Saturday, May 16, 2020 /08:00
AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice

Oil prices are continuously
rising despite the uncertainty surrounding COVID-19, with WTI nearing a
two-month high on Friday morning
For further research, analysis and trade recommendations, make sure you read
this morning's Global Energy Alert newsletter. From an analysis on Saudi
Arabia's current economic crisis to the latest updates on COVID-19, it truly is a
must-read.


Friday, May 15th, 2020
Oil prices appear to be
rising relentlessly, with WTI bouncing above $28 per barrel, nearly at a
two-month high. Market sentiment has been gaining steam as supply shut-ins
mount and demand begins to come back. Still, the risk of another wave of
coronavirus infections presents a major risk to
the rally.
OPEC+
could keep cuts beyond June. "The ministers want to
keep the same oil production cuts now which are about 10 million bpd, after
June. They don't want to reduce the size of the cuts. This is the basic
scenario that's being discussed now," one OPEC+ source told Reuters.
Analysts
see optimism in data. Oil timespreads have seen a
narrowing contango, a sign of tightening in
the oil market. "We believe stocks will be reduced gradually over the next 12
months or so," said Rystad
Energy head of oil markets Bjornar Tonhaugen. "Brent stabilizing above $30
gives the market confidence that frightening days of negative prices and record
daily declines are behind us."
Saudi
oil "flotilla" delayed at ports. The flotilla of Saudi
super tankers heading to
U.S. ports have been delayed because there has been a shortage of the smaller
ships used to lighten the load near shore.
Storage
fears subside. Due to sharp cuts in oil production,
the pace of inventory builds has slowed dramatically, easing fears of an acute shortage in storage capacity.
Iraq
cuts 650,000 bpd from southern fields. Iraq cut 650,000
bpd from its massive southern oil fields in order to comply with the OPEC+
cuts. The reductions have been split between state-owned companies and the
private international companies.
Exxon
CEO under fire. ExxonMobil (NYSE: XOM) CEO
Darren Woods is under scrutiny after
Legal & General Investment Management, which oversees $1.5 trillion in
assets, said it would vote against Woods as CEO and Chairman at the company's
upcoming shareholder meeting. The investment group cited Exxon's "lack of
strategic ambition around climate change," while its European competitors "step
up and reaffirm their sustainability ambitions."
WoodMac:
oil demand may not recover until 2026. Wood Mackenzie
outlined several scenarios in a new report, all of which paint a pessimistic
outlook for oil demand. The firm said it could take years for demand to
recover, but ultimately, demand will probably peak within the next decade.
Fed
warns economic damage will persist. Federal Reserve
Chairman Jerome Powell warned of
an "extended period" of economic damage. St. Louis Fed Chair James Bullard
warned job losses could be permanent and businesses could fail "on a grand
scale."
WHO:
Coronavirus may "never go away." The World Health
Organization warned that the world may live with COVID-19 indefinitely. "It is
important to put this on the table: this virus may become just another endemic
virus in our communities, and this virus may never go away," WHO emergencies
expert Mike Ryan told an
online briefing.
Venezuelan
opposition wants "change of direction" from U.S. The
Venezuelan opposition is reeling after the government easily thwarted a hapless
coup attempt by American contractors. Opposition lawmakers have contacted the
U.S. State Department and requested a change of direction, according to Bloomberg.
Nearly
600,000 clean energy jobs eliminated. The U.S. lost
447,000 clean energy jobs in
April, taking the total job losses for the sector close to 600,000 since
March.
Diamond
Offshore takes stimulus, pays executives. Diamond
Offshore (OTCMKTS: DOFSQ) took advantage of stimulus money passed by Congress, getting a $9.7 million tax refund. Then it
asked a bankruptcy judge to reward top executives the same amount. Oil
companies are receiving hundreds of millions of dollars in stimulus money. "This is a stealth bailout for the oil and gas industry," Jesse Coleman, a
researcher with Documented, told Bloomberg.
North
Dakota to pay to cleanup orphaned wells. North Dakota
wants to use $33.1
million in coronavirus aid to pay for cleaning up oil wells "orphaned" by the
industry.
Alaska
oil payout at risk. Alaska sends a check to every
citizen every year as a dividend from oil revenues. This year, the check is
expected to be about $1,000. But with revenues drying up, that payout is at risk.
Nigeria
to cut oil by a quarter. Nigeria said that
it would cut its oil production by 417,000 bpd, or about 23 percent of total
output, to bring it in line with the OPEC+ agreement.
Tesla
to unveil new low-cost battery. Tesla (NASDAQ:
TSLA) is set to introduce a
new low-cost battery with a longer range for its Model 3 in China later this
year. The improvement will bring the cost of the car in line with gasoline
vehicles.
BP
said governments should press ahead with clean energy. BP (NYSE:
BP) said that governments should "press ahead" with
climate change policy. "We have got to do the energy transition - this isn't an
option," BP CFO Brian Gilvary told the FT.
LNG
price war could send gas into negative territory. Gas
markets are oversupplied and LNG exporters are scrambling, looking for some combination of
fighting for market share and storing excess supply. U.S. inventories of
natural gas are expected to continue to rise this year.

Related News - Previous Oilprice Intelligence Report
- Bullish Sentiment Is Creeping Back Into Oil Markets - OIR 120520
- Oil Holds Gains Despite Massive Unemployment - OIR 080520
- The Worst
May Be Over For Oil - OIR 050520
- A Rare Week
of Optimism For Oil Markets - OIR 010520
- Earnings
Season Will Be A Bloodbath For Oil Producers - OIR 280420
- A Very
Brief Oil Price Rebound - OIR 240420
- Oil Price
Mayhem - Is The Market Broken? - OIR 210420
- Oil Prices
Fall Towards $15 for WTI and $25 for Brent As Storage Nears Capacity - OIR
170420
- Oil Prices Crash Towards $30 Despite Historic Cuts - OIR 100420
- Have Oil Bulls Got It Wrong? - OIR 070420

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- Low Oil
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