Mid-Week Review – May 26, 2021

WTI crude trading trends suggest a U.S. oil supply crunch as driving season nears
A key price spread in the market for West Texas Intermediate crude is signaling that oil traders are bracing for a potential supply crunch just ahead of the busy summer driving season that sparks a demand surge. The June-July WTI time-spread, also known as the prompt cash roll, traded at 20 cents a barrel Tuesday, the strongest level since May 2020, according to Bloomberg data. The spread serves as an indicator of supply-and-demand balances at the main U.S. crude storage hub in Cushing, Oklahoma. Its recent strength shows that inventories are tight just as oil refiners are ramping up output.

Oil producers face costly transition as world looks to net-zero future
Ali Allawi, Iraq’s finance minister, found himself in a quandary last year as the spread of coronavirus cut demand for oil and prices tumbled. Allawi’s treasury, which receives more than 90 per cent of its revenues from crude sales and spends 45 per cent of its total budget on salaries and pensions, suddenly didn’t have enough money to pay millions of public employees and retirees. OPEC’s second-largest producer borrowed billions of dollars, mostly from local banks, to bridge the shortfall. But public anger boiled over. The fallout of the virus then battered businesses as their most important customers — public employees — cut their spending.

Crude Oil Price Update – Trader Reaction to $66.05 Sets the Tone into Close
U.S. West Texas Intermediate crude oil futures are edging higher at the mid-session after clawing back all of its earlier losses. The market is getting a boost on uncertainty over a U.S./Iran nuclear deal. Last week, the market plunged as speculators bet on such a deal bringing more oil to an oversupplied market.

Exxon vs. Activists: Battle Over Future of Oil and Gas Showdown
For years, Exxon Mobil Corp. didn’t have to pay much attention to investors because of its gargantuan profits. Yet on a Friday night in January, Exxon Chief Executive Darren Woods was defending the company during a video call to an investor owning about 0.02% of the oil giant’s stock. Tech investor Chris James’s Engine No. 1 had launched an activist campaign against Exxon in December, calling the company a fossil-fuel dinosaur that lacked a coherent plan for surviving a global transition to cleaner energy sources. On the call, Charlie Penner, a hedge-fund veteran helping lead the Engine No. 1 campaign, pressed Mr. Woods to commit to steering Exxon to carbon neutrality, effectively bringing its emissions to zero—both from the company and its products—by 2050.