Tuesday, July 28 2020 / 8:37 PM / by
Josh Owens 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
40 U.S. producers surveyed by the EIA posted a combined $48
billion in write downs in the first quarter of 2020, the largest negative
adjustment in years.
The companies account for over 6 mb/d of U.S. oil
Although companies will not have to value their 2020
proved reserves until the end of the year, these first-quarter adjustments,
combined with crude oil prices that have remained much lower than 2019 levels
during the second quarter of 2020, indicate that the net present value of
proved reserves could continue to decline," the EIA said.
- Kinder Morgan (NYSE: KMI) is seeking to raise $1.25
billion in new senior notes to pay off $949 million in high-interest debt due
in September. The new notes would have a lower interest rate.
- Schlumberger (NYSE: SLB) was upgraded to Buy from
Neutral by Citigroup with a $26 price target (up from $20). The bank noted a "greater than anticipated benefit from restructuring."
- EQT (NYSE: EQT) said that all curtailed
shale gas production has been brought back online. The Pittsburgh-based gas
giant reported a net loss of $263
million in the second quarter.
Tuesday, July 28, 2020
Oil prices have been on autopilot for weeks, and the start of this week is no
different. Prices remain trapped in the low-$40s, hemmed in by supply
curtailments on the one hand, and concerns about depressed demand on the
overtakes Exxon to become #2. Reliance Industries has
surpassed ExxonMobil (NYSE: XOM) in market share, rising to the
second-largest energy company in the world after Saudi Aramco. Reliance has the
world's largest oil refinery and is now worth $189 billion, edging past the
LNG cargoes canceled, but fewer. Around 30 LNG cargoes have
been canceled from U.S. ports
for the month of September, another month of large cancellations. However, that
is fewer than the 50 canceled cargoes in July and 45 in August, offering some
glimmer of hope that the market is improving.
majors report earnings. The majors will report
second-quarter earnings in the next few days, and analysts expect the numbers
to be brutal. The consensus is that the top 5 majors will all report a loss. Royal Dutch
Shell (NYSE: RDS.A), Eni (NYSE: E), and Total (NYSE:
TOT) all report on July 30; ExxonMobil (NYSE: XOM)
(NYSE: CVX) report on July 31; and BP (NYSE: BP)
reports on August 4.
prepares for long-term decline. Some OPEC officials are admitting that oil demand
could be permanently damaged from the pandemic, and some are even admitting
that demand may have peaked. "The demand does not return to pre-crisis levels
or it takes time for this to happen," an OPEC source told Reuters. "The main concern
is that oil demand will peak in the next few years due to rapid technological
advances, especially in car batteries."
tech can track methane plumes. Kayrros is using satellite
technology that for the first time can track major leaks of methane with
pinpoint accuracy. More than 790 methane plumes were
emitted from energy infrastructure last year, a figure that is likely an
undercount because of clouds and other interference.
Sumed pipeline slows to a trickle. The Sumed pipeline in
Egypt has a capacity of 2.5 mb/d, bypassing the Suez Canal. But actual oil
flows have been running at about a quarter of that.
contractors take control of Libyan oil. Military
contractors with links to Russia have seized control of two oil
fields in Libya, including the country's largest field and its most important
export terminal, Es Sider. That has allowed the LNA to maintain an oil
blockade, scuttling attempts by the GNA to restart oil exports. Meanwhile, the
UN warned that the proxy war
in Libya between global powers risks starting a broader regional war.
planning for 30 million EVs by 2040. The UK expects EVs to jump to 30 million by 2040,
and the electricity grid could be carbon negative by 2033, according to
National Grid. That would require carbon capture and storage.
output on the rise. Canadian oil producers cut 1.3 mb/d of
production at the onset of the pandemic, and the curtailments allowed
inventories to come down and regional prices to rebound. The rig count is also
on the rise. "They're coming out of the other side of this in decent shape," Matt Murphy, an analyst with Tudor Pickering Holt & Co. in Calgary, told the WSJ. "I think in
hindsight it will have been a fairly smart decision to cut production."
driller Rosehill files for bankruptcy. Rosehill
Resources (NASDAQ: ROSE) filed for chapter 11 bankruptcy
protection. The company is active in the Delaware Basin.
majors find significant gas discovery in Egypt. Eni (NYSE: E),
(NYSE: BP) and Total (NYSE: TOT) have announced a new natural gas
discovery in offshore Egypt.
natural gas production expected to rebound. Gas output from
the Permian Basin is expected to rebound relatively quickly in the second half
of 2020 and will remain robust for years to come, Rystad Energy projects.
However, the pandemic may curtail investment in midstream capacity, which could
result in higher levels of gas flaring after 2023.
signs deals to develop Iranian oil field. Iran's Petroleum
Ministry has awarded a US$1.3 billion
development deal to more than double oil production at the supergiant South
Azadegan oilfield, the second such oil project signed this month, and a US$300
million development contract for Yaran. China is playing a key role in these projects.
Sachs recommends gold, warns about dollar. The U.S.
dollar's reign as the world's reserve currency is coming under threat, according to
Goldman Sachs. The investment bank recommended gold. "Gold is the currency of
last resort, particularly in an environment like the current one where
governments are debasing their fiat currencies and pushing real interest rates
to all-time lows," the bank said.
The post OPEC
Prepares For Long-Term Demand Risks first appeared in Oilprice.com on July 28, 2020.
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