October 18, 2019 /07:40PM / By Tom Kool of Oilprice.com
/ Header Image Credit: Oilprice.com
Oil prices were down on Friday morning as
worrying fundamentals and economic uncertainty boosted bearish sentiment
further. OPEC+ is coming under an increasing amount of pressure to cut
production as its next meeting nears.
Oil prices were down on Friday morning as the global economy continues to
struggle with the realities of the U.S.-China trade war and crude inventories
continue to build.
Aramco IPO to be delayed. Just days before the
official launch of the IPO was to be announced, it now appears that the Saudi
Aramco public offering will be delayed again. Bloomberg reports that there is a gap between the
valuation that Aramco wants and the one that banks are coming up with. There is
also a lack of clarity on some aspects of the company, complicating the
calculus for the banks involved. It's unclear when the offering will go
forward, but Bloomberg said it would be delayed until at least December or
January, instead of November. Analysts
see deeper OPEC+ cuts in December. As a result of weak
demand a growing supply, and the growing likelihood of a glut in 2020, many
analysts are betting that OPEC+ undertakes deeper cuts when they meet in Vienna
in December. "If by December there are clear signs of economic weakness, then a
further deepening by a minimum of 500,000 barrels a day would be highly
likely," Citigroup's Ed Morse said.
EIA inventory build. The EIA reported a large 9.3-million crude oil
inventory build for last week.
services look to clean energy. A growing number of
oilfield services companies are pursuing clean energy projects. "Almost 100 per
cent of our tech development goes in the direction of the post-transition business," Stefano Cao, CEO of Saipem, an Italian engineering group, told the FT. "The collapse of the oil price [in 2014]
was an awakening to a new world." In August, TechnipFMC
(NYSE: FTI) announced plans to spin off its LNG business
so that it can focus on clean energy. The current downturn in the market is
likely accelerating this trend, analysts said.
fate in the balance as debt payment looms. Citgo has a
$913 debt payment due at the end of the month, and
creditors could seize parts of the company if it does not pay. But the company
is stuck in the middle of U.S. sanctions, and the geopolitical battle over
will scrutinize 2,000-foot setbacks. A
highly-anticipated study found that shale drilling operations pose health risks
to people within 2,000 feet of drill sites in Colorado. The study found that
the risk was highest during the flowback stage, when water and chemicals return
to the surface. State regulators said they would apply additional scrutiny
to drilling permits that are sited within 2,000 feet. Current law only requires
setback distance of 500 feet, or 1,000 feet for high-occupancy buildings.
Energy to buy gas gathering for $2.25 billion. DTE Energy's
(NYSE: DTE) pipeline unit, DTE Midstream, said that it would buy a natural gas
gathering line system in the Haynesville shale in Louisiana for $2.25 billion.
cuts to shale outlook. Several U.S. shale drillers saw
their credit outlooks cut by analysts in the past week. Low oil
prices and a struggle with profitability has soured investor sentiment.
to go on trial. After more than three years, ExxonMobil
(NYSE: XOM) will finally go to trial next week over
accusations that it misled shareholders about its financial risks from climate
change. The odds are steep for the New York Attorney General bringing the case,
but if Exxon loses the fallout could be significant. "If the state wins and
especially if it obtains a large award, disclosures may become even more
careful and even more cases may be brought," Michael Gerrard, director of the
Sabin Center for Climate Change Law at Columbia University, told E&E News.
U.S.' green economy worth $1.3 trillion. A new study
estimates that America's "green economy" supports 9.5 million jobs, or about 4
percent of the U.S. workforce, and generates $1.3 trillion in annual revenue,
or about 7 percent of U.S. GDP. "Don't listen to the political rhetoric," Mark
Maslin, a professor of geography and one of the study's authors, told Bloomberg. "Just look at the data and be hard-nosed
about it, and say, 'Okay, if we're going to support the economy and make it
grow and have lots of employment, this is where I need to invest."
prices fall on EPA plan. EPA released details on its "fix" for ethanol, and prices for ethanol credits sank after the Trump
administration seemed to deliver a disappointing proposal. Farm groups
were angered by the "broken promise."
shipping costs cut into U.S. exports. Bloomberg reports that due to the global spike in
shipping costs - following U.S. sanctions on Chinese shipping giants - the number
of deals on oil cargoes from the U.S. Gulf Coast is dwindling. "The Port of
Corpus Christi is preparing for a slower U.S. crude export growth rate from its
site in November because of the surge in freight rates from the Cosco
sanctions," said Sean Strawbridge, the chief executive officer of the Port of
coal layoffs. U.S. coal production is set to slide by 10 percent this year, which will
likely lead to more job cuts.
strong Permian results. According to Wood Mackenzie, ExxonMobil (NYSE: XOM) is
posting strong results in the Permian basin, including on decline rates,
parent-child well interference, and cost savings. The consultancy cautions that
it is still early, but Exxon is on its way to achieving its lofty production
goals in the Permian.
Energy declares force majeure on Keystone pipeline. TC Energy
(TSE: TRP) declared force majeure on the Keystone
pipeline after a snow storm hit Manitoba.
Thanks for reading and we'll see you next week.
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