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Oil Ends Love Affair with Trump
Big Oil companies – those involved in the production and refining of oil – used to love Trump. He reduced regulations and opened up new drilling areas. As Trump continues to pursue a protectionist foreign trade agenda, however, oil companies just aren’t feeling the love anymore. Tariffs reduce overall demand for oil, and steel tariffs raise the cost of building new pipelines or refining units. Click Here to read more from World Oil.
Judge Dismisses Climate Change Suit against Oil Companies
On Monday, a federal judge ruled against two California cities who were suing oil companies for their contribution to climate change. The ruling largely ignored the question of climate change, instead ruling that Congress, not the courtroom, should set the terms for addressing climate change. Click Here to read more from The Hill.
Gasoline Prices Likely Have Peaked
According to the EIA, gasoline prices have likely reached their peak for the year. National average gasoline prices peaked at $2.96 in late May, and since then have been trending lower. Since 2000, the annual peak for gasoline prices has occurred before June at least 10 times. The EIA expects prices to fall to $2.84 by September, and decline to $2.68 by December. Of course, this is simply based on historical data, and past performance isn’t always an indicator of future results. Gasoline prices are highly cyclical, shooting up during the summer as demand increases and summer gasoline blends add refining costs, then fall during the winter. Click Here to read more from the EIA.
Pipeline Constraints Lead to Shut-In Wells
Given constraints shipping crude oil from Permian oil fields to refineries, many producers are forced to leave their drilled wells unused – called DUCs, or Drilled UnCompleted wells. DUCs rose to over 3,200 last month, almost double the counts a year ago. Pipelines taking crude from the Permian are nearly completely full, and are expected to be maxed out within the next few months. Rising DUCs count means lower production in the short-term (increasing prices), but as more takeaway pipeline capacity becomes available, those DUCs will be turned on quickly to increase production. Click Here to read more from Bloomberg.