Tuesday, September 15, 2020 /06:53
PM / by Josh Owens of Oilprice.com / Header Image Credit: Oilprice
Today, we will take a quick look at some of the
critical figures and data in the energy markets this week.
We will then look at some of the key market movers early this week before
providing you with the latest analysis of the top news events taking place in
the global energy complex over the past few days.
Chart of the Week
- The U.S. exported 5.2 billion cubic feet of natural gas per day
(bcf/d) in 2019, up from 0.3 bcf/d in 2017.
- In the first three months of 2020, LNG exports averaged 7.9
bcf/d, a 98 percent increase year-on-year.
- But the pandemic-related supply glut hit hard after that.
In June, the U.S. only exported 3.6 bcf/d. In
July, that fell to 3.1 bcf/d.
- Murphy Oil (NYSE: MUR) was upgraded to a Buy rating
with a $14 price target by MKM Partners.
- Northland Capital initiates coverage on 11 energy E&P
stocks. Its top natural gas pick was Range Resources (NYSE: RRC) due
to its cost structure and lower maintenance CAPEX. Northland Capital's top oil
pick was Concho Resources (NYSE: CXO).
- Ecopetrol (NYSE: EC) said it
would drill 100 Permian wells by
the end of 2021.
Tuesday, September 15, 2020
Oil prices jumped on Tuesday morning as Hurricane Sally forced outages in the
Gulf Coast, but the overall market sentiment remains bearish compared to prior
months. Both the IEA and OPEC released their monthly reports, and both struck a
more pessimistic tone, downgrading oil demand.
Sentiment is weakening. In its latest Oil Market Report,
the IEA struck a bearish tone, saying its outlook is more "fragile" than last
month. The agency noted that the pandemic is showing no signs of abating,
falling in some places but rising in others. Notably, demand in India fell
month-on-month. The agency cut its demand forecast by 300,000 bpd for this year
and by 0.6 mb/d for 2021. The IEA sees inventories drawing at a rate of 3.4
mb/d for the second half of 2020, a substantial draw but 1 mb/d narrower than
warns of peak demand. BP (NYSE: BP)
became the first oil major to declare that the world has
past peak oil demand. The company's most bullish scenario has demand "broadly
flat" for the next two decades. In more bearish scenarios, BP sees demand
collapsing by 50 percent or 80 percent by 2050.
$60 oil in 2021. Oil prices are set to rise to $60 a barrel
by the end of next year as the oversupply will have been drawn down by then,
according to Citigroup, which is bullish on oil.
No shale growth until end-2021. U.S. shale may not grow
until the end of 2021, according to a prediction from Trafigura, one of the
world's largest oil traders. "It's not dead - it's just on an enforced
sabbatical,2 Ben Luckock, Trafigura's co-head of oil trading, said at an industry
cuts demand forecast. In its latest monthly report, OPEC cut its demand forecast for
2020 by 400,000 bpd and by 770,000 bpd for 2021. The group also sees non-OPEC
supply growing by more than previously expected. "Further downside risk and
higher uncertainty in the economic outlook exist for the near term, as India's
economy may not be through the worst of the situation yet," OPEC said. "With
this in mind, it is likely that fiscal stimulus will require a large boost."
refineries, platforms, and ports shut for hurricane. Hurricane
Sally is set to make landfall along the Gulf Coast, forcing the energy industry
to evacuate staff and shutter facilities. According to U.S. government data, as of Monday
afternoon, 147 offshore production platforms were evacuated, or 22 percent of
admin favors ethanol, considers aid for refiners. President
Trump vowed over the weekend to allow higher concentration ethanol (E15) to be
sold with existing refueling infrastructure. That comes shortly after he instructed EPA to deny
waivers to small refiners seeking exemptions from biofuels blending
requirements. At the same time, Bloomberg reports that EPA is
considering a plan to give cash aid to refiners affected by the decision.
shale production continues to decline. Crude oil production
in the U.S. shale patch is set to decline by 68,000 bpd next
month, with every play registering declines in output except the Permian, the
Energy Information Administration said in its latest Drilling Productivity
recording shows oil executives concerned about flaring. The
New York Times reported that a secret
recording of a 2019 meeting of oil and gas industry executives revealed that
while they were publicly saying that methane emissions were not a problem and
therefore did not need to be regulated, privately they were concerned that
rampant flaring was threatening their industry.
Half of oil industry cash flow negative. At $40 per barrel,
the global oil industry, including both international and national oil
companies, are struggling. "Around half of the 50 companies we cover are cash
flow negative in 2020 and 2021 at today's oil price," Wood Mackenzie wrote in a note. The firm
estimates that upstream spending will come in at about $310 billion this year,
down by 30 percent from 2019 and down by 60 percent from the 2014 peak at $730
East 2 pipeline ordered new route. Pennsylvania officials
have ordered Energy
Transfer (NYSE: ET) to reroute a section of its $3 billion
Mariner East 2 pipeline after an August spill outside of Philadelphia.
Haftar commits to ending blockade. The Libyan National
Army's Khalifa Haftar has committed to ending a blockade of oil export
terminals in the country. The potential return of over 1
mb/d of supply would weigh on crude prices.
sues ExxonMobil. Connecticut filed a lawsuit on Monday
against ExxonMobil (NYSE: XOM) for misleading the public over
the impacts of climate change, the latest in a string of legal cases against
the oil major.
cuts CAPEX, focuses on pre-salt. Petrobras
(NYSE: PBR) lowered its CAPEX guidance
for the next four years to $40-$50 billion, down from $64 billion previously.
More than 70 percent will go into pre-salt.
energy eats away at fossil fuels. Renewables have been the fastest-growing energy
source in recent years and are expected to continue to be such in the coming
decades. Last year, renewables accounted for 41 percent of the rise in energy
demand, the largest of any energy source, BP Statistical Review of World Energy
The post Hurricane Outrages Provide Temporary Relief For Oil Markets first appeared in Oilprice.com on September 15, 2020.
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