Energy Report: Dark Days Ahead

President's words matter. Oil prices are falling as President Joe Biden warns of dark days ahead. The President said that “Let me be very clear, things are going to continue to get worse before they get better.” Biden said at the White House, a warning the death toll from COVID 19 will exceed 500,000 in next month. "We didn't get into this mess overnight, and it is going to take months for us to turn things around. But let me be equally clear, we will get through this. We will defeat this pandemic." Yet in the short term, the dour outlook is shaking investor confidence. Despite a slew of executive orders, there is still doubt that Biden can get massive COVID 19 relief passed.

Pump Jack, Oilfield, Oil, Fuel, Industry, Petroleum

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The COVID 19 fears are impacting markets overseas. China was ahead of the US in containing the virus may be getting another wave of it. The AP reported that Shanghai imposed lockdowns on two of China’s best-known hospitals after they were linked to new coronavirus cases. Outpatient services have been suspended at Fudan University Shanghai Cancer Center and Renji Hospital. They have been cordoned off, along with some surrounding residential communities. After months of quelling small clusters with mass testing, isolation, and social distancing, China has seen outbreaks grow this winter, mainly in its frigid north. The National Health Commission on Friday announced 103 new cases had been detected over the past 24 hours.

The European Centre for Disease Prevention and Control (ECDC) today raised the risk of spread of new SARS-CoV-2 variants to very high, as COVID-19 activity in the United Kingdom, where the B117 variant is dominant, keeps a tight hold despite the country's third lockdown.

The markets are also getting more concerned that some of Biden's executive orders are going to slow economic growth. We know that on the energy side we are already pricing in contraction and that will translate to lower GDP growth from the energy sector. The killing of the Keystone pipeline has killed thousands of jobs and now the Biden administration has suspended new leasing for fossil fuel production on federal lands and waters, as well as the issuance of new drilling permits for sixty days that will also cause a freeze in investment and the loss of more energy jobs.

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