July 07, 2020 / 06:53 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
- Exports of natural gas from the U.S. to Mexico account for 40
percent of total U.S. gas exports.
- A recent pipeline came online in Mexico,
connecting Guadalajara to a long-distance pipeline system running from the U.S.
border deep into Southern Mexico.
- Exports were expected to grow substantially this year, but
the pandemic has lowered those forecasts.
Energy Transfer's (NYSE: ET)
Dakota Access LLC filed a motion to stay the
court decision to vacate a permit and shut the pipeline down (more below). "We
will be immediately pursuing all available legal and administrative processes
and are confident that once the law and full record are fully considered Dakota
Access Pipeline will not be shut down and that oil will continue to flow," Energy Transfer said. U.S. Department of Energy authorized Pembina's
(NYSE: PBA) Jordan Cove LNG project, which has ridden a
regulatory roller coaster for 15 years. But the pipeline and export terminal
still needs to obtain state permits in Oregon. Hi-Crush (NYSE: HCR) says its
lenders agreed to extend the term
of a forbearance through July 12. The company has been in default due to its
failure to be in compliance with the springing fixed charge coverage ratio
Tuesday, July 7, 2020
A wild 24 hours brought a tidal wave of pipeline news
to start the week. Meanwhile, oil prices continue to be range bound, with WTI
trading right around $40 per barrel and Brent just a little bit higher. For
now, crude appears stuck between worrying Covid-19 news and a weak economy on
the one hand, and tightening oil market fundamentals on the other. Analysts are
generally more optimistic for next year, with some predicting prices would rise
to $66 per barrel.
scraps Atlantic Coast pipeline. Dominion Energy (NYSE: D) and
Energy (NYSE: DUK) canceled the Atlantic Coast
pipeline, citing regulatory uncertainty and ballooning costs. The pipeline
would have offered a key interconnection from the Marcellus shale to the
southeast. The cancellation is a major hit to Marcellus shale drillers and
highlights growing investor risk to long-distance pipelines. Dominion was
downgraded to Neutral from Outperform by Credit Suisse. Dominion also agreed to
sell gas transmission and storage assets to Berkshire Hathaway in a $10 billion
Access ordered to shut down. A federal judge vacated a permit for
the Dakota Access pipeline and
ordered it to shut down within 30 days. The decision found that the Army Corps
of Engineers violated federal law when approving the project. The 570,000-bpd
pipeline has been operational for three years. The pipeline needs to undergo a
full environmental review, which could last until next year, at which point it
is vulnerable to a potential new president in the White House.
product prices could rise after DAPL decision. The halting of
Dakota Access' operations could increase the cost of
shipping oil to the Midwest. Marathon Petroleum (NYSE: MPC) is
the most exposed to the shutdown, according to Tudor Pickering. "There could be
a big problem in the Chicago market," Sandy Fielden, director of oil and
products research at Morningstar, told Reuters.
could suffer. The price of oil at Clearbrook, Minnesota - a
marker for Bakken crude â€“ fell on Monday, opening up the widest discount to WTI
since May. If Dakota Access shuts down, the Bakken will struggle to
Arabia raises oil price to Asia. Saudi Arabia hiked the price of Arab
Light to buyers from Asia by $1.20 per barrel, the third consecutive month of
price increases, adding further evidence of a tightening market.
XL can't continue construction. A third major court decision
ruled that TC Energy's (NYSE: TRP) cannot continue construction
on Keystone XL, another decisive setback for pipeline builders. However, the Supreme
Court offered a consolation â€“ reinstating the Nationwide Permit 12 permitting
program, a fast-tracked authorization by the Army Corps of Engineers. The
decision allows dozens of other pipelines around the country to continue to
move forward. Keystone XL was the only exception, the Supreme Court said,
blocking its construction for now.
Oil demand unlikely to have peaked. The debate about peak oil
demand having already arrived due to the pandemic continues, but the IEA's
Fatih Birol has expressed skepticism.
announces 3.5-billion-euro write down. Italian oil company Eni (NYSE: E) said that it would write
down between 3.2 billion and 4.2 billion euros, and it would also assess how it
can accelerate its transition to low-carbon energy.
rig count plunges to record-low. Only 18 rigs were active in
Canada as of last week, down more than 100 from the same week a year ago. Some
fleets may be permanently idled,
according to Reuters.
industry got $2.4 billion in government assistance. The U.S.
shale industry received at least $2.4
billion in loans from the Paycheck Protection Program.
acquires Vivint in major solar deal. Sunrun
(NASDAQ: RUN) announced a $3.2 billion acquisition of Vivint Solar
(NYSE: VSLR), which will form a major solar PV provider. The
companies are the U.S.' number one and two largest installers. The combined
company would have 500,000 customers. The share prices of both companies surged
on the news.
half of LNG projects face delays. Of the 45 major LNG export
projects in pre-construction development, at least 20 are facing delays, according to a new
report from Global Energy Monitor.
metals see rising demand. After a downturn, the future looks
more bullish for metals used in
batteries â€“ nickel, aluminum, copper - as governments accelerate efforts to
switch to EVs. The European Union and China in particular are aiming to boost
considers moving HQ. Royal Dutch Shell (NYSE: RDS.A) is considering a move from the
Netherlands to the UK in order to simplify its governance structure.
resisting OPEC+ pressure. Angola is resisting pressure from
OPEC+ to cut deeper, according to Reuters. "Angola is saying
they would not compensate for its overproduction in July-September like the
rest of the countries but would be able to compensate only in
October-December," said one OPEC source. "We are still trying to convince
Related News - Previous
Oilprice Intelligence Report
- The Oil Rally Has Stalled Once Again - OIR 030720
- Oil Markets On Edge As Second Wave Hits - OIR 300620
- 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
Arabia Eyes Total Dominance In Oil And Gas
Releases Advised Price for PMS for the Month of July 2020; Raises Pump
Price to N140
- NNPC GMD,
Oando GCE and Other Executives Attend AKK Gas Presidential Flag Off
- 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