Saturday, September 12, 2020 / 07:00
AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice

While bearish sentiment
has returned to oil markets due to what appears to be a weakening demand
recovery, oil prices climbed on Friday morning after steep losses earlier in
the week.


Friday, September 11th, 2020
Oil prices edged up just a bit during midday trading on Friday, with Brent
climbing back above $40 per barrel. Sentiment remains more pessimistic than in
previous weeks.
OPEC+
in a bind as demand softens. Low prices are hitting OPEC+
members, just as they began ramping up production. Should OPEC stay on course with
the cuts, hoping that demand recovery picks up next year, enduring
low-for-longer oil prices that crush OPEC budgets? Should they cut
deeper?
ExxonMobil
puts Guyana FPSO on hold. ExxonMobil (NYSE: XOM) suspended work
on a third floating production, storage and offloading vessel in Guyana. The
company awaits approval from the government of Guyana for its Payara
project.
U.S.
CFTC: Climate change presents dangers to financial system. A
report from the U.S. Commodity Futures Trading Commission concluded that
climate change poses risks to the stability of financial markets. "A world
wracked by frequent and devastating shocks from climate change cannot sustain
the fundamental conditions supporting our financial system," the report said.
While not new, the conclusion carries weight coming from the top commodities
regulator.
Trump
to ban offshore drilling in Florida, Georgia and South Carolina. The
Trump administration said it would block offshore
oil drilling in Florida, Georgia and South Carolina. While the Atlantic
seaboard remained a speculative and arguably uncompetitive region for drillers,
the Eastern Gulf of Mexico has long been prized (and off limits) to the
industry. Up until now, the administration has supported opening up that
section for drilling, but with the key battleground state of Florida up for
grabs, Trump reversed course.
Uber
commits to 100 percent EVs by 2040. Uber (NYSE: UBER) committed to
making its fleet 100 percent electric by 2040, and it also said it would spend
$800 million on transitioning drivers to EVs through 2025. Lyft (NASDAQ:
LYFT) previously said it would meet the target by 2035,
although without financial support for drivers.
Investors
sue over potential Anadarko fraud. A searing
Bloomberg report details
the alleged fraud committed by top management at Anadarko Petroleum. A former
engineer alleges the company defrauded investors by overstating the size of an
offshore oil field. Former CEO Al Walker walked away with $100 million when the
company was sold.
Enbridge
to resume Line 5. Enbridge (NYSE: ENB) will restart the
eastern segment of the Line 5 pipeline in Michigan.
Enterprise
cancels Permian pipeline. Enterprise Products Partners
(NYSE: EPD) scrapped the
proposed Midland-to-Echo 4 oil pipeline project, a 450,000-bpd pipeline that
would carry Permian oil to the Gulf Coast. The decline of production and the
weak market led to the decision.
Floating
storage on the rise again. Oil is filling up in vessels at
sea again as the contango deepens. "The market is soft and bearish and floating
storage is returning again," a market source told Reuters.
Oil
market turns pessimistic again. The EIA reported a
surprise jump in crude stocks and weaker gasoline demand,
adding to bearish sentiment. Covid-19 cases are rising in Europe and India, and
India’s oil demand is expected to contract this year for the first time in over
four decades. "It will take three years for global oil demand to recover from
COVID to its new normal, assuming we have a vaccine or a cure," analysts at
Bank of America wrote in
a report this week.
BP
spends $1.1 billion on offshore wind. BP (NYSE: BP) purchased a
50 percent stake U.S. offshore wind assets from Equinor (NYSE:
EQNR) for $1.1 billion.
Elliot
hopes to derail Chevron takeover of Noble. Hedge
fund Elliott Management Corp., which holds a large stake
in Noble Energy (NYSE: NBL) is pushing the
company to abandon its plans to sell itself to Chevron (NYSE:
CVX), arguing that the proposed deal undervalues Noble.
UBS
advises clients to pick sustainable investments. Swiss
Bank UBS Group said that
it is telling its clients to invest in sustainable investments, the first major
financial institution to do so. The bank handles $2.6 trillion in assets.
Options
market says Exxon’s dividend in danger. The options market
is increasingly skeptical of ExxonMobil’s (NYSE: XOM) ability
to maintain its dividend. "Right now, the options market is forecasting an implied
dividend range of somewhere between about 30 and 50 cents over the next
dividend period, declining to somewhere between 20 and 30 cents this time next
year. That would be a significant cut from the 87 cents [Exxon is] currently
paying," Michael Khouw, chief investment officer at Optimize Advisors, said Tuesday
on CNBC’s "Fast Money."
Lawsuits
against Big Oil. New lawsuits for climate change damages against the
oil majors were filed this week by several governments, including Charleston,
South Carolina, the city of Hoboken, New Jersey, and the state of Delaware.
Copper
demand to surge on clean transition. The global need for
copper could increase by an estimated 350% by 2050, with current reserves
depleting sometime between 2035 and 2045, according to a new report.
Copper prices continue to rise, topping $6,800 per ton this week.
Natural
gas prices on the rise as supply stagnates. Contracts for
natural gas delivery at Algonquin city-gates, Transco Zone 6 New York and
Tennessee Zone 6 for December, January and February have moved up to
$6.63/MMBtu, $6.03/MMBtu, and $6.61/MMBtu, respectively. Natural gas supply hit
a relative peak (temporarily perhaps) late last year, falling as drillers
cutback amid low pricing. Lower supply is tightening up the market heading into
winter.
Colorado
drillers sink on new setback proposal. The Colorado Oil
and Gas Conservation Commission voiced support for
2,000-foot setbacks, significantly larger than current rules. The commission
won’t vote until October, but the share prices of Colorado-focused drillers
sank on the news.
Appalachian
drillers "red ink" in Q2. An analysis of
nine Appalachian-focused shale gas drillers found that the group collectively
posted $134 million in negative free cash flow for the second quarter.
Seeds
of commodity "super cycle" being planted. While it could
be years before prices shoot up again, the deep cuts in investment in new oil
capacity could sow the seeds of the next boom. India, China and other
fast-growing nations could shorten the
downtime before the next boom begins.
Hurricane
Energy slashes reserves. UK-based Hurricane
Energy (LON: HUR) slashed its
reserves in the West of Shetland area. Its Lancaster field now holds an
estimated 58 million barrels, down from 486 million barrels. The company’s
stock price plunged by more than 50 percent.
Credit:
The post Oil Prices
Creep Higher Despite Bearish Sentiment first appeared in Oilprice.com on September 11, 2020.

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