Tuesday,
May 26, 2020 / 9:48 PM / by Tom Kool of Oilprice.com / Header
Image Credit: Oilprice
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.
We hope you enjoy.
Chart of the Week
- The U.S. South accounts for more utility-scale solar
installations over the past three years than any other region of the country.
- The "South Atlantic" region installed 2.2 GW of new solar
in 2019, according to the EIA, more than double the 1
GW installed in California.
- The EIA attributes strong solar growth in the South
Atlantic to state government incentives.
Market Movers
- Oklahoma-based oil and gas driller Unit Corp.
(NYSE: UNT) filed for Chapter 11
bankruptcy.
Private equity giants Riverstone Non-ECI and Riverstone QB
Holdings bought millions of shares
in Centennial
Resource Development (NYSE: CDEV). The Riverstone entities own
31.7 percent of Centennial. BP (NYSE: BP) said it would cut its
leadership in half, cutting senior management from 250 down to 120. "We expect
the reinvented bp to be smaller and nimbler. We have already started by
removing a layer of management at Tier 1 and 2," BP CEO Bernard Looney said in
an email to staff.
Tuesday May 26, 2020
Oil prices continue to show positive momentum as the oil market appears set to
rebalance faster than expected. Rystad estimates that the market was 16 mb/d oversupplied
in April. But by June, 4 mb/d in demand will come back and supply cuts of 12
mb/d will move the market back to an equilibrium, although at much lower levels
compared to the pre-pandemic era.
U.S.
shale permanently damaged? "February was peak shale," Daniel Yergin, vice chairman of IHS Markit, told the WSJ. Already struggling
with a poor track record of profits, U.S. shale may not rebound to previous
levels for years, if ever. More than 70 companies could file for bankruptcy this
year at $30 WTI.
Demand
on the upswing. Roughly 4.1 billion people went into
lockdown at its peak, but more than 90 percent of them live in areas that have
seen some sort of a reopening. Driving activity and gasoline demand are rising,
boosting bullish sentiment.
Peak
demand looms as threat to Russia. Russia's economy could be
in for years of stagnation as
demand for its oil and gas may begin to wane, according to a new study. The
study says that Russia's economy could be destined to grow at below 1 percent
for two decades, absent economic diversification. "The rents that we enjoyed
for the last 20 years will never come back," Alexei Kudrin, former finance
minister and now a top government auditor, warned in an article, Bloomberg
reports.
Russia
opens door to post-June cuts. Russia is considering extending the OPEC+
production cuts beyond June.
IEA: No peak demand yet. The IEA said that oil demand has
not yet peaked. "In the absence of strong government policies, a sustained
economic recovery and low oil prices are likely to take global oil demand back
to where it was, and beyond," the IEA's Fatih Birol told Bloomberg.
Qatar
pursues LNG expansion. Qatar is moving forward with the
development of the largest gas field on the planet. "The North Field expansion
project is moving full steam ahead, no delay there. The only issue is because
of COVID and suppliers and so on," said Saad al-Kaabi, Qatar's
energy minister. "In my view, you continue your plan and invest in the bad
times because these projects are long term." The project will increase Qatar's
production capacity from 77m tonnes of LNG per annum to 110m by 2025, the FT
said.
Global
LNG downturn. The glut of LNG worldwide could put the next
phase of liquefaction plants on ice. "We don't see any additional North
American export capacity getting sanctioned in the next decade," Ross Wyeno, an
LNG analyst at S&P Global Platts, told the Financial Times. The
glut could last until the mid- to late-2020s, according to analysts. Qatar's
decision to continue to expand export capacity edges out any other competitor
in the near-term.
Covid-19
spreads in Brazil's oil fields. At least five oil companies
have reported coronavirus cases
among their workforces in Brazil, including Equinor (NYSE: EQNR) and
Royal
Dutch Shell (NYSE: RDS.A). Brazil now ranks second in the world
for the number of positive cases, and there are at least 544 known cases in
Brazil's offshore oil fields.
U.S.
air traffic picking up. While still a fraction of
pre-pandemic levels, TSA data shows that passenger
throughput at U.S. airports is increasing. On May 25, more than 340,000 people
passed through American airports, nearly triple the low levels seen in April.
But that number still stands at about 15 percent of year-ago levels.
Iranian
tankers arrive in Venezuela. Despite threats from
Washington, five Iranian tankers carrying gasoline
arrive in Venezuela.
Gap
between physical oil and contracts shrinks. In a sign of a
tightening market, the price between physical oil and the Brent contract has
narrowed in recent weeks, after a huge gap in April. "A few weeks ago, we had
armageddon pricing when nobody wanted physical barrels apart from for storage," Richard Fullarton, chief investment officer at hedge fund Matilda Capital
Management Ltd., told the WSJ.
U.S.-China
tensions on the rise. Chinese President Xi Jingping said
that China was preparing for a worst-case
scenario of war. Tensions with the U.S. are on the rise and many geopolitical
analysts have predicted a new Cold War appears all but inevitable. But is a hot
war possible?
Rural
economies hit by dwindling oil revenues. Royalty checks to
landowners are falling because of low oil
prices and the collapse of drilling.
Related News - Previous Oilprice Intelligence Report
- Is The Oil
Rally Coming To An End?
- The Oil Bulls Are Back - OIR 190520
- A Relentless Oil Price Rally - OIR 150520
- Oil Holds Gains Despite Massive Unemployment - OIR 080520
- The Worst
May Be Over For Oil - OIR 050520
- A Rare Week
of Optimism For Oil Markets - OIR 010520
- Earnings
Season Will Be A Bloodbath For Oil Producers - OIR 280420
- A Very
Brief Oil Price Rebound - OIR 240420
- Oil Price
Mayhem - Is The Market Broken? - OIR 210420
- Oil Prices
Fall Towards $15 for WTI and $25 for Brent As Storage Nears Capacity - OIR
170420
Related News - Oil and Gas
- Average
Prices of PMS, AGO, HHK and Cooking Gas - April 2020
- Nigerian
Oil and Gas Industry Update
- Natural
Gas: Demand Pressure and Price Plunge hit LNG Revenue
- OMCs to
Resume Importation of Petrol
- 20.89bn
Litres of PMS Imported Into Nigeria in 2019 - NBS
- Ahead of
Tomorrow on WebTV: Discussions on Post COVID-19; Repositioning The
Nigerian Gas Industry
- OPEC Members Test the Depth of Crude Oil Reserves
- Big Oil,
Little Oil Have Full Lives Ahead - FBNQuest
- Groups Advocate for Reforms in the Downstream Sector of the Oil and
Gas Industry
- European
Oil Majors Could Adapt to Low Prices
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