Tuesday, January 28, 2020 /08:40
PM / By Tom Kool of Oilprice.com / Header Image Credit: Oilprice
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. We hope you enjoy.
of the Week
- U.S. oil production is expected to average 13.3 million
barrels per day (mb/d) in 2020, an increase of 9 percent from last year,
according to the EIA. The agency sees output
averaging 13.7 mb/d in 2021.
The agency expects the rig count to continue to decline
through most of 2020. But improved rig efficiency means that output could
continue to climb, albeit at a slower rate.
The EIA sees the Permian averaging 5.2 mb/d this year, up
0.8 mb/d from 2019.
- Key Energy Services (NYSE: KEG) reached a debt
restructuring agreement with creditors, helping it avoid bankruptcy. Key is a
well-services company based in Houston, and it was delisted from the NYSE last
Eni (NYSE: E) announced a gas and
condensate discovery in the Mahani onshore block in the UAE. Halliburton (NYSE: HAL) was awarded seven contracts for
drilling and completion services at the next phase of the Ichthys LNG project
Tuesday January 28, 2020
The coronavirus continues to send panic through global
markets. Oil prices turned positive on Tuesday, with WTI trading close to $54
and Brent just above $59. With tens of millions of people essentially locked
down in China, oil demand is expected to take a hit.
mulls deeper cuts. The sharp drop in oil prices over the
past week and fears about a renewed oil supply surplus has OPEC+ turning on the
rumor mill again. An OPEC source says that the group will consider extending
the cuts until June, while other
source said the group might also consider a deeper cut from
current levels. The current deal expires in March.
much panic? Oil has declined by around $7 per barrel in a
little over a week, and some analysts think the selloff has gone too far. "Several questions remain unanswered about the potential fallout from the
coronavirus, but if the experience from the 2003 SARS outbreak is any
indication, demand worries are likely overdone," Barclays said in a note.
Others agreed. "We believe coronavirus is a Chinese jet fuel demand story for
now and not yet a global demand story," RBC Capital Markets wrote.
oil production falls to 280,000 bpd. Libya's oil production
has plunged to 280,000 bpd as
the LNA continues to blockade the country's oil export terminals. Libya has
very little storage capacity so once filled, output could soon fall further.
The head of the National Oil Corp. said that the country's oil production is
rapidly falling to zero.
stock hits 10-year low. ExxonMobil (NYSE: XOM)
closed at a 10-year low on Monday. Bloomberg notes that the oil major is
running a counter-cyclical strategy - spending heavily at a time when prices
are low and supply is readily available - in order to profit from the next
cycle. Most if its big projects - Guyana, Mozambique, Gulf Coast petrochemicals - will not "meaningfully begin contributing" to cash flow until 2023-2025,
Scotiabank said. Goldman Sachs said that its "concern" is the "lack of [free
cash flow] in the business model if oil prices do not recover."
to complete Nord Stream 2. Gazprom will move forward
without foreign companies in order to complete the Nord Stream 2 pipeline. The
project is nearly complete but has been delayed because of U.S. sanctions. "The
Nord Stream 2 project, which is already 94 per cent complete, will be finished
by the Russian side," Gazprom deputy head Elena Burmistrova said.
planning storage and renewables fund. The world's largest
asset manager is creating a
multibillion-dollar renewable energy fund, which follows on the heels of its
decision to no longer finance coal projects.
Mexico to hit 1 mb/d. The state of New Mexico likely
surpassed 1 mb/d of oil production in November, according to Rystad Energy. The
southeast corner of the state has become one of the hottest parts of the Permian. "Over half of the state's oil production comes from wells set in 2019, making
the sub-basin one of the areas with the youngest base production. This is
putting pressure on base decline as younger wells decline faster," Rystad said.
prices continue to fall. JKM prices are down 40 percent
year-on-year, amid a global glut of gas. Prices recently fell below $4/MMBtu.
If prices fall further, it would put pressure on U.S. natural gas prices,
dragging them down even lower.
to revise mileage rule. The Trump administration is trimming its plan to
rollback Obama-era fuel economy standards in order to boost the odds the plan
survives legal challenges.
makes new discovery in Guyana. ExxonMobil
(NYSE: XOM) raised its Guyana oil
estimates by 2 billion barrels after disclosing yet another discovery.
weighs privatization. The Venezuelan government is
proposing giving shares to foreign companies in the country's oil operations,
which would amount to a significant departure from decades of state control.
The government has held talks with Rosneft, Repsol (BME: REP)
Eni (NYSE: E), according to Bloomberg.
rise could mean a hard fall. Tesla's
(NASDAQ: TSLA) extraordinary spike recently - with its share
price doubling since October - sets up the possibility of a hard fall.
- The "Twin Threats"
Facing Big Oil
- OPEC Mulls Extending Oil
Production Cuts Through End-2020
- Oil Bears Are Back As Demand
Fears Go Viral
- Four Promising Oil Trends To
Watch In 2020; Nigeria Giving Majors Some Pushback
- Oil Falls Despite Major Outage
In Libya - 210120
- The Single Biggest Factor In Oil
This Week - OIR 170120
- Average Prices Of PMS, AGO, HHK
and Cooking Gas - December 2019
- Nigeria's Oil Production Slips
for the Third Consecutive Month
- Oil Prices Trade Close to $70pb,
Thanks to Rising Geopolitical Tensions
- Oil Traders Obsess Over Weak
Demand and Oversupply - OIR140120
- Oil Bears Return With A Bang -
- US, Iran Hostilities: Chevron
Pulls Out Staff From Iraq As Crude Oil Price Drops
- Is The Oil Price Rally Already
Over? - OIR 080120
- The Wait is Over: Uganda's Long
Road to First Oil
- US, Iran Hostilities: Global
Crude Oil Prices Trend Upwards
- Is This The Next Great Oil
- Prospect Of War Pushes Oil To
Seven Month High - OIR 030120