April 14, 2020 / 7:21 PM / by Tom Kool of Oilprice.com /
Header Image Credit: Mario Tama/Getty Images/AFP
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.
As another note, with OPEC and its partners failing to inject some bullish
sentiment into oil markets with their historic production cut deal, our
analysts recently shared their forecasts on where oil will go from here
We hope you enjoy.
Chart of the Week
The Permian basin is on track to lose 76,000 bpd in May,
month-on-month, ending a decade of nearly uninterrupted growth.
Natural gas production is also set to decline. The Permian
will lose 32 million cubic feet per day. The much larger Appalachian basin will
lose 326 mcf/d in May.
ExxonMobil (NYSE: XOM) sold $9.5
billion in debt this week, just a month after it sold $8.5 billion in debt. 'The logic behind Exxon's deal was to stock up further on cash while the market
is still open to issuers of new debt," Reuters reported. Royal Dutch Shell (NYSE: RDS.A) ended force majeure on
exports of Nigeria's Forcados crude oil after a pipeline reopened. Halliburton (NYSE: HAL) and Schlumberger
(NYSE: SLB) both saw credit downgrades by Wells Fargo
Tuesday April 14, 2020
Oil has given up all the gains it had made since the
start of the month as markets come to view the OPEC+ deal as inadequate. OPEC+ agreed to cut nearly 10
mb/d, and depending on who is doing the accounting, additional cuts from other
non-OPEC countries take the reductions up close to 20 mb/d. In reality,
however, the market-based cuts from the likes of the U.S. will occur anyways
and won't be switched off overnight. Oil showed little life after the historic
deal was announced, highlighting the magnitude of the massive drop in global
say OPEC+ deal comes up short. Goldman Sachs said it was "too little and too late" for the oil market. JBC Energy said it was "just a plaster on an open wound." The 9.7-mb/d OPEC+ cut is likely not going to be enough to halt the build in
oil inventories. Goldman estimates that even with full compliance of the OPEC+
cuts, another 4.1 mb/d of shut-ins are likely by May.
of OPEC+ deal questioned. OPEC+ agreed to a two-year deal
in an attempt to inspire confidence about market stability. However, analysts
also questioned the solidity of that commitment. "The current deal has been
forged under duress and is much more likely to fall apart over time", Bjarne
Schieldrop, chief commodities analyst at SEB, said in a statement. "Saudi
Arabia's economic need for a production volume of 12-13m bl/day in a $50/bl
world, and Russia's strong distaste for production cuts as a means for achieving
higher prices, are fundamentals which the current deal cannot circumvent."
say more cuts might be needed. Saudi Arabia said that more
cuts are possible. "Flexibility and
pragmatism will enable us to continue to do more if we have to," Prince
Abdulaziz bin Salman told reporters on a conference call yesterday. "We have to
watch what's happening with demand destruction or demand improvement, depending
on how things evolve."
Worst downturn since 1930s depression. Oil fell back not
only because of the OPEC+ deal coming up short, but also because the global
economic outlook is dire. The IMF warned on Tuesday that global GDP will shrink
by 3 percent in 2020, and that the economic shock would be worse than the
recession a decade ago.
RRC considers cuts. The Texas Railroad Commission held a
hearing on Tuesday to weigh a proposed cut in production in the state. Pioneer
Natural Resources (NYSE: PXD) CEO Scott Sheffield said the
state should order a 20 percent cut in production, which would amount to a
1-mb/d reduction. Odds are low, according to some analysts. "It's a very small
minority that wants to take action so it's hard to imagine the commissioners
will impose limits", Regina Mayor, KPMG International's global head of energy,
told Bloomberg. "It'd not only
be un-American but unimaginably un-Texan".
imports rise. China's oil imports rose in March by 4.5
percent year-on-year, as refiners took advantage of cheap crude to stock
Arabia says U.S. shale was not a target. Saudi Arabia said
that U.S. oil producers were not the target of the recent price war. "I made it
clear that it was not on our radar or our intention to create any type of
damage to their industry," Saudi energy minister Prince Abdulaziz bin Salman said.
company hires restructuring advisers. FTS
International (NYSE: FTSI), a hydraulic fracturing company,
hired advisers to plan for a debt restructuring.
oil could hit $45 this year. If oil demand rebounds then
oil prices could rebound to $45 per barrel
by the end of the year, the chief executive of Gazprom said.
shuts production in Gulf on Exxon leak. Royal Dutch
Shell (NYSE: RDS.A) said that a leak at an
offshore pipeline operated by ExxonMobil (NYSE: XOM) forced
Shell to shut in production at its 100,000-bpd Perdido platform in the U.S.
Gulf of Mexico.
suspends work at Tengiz site. The Chevron (NYSE:
CVX) led Kazakhstan venture will suspend construction work
at the $45 billion Tengiz expansion project due to the coronavirus outbreak.
Dozens of cases of the virus have been reported at a workers' camp near the
admin denies requests for royalty relief. The Interior
Department said it would not issue
blanket royalty relief for oil and gas companies, but would offer relief on a
take $1 billion stake in European oil companies. Saudi
Arabia's sovereign wealth fund invested $1 billion in four
European oil majors - Equinor (NYSE: EQNR), Royal Dutch
Shell (NYSE: RDS.A), Total (NYSE: TOT) and Eni (NYSE: E).
than half of global licensing rounds could be canceled. The
pandemic and the collapse of oil prices could lead to more than half of global
licensing rounds for new oil and gas offerings getting canceled, according to
Rystad Energy. "This year was slated to be another remarkable year for
exploration with about 45 countries launching at least 52 lease rounds, about
60% of them in offshore areas," Rystad said in a report. Half of those could be
Vaca Muerta on life support. Argentina's
YPF (NYSE: YPF) cut production at its flagship Loma Campana
field by 50 percent as demand collapses and pipelines clog up. The Vaca Muerta,
one of the most exciting shale basins in the world outside of North America is
in freefall due to low oil
- Oil Supply
Deal: Market Stability Desired
Production Cuts: Implications for Nigeria
Sachs: Don't Expect Oil Prices To Rise On Historic Oil Deal
- Trump Wants
OPECplus To Double Its Production Cut
- G20 Oil
Nations Agree To 3.7m Bpd Cut
Agrees To Less Than 10m Bpd Cut
- Oil Prices
Crash Towards $30 Despite Historic Cuts - OIR 100420
Statement from the G20 Extraordinary Energy Ministers Virtual Meeting
- Big Egos,
Poker Faces, and Deep Pockets Meet to Address Oil Glut
- Global Oil
Producers Agree On Joint 10 Million Bpd Output Cut
- Nigeria is
Ready for OPEC Talks - Sylva
- Fall Out of
OPECplus Coalition Pushed Oil Prices Lower to $31.92 per barrel in March
Aiteo, Seplat and Others Collaborate To Fight COVID-19