and solar, which are also not entirely emission-free given the materials they need to operate.

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Source: Oil Price

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Goldman Sachs had a forecast and is now even more bullish on oil. It is expecting Brent Crude prices to hit $75 a barrel in the third quarter this year. On the back of faster market rebalancing, the lower expectation on inventories and traders is still hedging against inflation.

The investment bank’s analysts forecast Brent Crude prices reaching the $70 a barrel mark. This is during the second quarter of this year. Moreoever, it is now and hitting $75 in the third quarter. With that, Goldman Sachs is thus lifting its previous Q2 and Q3 forecasts by $10 per barrel.

“Faster re-balancing during the dark days of winter will be followed by a widening deficit this spring as the ramp-up in OPEC+ production lags our above-consensus demand recovery forecast,” said Goldman Sachs.

“We further believe that this additional rally receives full support by the current repositioning for a reflationary environment with investors turning to oil, buying a lagging real asset that benefits from a stimulus-driven recovery and has demonstrated an unmatched ability to hedge against inflation shocks,” the analysts noted.

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Source: Oil Price

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A New Oil Supercycle Is Beginning? The world’s biggest names in oil trading and analyzing can’t seem to get on the same page when it comes to predicting what will happen next for the volatile commodity.

Some, like Jeffrey Currie of Goldman Sachs and Christyan Malek of JPMorgan, according to the Financial Times, are confident that oil is ready for the next supercycle—a prolonged rise in the price of oil.

And when they refer to this rise, they’re talking $80, or even $100 per barrel.

What Do Others Say?

Others, like oil analyst Arjun Murti who correctly predicted the last $100+ per barrel achievement seen between 2008 and 2014, say that talk of this next supercycle may be a bit hasty.

For Malek, he sees a situation where demand outstrips supply, before “we don’t need it in the years to come.”

The reason for supercycle predictions is simple: stimulus packages. Most notably the stimulus package that the U.S. government is expected to roll out, are expected to boost consumption.

And according to Currie, this stimulus will create a “significant, commodity-intensive consumption”. This is as the stimulus package is mostly targeting lower and middle-income households.

“These people don’t drive Teslas,” Currie explained. “They drive SUVs”.

Murti, on the other hand, thinks that if oil demand were to increase by half a million barrels per day. That is over the next year. This means it wouldn’t be enough to outstrip supply.

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Source: Oil Price

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Brent Crude oil hits $60 a barrel early on Monday, rising above that threshold for the first time since the start of the COVID-19 pandemic early last year.

As of 8:54 a.m. ET on Monday, Brent Crude was trading at $60.10, up by 1.28 percent, and WTI Crude was up 1.25 percent at $57.56.

Continued production restraint from the OPEC+ group and the extra cut from the alliance’s key member and world’s top oil exporter, Saudi Arabia, supported oil prices at the start of this week, after oil posted last week its third consecutive weekly gain.

The tightening of the oil market, combined with prospects of a rise in demand later this year with COVID-19 cases now falling and vaccination rates increasing, have been boosting oil prices since the start of February.

The Brent futures curve is also strengthening in backwardation, the state of the market signaling tighter supplies with the prices of the nearer futures contracts higher than those further out in time.

Prompt oil prices are now at more than a one-year high—the last time Brent was above $60 a barrel was in late January 2020.

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Source: Oil Price

Image: Off shore oil rig about twenty minutes past sunset. Credit: arbyreed/Flickr

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Natural gas prices exploded on Monday, with spot prices soaring more than 10% as cold weather threatens the Northeastern part of the United States.

At 1:30 p.m. EST, the spot price for natural gas was $2.833 per MMBtu, a 10.49% increase on the day or an increase of $0.269.

That price is about 50% higher than this time last year when it was trading at around $1.80 per MMBtu.

Front-month natural gas futures (NG1) were $2.84 at that time, as traders anticipate increased demand for the commodity as a massive storm heads toward the northeastern United States.

Monday’s outlook adds 18 heating degree days compared to Friday’s outlook, according to Wood Mackenzie.

“The unseasonably cold weather is expected to arrive this weekend and stock around through next week… The polar blast could mark some of the coldest temperatures seen this winter in much of the U.S.” Wood Mac analyst Mark Spangler said in a note to clients today.

And the price of natural gas may climb higher still, with more cold weather in store toward the middle of this month.

Some areas of the United States like Kansas, Alaska, Massachusetts,  and Wisconsin, could see this week—or are already seeing–the coldest temperatures so far this winter. The increased demand could help to draw down stubborn inventories.

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Source: Oil Price

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