June 16, 2020 /05:50 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.
- The Southwest Power Pool - the electric grid operator for much
of the Great Plains - set a record high of 62 percent
of its electricity provided by renewable energy for a full day on March 7,
- For 2019 on average, wind accounted for 29 percent of the
region's electricity, with a high of 37 percent for the month of October.
- SPP has 21 GW of wind installed, or about 24 percent of the
area's nameplate capacity.
- Cabot Oil & Gas (NYSE: COG) faces
felony charges for
environmental crimes in Pennsylvania from a decade ago.
- BP (NYSE: BP) was asked by the Iraqi
government to cut production at the Rumaila field in Iraq by 10 percent in
order for the country to comply with the OPEC+ production cuts.
- Vista Proppants & Logistics LLC,
a private equity-backed frac sand supplier, has filed for bankruptcy.
June 16, 2020
Oil initially sank on Monday on fears of a second wave of coronavirus, but
rebounded after the Federal Reserve promised to begin buying corporate bonds.
Rystad Energy says that oil might be moving into a more stable trading range
between $35 and $40.
to write off $17.5 billion in assets. BP (NYSE: BP) said
it would write down $17.5 billion in assets due to a lower-for-longer outlook
on oil prices, the largest writedown by an oil major in years. The announcement
caused the company's share price to slide 1.5 percent. BP also suggested that
it will continue to pursue a cleaner energy transition, and the write-down
punctuates the grim long-term outlook for oil and gas. The announcement also
comes just a few days after deciding to cut 10,000 jobs from the company.
Oil market on the mend. The IEA said in its latest Oil
Market Report that the second half of the year will be brighter than the first,
with demand rising and sharp supply cuts balancing out the market. Still demand
will be down 8.1 mb/d. Demand rebounds in 2021 by 5.7 mb/d, leaving demand
short of pre-pandemic levels until 2022 at least.
second wave of coronavirus infections poses a threat to oil.
A feared second wave of coronavirus
infections may have arrived, with cases rising in many parts of the U.S., while
exploding much more rapidly in Latin America. In China, a small number of new
cases raised fears of a return of the virus. With much of the market pricing in
a steady rebound in demand, any renewed lockdown or economic hit would drag oil
Supreme Court rules in favor of major gas pipeline. The
Supreme Court ruled in favor of the
Atlantic Coast Pipeline, a long-distance pipeline that would carry Marcellus
shale gas to the U.S. Southeast. The pipeline has been delayed for years, and
controversially, crosses the Appalachian Trail. Originally expected to cost $5
billion, the cost has risen steeply. The Supreme Court decision does not remove
all outstanding obstacles, however.
of abandoned oil and gas wells leaking methane. Millions of
old oil and gas wells are leaking methane and other hazardous pollutants, and
experts see the industry abandoning many more wells as a growing number of
companies face financial distress. Reuters reports on the worsening
public health and environmental problem, finding that more than 3.2 million
abandoned wells have leaked methane equivalent to burning 16.2 million barrels
RRC considers flaring cuts. Three new reports have come out
in recent days, proposing ways for Texas to
cut natural gas flaring. The reports come as the Texas Railroad Commission is
scheduled to meet on Tuesday to discuss ways to cut down on the practice. The
proposals range from cutting oil and gas production, to banning flaring in some
cases, for example.
forced to curtail production in Guyana. ExxonMobil
(NYSE: XOM) has curtailed production at its
Liza field in Guyana due to the risk of excessive flaring.
jobs lost in oil and gas. More than 100,000 jobs have been eliminated
in oil and gas since February, according to a Rystad Energy analysis. About
45,000 of those jobs are located in Texas.
Arabia cuts oil shipments to Asia. Saudi Arabia reduced oil
exports to Asian refiners by between 10 and 40 percent, according to Bloomberg.
cut lending to shale. Lenders are cutting borrowing bases
to U.S. shale drillers, with a total reduction of 30 percent for asset-backed
loans, according to Moody's and JPMorgan Chase. "It's an unavoidable
reckoning," Todd Dittmann, head of energy at alternative investment manager
Angelo Gordon & Co., told the WSJ. "A decade of
bubbling public and private debt and equity capital delayed this day, but no
more." For example, Centennial Resource Development (NASDAQ: CDEV) saw
its revolving loan cut from $1.2 billion to $700 million.
EVs to take record market share. The IEA estimates that EVs
will capture 3 percent of global car sales this year, up from 2.6 percent in
2019. EVs erased around 600,000 bpd of oil demand in 2019.
Oil & Gas files for Chapter 11 bankruptcy. Extraction Oil
& Gas (NASDAQ: XOG) is the second large U.S. shale company
to file for bankruptcy in
recent months, following the April bankruptcy filing from Whiting
Petroleum (NYSE: WLL). Extraction produces nearly 100,000 bpd
in Colorado's DJ Basin. Extraction's 2016 IPO was the energy sector's largest public
offering since the 2014 downturn and it was valued at $4 billion after it went
public. As of Monday, its market cap was a little over $70 million.
Energy could file for bankruptcy this week. Chesapeake
Energy (NYSE: CHK) may file for bankruptcy as soon as this
week, according to Reuters.
LNG exports plunge. U.S. LNG exports are expected to be
down 60 percent in July, year-on-year, as the global glut continues to hit
American exporters. "Essentially, the world doesn't need more LNG from the US
at this moment," Dumitru Dediu, a partner at McKinsey, told the FT. Roughly 45 LNG
cargoes scheduled for export in July from the U.S. have been canceled.
Australian LNG points to glut. While U.S. LNG takes a hit,
Australia also reports LNG tankers sitting idle with no place to go. Roughly 41
cargoes are either sailing around Australian waters or anchored offshore,
according to The Sydney Morning Herald.
Reserve to buy corporate bonds. Financial markets turned positive after opening in
the red on Monday after the Federal Reserve said that it would begin buying
individual corporate bonds on top of ETFs that it had already been buying.
Related News - Previous Oilprice Intelligence Report
- The Oil Price Rally May Have Gone Too Far
- Why Oil
Prices Didn't Rally After The OPECplus Extension
- Oil Prices
Surge As OPECplus Nears Deal - OIR 050620
- Oil Rallies
Towards $40 as OPECplus Nears Deal - OIR 020620
- Oil Prices Slide As U.S.-China Tensions Spike
- Will U.S.
Shale Survive If Oil Hits $40?
- 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
Related News - Oil and Gas
Cuts Could Be Deeper for Longer
- Why Oil
Prices Didn't Rally After The OPECplus Extension
Deregulation Farce; What's The Way Forward?
Deal Fails To Give Prices Major Boost
Arabia Increases Its Oil Prices By Most In Two Decades
Extends Deeper Production Cut to July
Removes Existing PMS Price Cap; Commences Market Based Pricing Regime
Conundrum in the Retail Pricing of PMS
- Crude Oil Production Cuts Will Spur Nigeria's Negative Growth in Q2
2020 - PFI Capital
Prices of PMS, AGO, HHK and Cooking Gas - April 2020