November 06, 2019 /09:26AM / By Tom Kool of Oilprice.com
/ Header Image Credit: Brand Spur
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
- In early October, the average retail gasoline price in
California topped $4 per gallon, which was only the second time that had
occurred since 2014.
- California is geographically isolated, has few pipeline
connections, and few refineries.
- The price spike occurred because of
some refinery outages, combined with the brief oil price spike after the Abqaiq
attack in Saudi Arabia.
- Chesapeake Energy (NYSE: CHK) was
down more than 15 percent
in midday trading on Tuesday after missing earnings results (more below). The
shale gas driller reported disappointing earnings on lower output and lower
prices. The company plans on slashing capex in 2020 by 30 percent.
- Pioneer Natural Resources (NYSE: PXD) narrowly
beat earnings estimates.
Revenues were off by 6 percent year-on-year, but production rose by 9 percent.
- Chevron (NYSE: CVX) saw its share
price rise by more than 4 percent on Monday after news broke that it planned on
selling its stake in the Azeri-Chirag-Gunashli oilfield in Azerbaijan for $1.57
Tuesday November 5, 2019
Oil prices moved higher at the start of the week as signs of a trade
breakthrough between the U.S. and China continue to gain steam and OPEC hints
at making deeper production cuts. While bearish sentiment remains prevalent in
oil markets, with OPEC revising down its oil demand projections once again, it
seems that oil bulls are slowly returning and oil prices are creeping higher.
cuts oil demand forecast. OPEC said that demand for its oil
will be lower than expected over the next five years, due to rising U.S. shale
production. The group said that demand for its oil would average 32.8 mb/d by
2024, a sharp cut from the 35 mb/d in last year's forecast.
trade deal inches forward. The U.S. and China are expected to sign a partial
trade deal later this month, and China is pressing the U.S. to remove more
tariffs. The U.S. is already expected to delay the planned tariff hike in
December, but markets are trading up on rising expectations that existing
tariffs could be rolled back.
IPO goes forward. After years of delay, Saudi Arabia
finally gave the go-ahead for the Aramco
IPO. The prospectus for the company will be released on November 9, with the
public offering launching in December. Saudi officials have long demanded a
$2-trillion-dollar valuation, but most analysts believe that is
overly-optimistic. Wall Street banks have given a wide range for the
valuation. Goldman Sachs said Aramco could be worth somewhere between $1.6 and
wave of unprofitable oil about to hit the market. A wave of
investment in offshore oil drilling in the early part of this decade is coming
online now, and many of the projects may not turn a profit
because they were given the greenlight when oil prices traded at around $100
pipeline remains offline. The source of the leak in the Keystone
pipeline has still not been identified, according to U.S. regulators. There is
no estimated timeline for a restart of the damaged pipeline. More than 9,000
barrels of oil spilled last week. Prices for Western Canada Select (WCS), a
heavy blend of oil in Canada, fell sharply, dropping to a $22-per-barrel
discount relative to WTI, the highest in nearly a year.
to hike EV incentives. Germany agreed to increase cash
incentives for electric cars by 50 percent, rising to as much as 6,000 euros
($6,680). The Germany auto industry will cover half of the subsidy. The changes
will be enacted this month and run through 2025, according to Bloomberg.
associated gas production is soaring. A growing portion of U.S. natural gas
production is coming from associated gas in the Permian.
warned that it might be forced out of business. Shale gas
giant Chesapeake Energy (NYSE: CHK) warned that it might not
stay in business of oil and natural gas prices remain depressed. On Tuesday,
Chesapeake said there is "substantial doubt" about its ability to continue as a
going concern if prices don't rise.
auto industry slump weighs down economy. The slump in the
global auto industry is impacting the broader
global economy, as lengthy and interconnected supply chains feel the effects of
reduced sales. Last year, the auto sector contracted for the first time since
the financial crisis a decade ago.
central bank warns on climate. The Norwegian central bank warned about the risk to
the country's finances from climate change and said that the risk should be
incorporated into the assessment of banks' systemic risks.
halted in UK. The British government will impose an
immediate moratorium on fracking due to the uptick in seismic activity. "We
cannot be certain that shale gas can be extracted safely, and therefore we must
impose this moratorium until the science changes," UK Business Secretary Andrea
lease sale unlikely this year. The Trump administration had
promised to hold a lease sale in the Arctic National Wildlife Refuge (ANWR)
before the end of the year, but that goal looks increasingly out of reach.
Still, some analysts say that if done well, the changes to ANWR could be more
permanent. "A couple of extra months is probably a prudent move so that you get
it right," Andy Mack, a former Alaska commissioner of natural resources, told Alaska Public Radio.
to cut spending to pay down debt. Occidental
Petroleum (NYSE: OXY) announced plans to cut
spending by half in the Permian to help reduce its debt load. The company is
trying to fix its balance sheet after its massive acquisition of Anadarko
Petroleum. Oxy's capex for 2020 will be limited to $5.5 billion, down from $9
billion last year. The company's share price was down by more than 4 percent
during midday trading.
under fire for potential buyback delay. Royal Dutch
Shell (NYSE: RDS.A) said that it might delay its share buyback
program because of deteriorating macro factors, leading to a 4 percent drop in
the company's shares last Friday, even as it has regained some of that lost
ground. Some analysts saw the warning as damaging to the company's reputation. "Management credibility has now been strained," Jefferies analyst Jason Gammel
said, according to Reuters. He maintained his "buy" recommendation on Shell, "with somewhat less enthusiasm."
Lawmakers Vote to Increase Deepwater Royalties
Arabian CMA Announces the Approval of The IPO of The Saudi Arabian Oil
Markets: A Rare Bullish Bounce In Oil Markets
- FG Urged to
Pay Greater Attention to Oil Producing Communities
- Is OPEC
Doing Enough To Counter The Looming Oil Glut? - OIR 291019
Rated BBB plus Long-Term (NG), A2 Short-Term (NG)- GCR; Outlook Stable
Markets: Oil Bulls Broken By Economic Fears - OIR 251019
- OPEC Raises
Nigeria's Oil Production Quota by 80,000bpd
Rebounds On Rare Market Optimism - OIR 221019
- OPEC Faces
Critical Decision As Oil Drops Again - OIR 181019
Prices Of PMS, AGO, HHK and Cooking Gas - September 2019
- Oil Markets
Bearish Despite Rising Geopolitical Risk - OIR 151019