Tuesday,
September 29, 2020 / 09:26 PM / by Josh Owens of Oilprice.com /
Header Image Credit: Oilprice
Chart of the Week
Market Movers
Tuesday, September 29, 2020
Oil prices slid on Tuesday as traders grew cautious on demand fears and
rising coronavirus numbers in the U.S. and Europe. "Sentiment is suffering from
the uncertainties related to Covid-19," said Harry Tchilinguirian, head of commodities strategy at
BNP Paribas SA.
Oil stuck at $40. Oil prices have been rangebound at around $40 per barrel for
months, and there is little sign that prices will break out anytime soon. "The
market is stuck," Giovanni Staunovo, a commodity analyst at UBS Group AG, told Bloomberg. "For prices to rally, OPEC+ spare capacity needs to drop,
and to see that, demand needs to recover further. As long as there's not a
second global lockdown, oil can't fall too far below $40".
India cuts refinery runs. Indian refiner Bharat Petroleum Corp. will maintain lower refinery runs due to weak diesel demand, a symptom of a
slow recovery in industrial demand.
Libya restarts exports. Libya's oil production has climbed to 250,000 bpd, up from 90,000 bpd, as the blockade on
the country's oil export terminals is partially lifted. Exports at the eastern
ports of Hariga, Brega and Zueitina have resumed, but Es Sider and Ras Lanuf
remain offline. JPMorgan and Goldman Sachs estimate that exports could rise to
0.5 mb/d by the end of the year, and potentially rising to 1 mb/d by the end of
the first quarter in 2021.
Rosneft criticizes BP's energy
transition. Rosneft
(OTCPK:RNFTF), which partners with BP (NYSE: BP) in Russia,
criticized the British company's shift to renewables. "It is an existential
threat for supply. It is an existential threat for price volatility... we will
have a [supply] crunch, price volatility, and yes higher prices," Rosneft's
Didier Casimiro told the Financial Times Commodities Global Summit.
Colorado drilling setbacks,
emissions control, go forward. The Colorado Oil and Gas Conservation Commission voted Monday for 2,000-foot setbacks. A final vote on that
rule and many others is expected in early November. The oil and gas industry
says the move will devastate drilling in the state by limiting drilling
locations. Meanwhile, a separate state agency passed first-in-the-nation rules requiring companies to cut
emissions from drill sits, storage takes and pipelines.
Devon Energy merges with WPX. Devon Energy (NYSE: DVN) will acquire WPX Energy (NYSE: WPX) in a $2.6
billion all-stock deal, a move that will make Devon larger than Apache Corp.
(NYSE: APA) and Marathon
Oil (NYSE: MRO). The share prices of both Devon and WPX jumped on the news,
but fell back on Tuesday. The move comes after Chevron
(NYSE: CVX) acquired Noble Energy, and may signal more consolidation
ahead. Notably, Devon has large acreage on
federal lands, which could be at
risk if Joe Biden wins the presidency. Acquiring WPX would diversify Devon's
holdings.
Technology will be vital as oil
and gas rebounds. The oil and
gas industry is going to have to rely heavily on technology to cut costs and
increase efficiency. According to industry giant Buurst
Inc, there are three key
technology trends that will
help revive the oil and gas industry. These trends include cloud storage,
closing data centers, and cross-platform business partnerships.
Natural gas prices surged on
weather. The U.S. west coast is seeing high temperatures, while
the east is in a cold spell. Natural gas prices surged to $2.80/MMBtu, but fell back to around $2.50/MMBtu on Tuesday.
Swedish battery maker raising
$600 million. Swedish lithium-ion
battery manufacturer Northvolt is raising $600 million in equity, with investors including
Volkswagen, Goldman Sachs and Spotify founder Daniel Elk. Northvolt aims to
capture 25 percent market share in Europe by 2030.
EPA pushes back on California
ICE ban. The U.S. EPA is raising legal questions about California's plans to phase out
gasoline and diesel vehicles.
Canada-to-Alaska railway to go forward. U.S. President Donald Trump is set to approve a $22-billion freight railway project that will run
between Alberta and Alaska to transport a variety of commodities such as oil,
ore, and potash, as well as container goods.
Trump's offshore drilling ban
hits offshore wind. The Trump
administration recently blocked offshore oil and gas drilling off the coast of
Florida, Georgia, and North and South Carolina. But the restrictions could limit offshore wind as well.
Judge removes BLM acting
director. For more than a
year, William Perry Pendley has led the Bureau of Land Management as an Acting
Director, having not received Senate confirmation. A U.S. judge ruled that his leadership was illegal, a ruling that removes
him from the job. The ruling has broader implications. There are now legal questions over whether every BLM rule under his tenure may now be
invalidated - decisions that may affect oil and gas leasing.
Shell preparing thousands of job
cuts. Royal Dutch Shell (NYSE: RDS.A) is preparing thousands of job cuts as it nears the completion of a
major restructuring.
China on track to buy record
LNG. China is on track
to increase LNG imports by 10 percent this year to a new record
high.
China's car sales increase. In a sign of
ongoing recovery, China's car sales have increased for two consecutive months.
Guyana nears deal with
ExxonMobil. Guyana is close to reaching a deal with ExxonMobil (NYSE: XOM) to approve the
company's Payara project.
Trafigura forms renewables unit. Oil trader Trafigura announced plans to invest $2 billion in renewables.
Oil and gas investment to fall,
then rebound. The amount of new
money going into oil and gas FIDs will drop to around $53 billion, down from
2019's $190 billion, Rystad Energy projects. FID spending will double next year
and exceed pre-pandemic levels already from 2022, the firm said.
Credit:
The post Oil Market
Sentiment Suffers As COVID Uncertainty Grows first appeared in Oilprice.com on September 29, 2020.
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