July 14, 2020 / 06:55 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.
Chart of the Week
- In the first six months of 2020, henry hub natural gas prices averaged just $1.81/MMBtu, the lowest first half on record.
- For the month of June, prices averaged $1.63/MMBtu, the lowest monthly average since 1989.
- Factors include warm weather, high production, high inventories, Covid-19 related demand destruction, and the curtailment of U.S. LNG exports.
- The EIA expects spot prices to average $2.05/MMBtu in the second half of the year.
- Tellurian (NASDAQ: TELL) has failed to qualify for a
tender for competitively priced LNG in India, as the $2.5 billion stake
proposed by Petronet expired. The original announcement that the deal was in
trouble caused Tellurian's share price to crash several months ago. Breaking
ground on the Driftwood LNG project was previously pushed off until 2021.
- Hi-Crush (NYSE: HCR), a frac sand
supplier, filed for chapter 11
bankruptcy protection. The severe slowdown in drilling activity has sapped
demand for sand.
- Kinder Morgan (NYSE: KMI) sent a request to FERC to begin
service on its seventh LNG train at its Elba Island export terminal. The
company said Train 8 would be ready by July 13. Meanwhile, Kinder Morgan was
recently downgraded to Sell by Goldman Sachs.
Tuesday, July 14, 2020
Oil prices retreated on Monday over concerns about
more OPEC+ production and worrying Covid-19 numbers in the U.S., although crude
regained some ground in early trading on Tuesday. Oil prices remain stuck at
about the $40 and $43 price levels for WTI and Brent, respectively, awaiting
leans towards easing cuts. OPEC+ is right now leaning towards
allowing the production cuts to drop from 9.7 mb/d to 7.7 mb/d beginning in
August. The group's technical committee meets this week. The
challenge for the group is that while they don't want to cede market share to
other producers bringing production back, if they ease the cuts they risk pushing oil
prices down. Other analysts believe that because the market is technically
seeing a supply deficit, there is room for the group
this the end of the pipeline boom? The cancellation of the Atlantic
Coast pipeline and the potential death blow by a court to the Dakota Access
pipeline - a pipeline that was already online - raises the investor risk to
long-distance pipelines everywhere. Is the pipeline building boom over?
write-downs on the rise. The oil majors have announced a slew
of impairment charges as they revise down their long-term oil price
assumptions, with an eye on energy transition. The companies are dealing with
this challenge in different ways, but impairments may continue to rise for a
while. On Tuesday, Woodside Petroleum (ASX: WPL) announced a US$4.37 billion
Middle East loses $270 billion on downturn. Oil-producing
countries in the Middle East are set to earn $270 billion less in oil revenues this
year compared to 2019, with losses led by Saudi Arabia, according to the
International Monetary Fund. The region's overall GDP could contract by 7.3
percent this year. Oil-importing countries in the Middle East, such as Egypt,
will suffer less, with GDP expected to contract by just 1.1 percent.
proposes $2 trillion in clean energy. On Tuesday, Democratic
presidential candidate Joe Biden unveiled a $2 trillion
spending proposal for clean energy, which called for 100 percent emissions-free
electricity by 2035.
targets shipping to disrupt Venezuela. Shipping insurers are withdrawing services to
vessels that carry oil to and from Venezuela under pressure from the U.S.
oil imports surged. China's crude imports surged to 11.93
mb/d in June, a record high, and up 25 percent from a year earlier. A separate
estimate put imports at 12.9 mb/d for the month.
in Iran. Multiple explosions have hit Iranian nuclear facilities
in the past few weeks, and at least one study suggests it could set the Iranian
nuclear program back by two years. Analysts widely suspect either Israel or the
U.S., or both working together. The clandestine confrontation with Iran raises
new geopolitical risks to the region.
Energy: U.S. shale peaked. "I don't think I'll see 13m [barrels
a day] again in my lifetime," Parsley Energy (NYSE: PE) CEO
Matt Gallagher told the FT.
companies turn to renewables. Oil and gas companies are
increasingly deploying renewables to power their operations. IHS Markit says it
has tracked 45 renewable energy projects by oil and gas companies. The moves
help the industry lower the emissions of their operations.
restarts Guyana drilling. ExxonMobil (NYSE: XOM) restarted
drilling in Guyana in June, following a temporary suspension due to travel
restrictions related to the coronavirus. Exxon "will also adjust the pace of
our development projects and exploration activities" given the plunge in oil
prices, but still plans to pursue "key exploration opportunities," according to
a statement to E&E News.
City Fed survey finds ongoing stress. Roughly 32 percent of oil
executives responding to the Kansas City Fed survey said that they would
be insolvent within one year if current crude prices remain steady.
receives $2.5 billion in new funding. Electric vehicle startup Rivian
secured $2.5 billion in its
latest funding round. The Michigan-based EV company plans to launch production
of its R1T pickup and R1S SUV next year.
declares force majeure again. Just two days after it lifted the
force majeure on all oil exports, Libyaâ€™s National Oil Corporation has declared force majeure
again, citing a renewed blockade on its oil export terminals and blaming it on
interference from the United Arab Emirates.
hits 20-year low. The number of oil and gas wells drilled
globally is expected to hit 55,350 this year, the lowest level in two decades,
according to Rystad Energy. That represents a 23 percent drop from 2019 levels.
The number of wells drilled does not return to 2019 levels through at least
2025, as far out as the Rystad forecast goes.
finds upside in some energy stocks. Goldman Sachs issued Buy
ratings for Hess (NYSE: HES), Concho Resources (NYSE: CXO),
(NYSE: EQT), and Noble Energy (NASDAQ: NBL), while
issuing a Neutral rating for Cabot Oil & Gas (NYSE: COG) and
(NYSE: OVV). The banknotes that free cash flow upside potential
is being underappreciated by the market.
Related News - Previous
Oilprice Intelligence Report
- Oil Returns to $42 After COVID Correction - OIR 100720
- Oil Prices Range Bound As Pipelines Come Under Pressure - OIR 070720
- The Oil Rally Has Stalled Once Again - OIR 030720
- Oil Markets On Edge As Second Wave Hits - OIR 300620
- Oil Prices Fall Below $41 as a "Second Wave" of COVID Hits
- OIR 260620
Has Returned To Oil Markets - OIR 230620
- Oil Prices Climb Despite Fears Of A "Second Wave" - OIR
- Oil Markets Have Finally Found Stability - OIR 160620
- The Oil Price Rally May Have Gone Too Far
- Why Oil Prices Didn't Rally
After The OPECplus Extension
Related News - Oil and Gas
- Movement in
Oil Prices and What It Means for Nigeria
Nigeria from Perennial Oil Price Volatility
Arabia Eyes Total Dominance In Oil And Gas
Releases Advised Price for PMS for the Month of July 2020; Raises Pump
Price to N140
- NNPC GMD,
Oando GCE and Other Executives Attend AKK Gas Presidential Flag Off
- Coronanomics (24) - Sectorial Analysis of Nigeria's Oil Sector
Litres of PMS Imported Into Nigeria in Q1 2020 - NBS
- Average Prices of PMS, AGO, HHK and Cooking Gas - May 2020
Cuts Could Be Deeper for Longer
- Why Oil
Prices Didn't Rally After The OPECplus Extension