June 30, 2020 /06:40 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
- U.S. commercial oil inventories reached an all-time high of 541
million barrels for the week ending on June 19, breaking a record last set in
March 2017. These numbers exclude the SPR.
- As of June 19, inventories were at 62 percent of their
total available storage capacity, according to the EIA.
- Inventories have increased by 64 million barrels since
- Chesapeake Energy (NYSE: CHK) filed
for bankruptcy protection (more below) and sought a bankruptcy court to toss out $311 million in pipeline
contracts, setting up a court battle with Energy
Transfer (NYSE: ET).
- More fallout from Chesapeake's bankruptcy: Hi-Crush
(NYSE: HCR), a frack-sand miner, was already "teetering on the
edge of bankruptcy," according to BloombergLaw, but "is in an
even more precarious position after customer Chesapeake Energy Corp. went
- Lilis Energy (NYSEMKT: LLEX), a
Fort Worth-based driller, filed for Chapter 11
Tuesday, June 30, 2020
Oil continues to trade around $40 per barrel. There
are offsetting forces at play - continued economic rebound creates upward
pressure but fears of accelerating Covid-19 transmission magnifies downside
risk. In the oil market, the possibility of new Libyan oil is offset by tighter
compliance from OPEC+.
takes $22 billion write down. Royal Dutch Shell (NYSE: RDS.A) said it would write down
$22 billion, as it revised down its assumed oil price in the years to come. The
writedown included an $8-$9 billion impairment in its integrated gas unit,
$4-$6 billion in upstream, and $3-$7 billion in its refining portfolio. The
move will increase deb gearing by 3 percent.
Energy files for bankruptcy. Chesapeake Energy (NYSE: CHK) is
arguably the highest-profile shale driller to succumb to bankruptcy to date.
The company will continue to operate six to eight rigs for the next two years,
about half of the number of rigs from the first quarter. The bankruptcy will
wipe out $7 billion in debt. Chesapeake reported a first quarter loss of $8.3
billion earlier this year.
to host July 9 international clean energy summit for governments. China,
India, the European Union and the United States will join other countries in a "green recovery" summit hosted by the IEA. The agency is pushing the world to
undertake green stimulus. "Even if governments do not take climate change as a
key priority, they should still implement our sustainable recovery plan just to
create jobs and to give economic growth. Renovating buildings, for instance, is
a job machine," the IEA's Fatih Birol said.
poll: Brent to average $40 this year. A Reuters survey of 45 analysts finds
an average Brent price of $40 per barrel for 2020, with price gains towards the
end of 2020 and into 2021.
makes job cuts. ExxonMobil (NYSE: XOM) is preparing to let go
between 5% and 10% of its US-based
employees subject to performance reviewed, anonymous sources told BNN
crews rise. The number of active U.S. frack crews, which
bottomed out at 45 last month, has since jumped to 78 last week, according to
industry consultant Primary Vision Inc. and Bloomberg.
oil could resume. Negotiations between the U.S. and regional
governments in the Middle East could pave the way for oil
to sell petrochemical business to Ineos for $5 billion. BP (NYSE: BP)
agreed to sell off its
entire petrochemical unit to Ineos for $5 billion. The oil market downturn has
accelerated BP's plans to transition into a low-carbon energy company. The oil
company's shares jumped on the news.
reports spill at Beaumont refinery. ExxonMobil (NYSE: XOM) reported that a storage
tank's floating roof at its Beaumont, Texas refinery broke and spilled
thousands of pounds of chemicals.
cuts June oil exports. Iraq's oil exports declined by 9 percent - or 310,000 bpd - in June, according to Reuters. "This is the lowest level of
Basra exports in five years," Daniel Gerber, CEO of Petro-Logistics, told Reuters. "But Iraq still
needs to cut by a further 300,000 bpd to achieve full compliance" with the
reveal new methane leaks. New satellite data from Kayrros found
that methane leaking from the Yamal pipeline that carries natural gas from
Siberia to Europe was leaking 93 tonnes of methane every hour, or the
equivalent annual CO2 of 15,000 cars. That was one data point in a series of
new findings that suggest that methane leak data over the past decade
understates the true scale of the problem.
admin cuts royalty rates. The Trump administration cut royalty
rates for drilling on public lands from 12.5 percent of sales to 0.5 percent,
according to the FT. The cuts negatively impact state budgets.
wave of Covid in China could derail oil recovery. China's oil
demand has rebounded rapidly to about 90 percent of pre-Covid levels. If
measures to contain a recent outbreak in Beijing fail, by mid-July the city
could move into a stricter lockdown phase.
gas shut-ins possible. Natural gas prices plunged below
$1.50/MMBtu last week, even as prices rebounded sharply on Monday. LNG
cancellations could back up supply within the U.S., exacerbating a glut.
Goldman Sachs says that shut-ins are now
incorporated into the bank's "base case," rather than a remote risk.
oil benchmarks to challenge WTI. S&P Global Platts launched the Platts
American GulfCoast Select (AGS) crude benchmark, which would better reflect
waterborne light sweet crude from the Permian than WTI, which is landlocked.
Also, Argus launched the Argus AGS, with a similar profile.
Democrats launch cleantech bill. House Democrats will unveil legislation on
Tuesday that calls for 100 percent clean cars by 2035.
Aramco promises to protect $75 billion in dividends. Saudi
Aramco will have to take on debt to finance its
dividend, which, at nearly $75 billion, is more than all of the dividend
payouts from the oil majors combined.
cheaper almost everywhere. A new report finds that
renewables are cheaper than coal "virtually everywhere." Renewables plus
batteries are even cheaper than one-third of existing coal plants.
Related News - Previous Oilprice Intelligence Report
- Oil Prices Fall Below $41 as a "Second Wave" of COVID Hits
- OIR 260620
Has Returned To Oil Markets - OIR 230620
- Oil Prices Climb Despite Fears Of A "Second Wave" - OIR
- Oil Markets Have Finally Found Stability - OIR 160620
- 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
Related News - Oil and Gas
- Coronanomics (24) - Sectorial Analysis of Nigeria's Oil Sector
Litres of PMS Imported Into Nigeria in Q1 2020 - NBS
- Average Prices of PMS, AGO, HHK and Cooking Gas - May 2020
Cuts Could Be Deeper for Longer
- Why Oil
Prices Didn't Rally After The OPECplus Extension
- The Deregulation Farce; What's
The Way Forward?
- OPECplus Deal Fails To Give
Prices Major Boost
- Saudi Arabia Increases Its Oil
Prices By Most In Two Decades
- OPECplus Extends Deeper
Production Cut to July
- PPPRA Removes Existing PMS Price
Cap; Commences Market Based Pricing Regime