May 19, 2020 / 6:15 PM / by Tom Kool of Oilprice.com / Header
Image Credit: Oilprice
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.
- U.S. natural gas production is expected to decline by 2
percent in 2020, averaging 97.1 billion cubic feet (Bcf/d), down from 99.2
Bcf/d in 2019.
- Gas output was already expected to flatten heading into
2020, prior to the onset of the global pandemic.
- The EIA expects Henry Hub prices to average $2.14/MMBtu in
2020, or $0.43 cents lower than the 2019 average.
- EQT (NYSE: EQT) began curtailing natural gas
production in Pennsylvania and Ohio, according to a regulatory filing by Equitrans
Midstream Corp. (NYSE: ETRN).
- Oasis Petroleum (NYSE: OAS) reported a
larger-than-expected first quarter loss, and cut spending by 50 to 60 percent.
- Petronas farmed out its 50 percent
stake in an offshore block in Suriname to ExxonMobil (NYSE: XOM).
Oil prices have climbed to their highest level in months, with WTI at $32 and
Brent breaking $35 per barrel. Sentiment has vastly improved over the past few
weeks, and recent promising news about a potential coronavirus vaccine has
boosted energy and equity markets.
prices rise, but too far? WTI has rocketed into the $30s on
hopes of supply cuts and demand rebound. Fears of storage tank topping have subsided, which has helped
boost prices. But there is still plenty of downside risks to the
oil demand rises back to pre-pandemic levels. China's oil demand is thought to have
rebounded to about 13 mb/d, just shy of the 13.4 mb/d level seen before the
initial lockdown. Meanwhile, China's air quality is now worse than it was before
maintenance creates new problems. With so much of the
global oil industry idled, maintenance is being deferred en masse. That
could cause problems later, driving up maintenance costs and also potentially
leading to more unplanned outages.
cuts deeper than expected. The U.S. and Canada have lost somewhere between 3.5
and 4.5 mb/d from shut ins. In North Dakota, more than 7,000 wells have been
closed, shutting down 950,000 bpd of production.
fuel demand rises. India's fuel demand is rising as the government
moves to lift restrictions. Petrol sales from state-owned refiners plunged by
61 percent in April, year-on-year, but has been down 47.5 percent in May, a
sign of a pickup in demand.
gas storage running out. Natural gas could suffer a similar
fate as crude oil, with oversupply leading to rapidly filling up storage.
does not stop EV revolution. The coronavirus will hit EV
sales hard this year, but sales of gasoline and diesel vehicles will suffer
worse in percentage terms. In the long run, the pandemic wonâ€™t change the
trajectory for EVs. In 2020, EV sales will drop by 18 percent, according to
BNEF, while the internal-combustion engine will see sales fall by 23 percent. "The long-term electrification of transport is projected to accelerate in the
years ahead," the report said.
downgraded as pandemic rages. Petrobras
(NYSE: PBR) saw its outlook downgraded by Raymond James
because of the rapid spread of COVID-19 in Brazil, which now holds the fourth
largest number of cases. "The pandemic is totally out of control," analysts at
Raymond James wrote. They view a lockdown as likely.
worth $2 trillion calling for "green" recovery. A group of more than 150
companies worth $2 trillion are calling on governments to ensure that their
economic stimulus packages are "grounded in bold climate action."
York kills Williams gas pipeline. New York and New Jersey blocked key water permits
for the controversial $1 billion Northeast Supply Enhancement natural gas
pipeline owned by Williams Cos. (NYSE: WMB). Williams said it would not
reapply at this time.
Shale to decline by 200,00 bpd in June. The EIA said that U.S. shale
production will decline by 197,000 bpd June, compared to May. The Permian will
lose 87,000 bpd. Gas production will also decline by 779 mcf/d, with losses
from the Permian and Anadarko leading the way.
fall 35 percent from Corpus Christi. Crude oil shipments
from the U.S. from the port of Corpus Christi have declined by 35 percent
since the first quarter.
oil bankruptcies this week. Gavilan Resources LLC, an oil
company formed by Blackstone Group, filed for bankruptcy on
Monday. Offshore drillers Fieldwood Energy LLC, which operates in the Gulf of
Mexico, filed for bankruptcy this week, its
second Chapter 11 filling in two years. Ultra Petroleum (OTCMKTS: UPLC) also
filed for bankruptcy for the second
Zero claims from Big Oil questioned. A new report casts doubt on the
seriousness of the net zero promises from the oil majors. None of the companies
are aligned with 1.5C warming targets.
June expiring with stability. The June WTI contract expires on Tuesday and
there has been on rerun of the chaos seen a month ago, when WTI crashed into
betting on gasoline. After chaos in WTI pricing, some fund
managers are instead looking to invest in
gasoline or Brent.
invest $5.6 billion in China ethylene. Royal Dutch
Shell (NYSE: RDS.A) and China's Cnooc (NYSE: CEO) signed
an agreement to invest $5.6 billion in an
ethylene project in the Chinese city of Huizhou.
drillers keep drilling. A new study looks at some of the
incentives that shale companies have to keep drilling, including a desire to
avoid having leases expire on land.
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