David Feldman

Three Things to Know in Energy – 11/6/2017

Blog Post created by David Feldman Champion on Nov 6, 2017

1. Saudi Prince Mohammed bin Salman arrests dozens of high-profile figures over the weekend.


Oil prices have reached a two year high, in large part due to Saudi Arabian Prince Mohammed bin Salman detaining multiple high-profile figures — including 11 princes, former ministers, and the billionaire Prince Alwaleed bin Talal.  The arrests are reported as a new anti-corruption probe headed by the kingdom.


The prince’s supporters maintain the arrest of princes is entirely about eradicating corruption, but others are speculating it serves a broader consolidation plan.  Even with the news, we don’t expect significant oil policy changes from the country any time soon.  Prince Mohammed bin Salman still appears strongly committed to the continued OPEC cuts into 2018 and moving ahead with the Aramco sale.


2. U.S. oversupply is coming to an end.


In 2017, we’ve seen a consistent and dramatic reduction in comparative inventory (C.I.).   Levels are down 159 mmb since February, approaching the 5-year average for the first time in almost three years.


What does that mean?  C.I. and WTI prices are inversely correlated.  That means when C.I. goes down, WTI prices go up.  If 2017 numbers continue, it’s projected that oil prices may be approximately $67 per barrel by the end of December.


3. AEP, one of the nation’s largest power companies plans to invest $1.8B in renewables over next three years.


In a move to provide cleaner energy solutions for its customers, Ohio-based American Electric Power (AEP) has announced it plans to invest $18.2 billion in capital from 2018 through 2020 its regulated operations and new, renewable generation.  Of the investment, 72% will be focused on transmission and distribution operations.  


“Today, we are solely focused on making the right investments to be the energy company of the future, including modern, smarter infrastructure; advanced technologies; and cleaner generation,” said Nicholas K. Akins, AEP’s chairman, president and CEO. “Investments in our distribution and transmission systems will provide significant benefits to customers as we rebuild and enhance aging infrastructure; add advanced, more efficient technologies; and create a more robust and resilient system.”