- Europe lockdowns threaten fuel demand recovery
- Most of Europe is now under the strictest restrictions, according to the Oxford stringency index, which assesses indicators such as school and workplace closures, and travel bans (Reuters)
- The U.K. imposed a new national lockdown on Monday that is expected to last six weeks. Additionally, Germany extended its lockdown until the end of January, and Italy extended its lockdown to January 15. The lockdowns have expanded beyond Europe, with Shijiazhuang, the capital of China's Hebei province, having banned all residents from leaving the city
- In response to the renewed lockdowns, Goldman updated its 1Q2021 market outlook to reflect weaker market conditions
- Oil prices above the $50/Bbl mark will not encourage significant production growth (Bloomberg)
- Bloomberg estimates that at $50/Bbl, nearly all shale-plays are profitable. The most productive U.S. oil play, the Permian Basin, needs oil in the low to mid $30s to break even
- Many producers have said that price alone will not encourage more drilling and completion activity. A more balanced market is required for U.S. shale companies to grow production. Still, prices above $50/Bbl will allow shale producers to pay off debt and strengthen their balance sheets
- U.S. retail gasoline prices are at their highest since the pandemic began (Reuters)
- The U.S. national price average for regular unleaded gasoline was $2.29/gal on January 7, 2020
- The average price of gasoline has increased by 5c or 2% this week. Still, prices are walking a tight-rope as additional lockdowns threaten fuel demand