The GERM Report

-So much for energy independence

-Baker Hughes offers glimmer of hope

A dip in the trend in US employment levels and the latent response from API data showing a build in petroleum product inventories sent crude oil prices marginally lower in the Thursday session. President Biden, meanwhile, made good on his campaign pledges by advancing a greener agenda almost on day one. But the headwinds might not last. Oilfield services company Baker Hughes said it was expecting demand to recover from the pandemic rather quickly.

Crude oil prices drifted in negativity for much of the trading session Thursday, shrugging off the optimism that greeted the Biden administration. The price for Brent crude oil was down a fraction of a percent as of 3:15 p.m. ET to trade at $56.05 per barrel.

The Labor Department on Thursday reported first-time claims for unemployment insurance dipped by 26,000 to come in at 900,000 for the week ending Jan. 16. The less-volatile four-week moving average, however, was revised up by 23,500 to 848,000. Big states with big economies such as California, Texas and New York showed the most increase in initial filings. The get-to-work attitude displayed so far by the Biden administration could mute the overall impact, however, given the prospects for $1.9 million in new stimulus.

Biden on his first day in office revoked the permit for the Keystone XL pipeline and rejoined the Paris climate agreement. On Thursday, he placed a temporary moratorium on new drilling permits and leases on federal lands. The emphasis there should be on the words “new” and “temporary.” But industry groups lashed out nonetheless.

“Restricting development on federal lands and waters is nothing more than an ‘import more oil’ policy,” American Petroleum Institute President and CEO Mike Sommers said in a statement. “Energy demand will continue to rise—especially as the economy recovers—and we can choose to produce that energy here in the United States or rely on foreign countries hostile to American interests.”

That speaks volumes on the notion embraced by the Trump administration that, with net exports and increased production, the United States was energy independent.

Meanwhile, the oil sector itself continues to speak through fourth quarter earnings reports. Oilfield services company Baker Hughes said that, all things considered, it was reasonably pleased with the performance in the last few months of 2020. Looking ahead, the company said it expected demand to return sooner than later.

“As we look ahead to 2021, we are cautiously optimistic that the global economy and oil demand will begin to recover from the impact of the global pandemic,” Lorenzo Simonelli, Baker Hughes chairman and chief executive officer, said in a statement.