December 28, 2019 /05:30AM / By Tom Kool of
Oilprice.com / Header Image Credit: Oilprice.com
While there are still
plenty of risks in the oil market, bullish sentiment has undoubtedly taken hold
as the year comes to an end, with prices 30 percent higher than they were 12
Oil seems set to close out the year on a high note. Oil prices are roughly 30
percent higher than they were at the start of the year, although 12 months ago
saw a sudden and steep downturn. Still, WTI rose above $61 in recent days, and
investors are more bullish than they have been in months. That does not mean
that the downside risks have gone away - the IEA still sees a supply surplus in
the first quarter - but there is now hope that the market is closer to balance
than it has been in a long time.
closes out great/lousy decade. The U.S. shale industry
closes the door on a wild decade, complete with record production levels, but
also widespread financial wreckage. The growth-at-all-costs business
model just won't cut it in the
2020s, Liam Denning says for Bloomberg Opinion.
shale hype came to an end. After a decade of ups and
downs, 2019 may turn out to be a pivotal year - investors
began to turn their backs on the shale industry, after repeatedly placing
larger and larger bets on the hope that the industry would eventually become
profitable. That doesn't mean that financing has entirely dried up, but in
addition to financial hurdles, drillers are also facing rising scrutiny over
climate change, which is starting to affect decision-making at big banks.
launches energy exchange. China plans to launch an energy
exchange that will make buying and selling energy-related products much easier.
But the exchange will also increase-to the worry of many-China's geopolitical
foothold in new markets.
industry takes another look at Africa. There has been
an uptick in interest in
offshore oil drilling in Gabon, an indication that Africa could become a prime
drilling spot in the 2020s.
The Year of the Electric Car. Automotive analysts say
that 2020 could be the year of the electric car due to a wave of new EV models that will hit showrooms. In Europe,
the number of EV models available will rise from 100 to 175 by the end of the
year. That will rise to 330 by 2025. Analysts say that the market share for EVs
could rise from 3.4 to 5.5 percent of all cars sold.
bubble to force shake out. There is a growing
consensus that the window for major independent LNG export projects is closing,
which means that 2020 could be a shakeout year for the sector. "It's getting
late. It's getting dark. It's much tougher," Michael Webber, an independent LNG
analyst and managing partner of Webber Research & Advisory, told S&P Global Platts. "Liquidity issues are going to have real teeth to them next year. The
rubber will meet the road for a lot of these projects." Chinese tariffs on U.S.
LNG could also delay project sanctioning.
moves forward on LNG. Nigeria and partners Royal Dutch
Shell (NYSE: RDS.A), Eni (NYSE: E) and Total SA
(NYSE: TOT) gave a final
investment decision on Train 7 at its facility in Abuja.
Sachs: Buy Chevron and ConocoPhillips. Goldman Sachs
issued an investment note describing why they have a Buy rating for Chevron
(NYSE: CVX) and ConocoPhillips (NYSE: COP).
Chevron offers positive cash flow and exposure to the Neutral Zone oil fields
along the Saudi/Kuwait border, which may soon restart. Conoco has oil producing
assets in Alaska, which offers strong margins for Pacific refineries.
Meanwhile, Goldman gave ExxonMobil (NYSE: XOM) a
Neutral rating, noting the positive development in Guyana, but the headwinds
for its downstream and natural gas assets.
buses and trucks in California threaten CNG market. The
2018 mandate for electric buses in California could be followed by another one
for trucks. The development "has not yet received much investor attention," according to Raymond James. For suppliers of CNG, such as Clean Energy
Fuels Corp. (NASDAQ: CLNE), "fleet electrification represents a
structural, long-term headwind," the bank said.
Strong non-OPEC supply growth. While the U.S. has
accounted for virtually all of non-OPEC supply growth in recent years, there is "some kind of awakening" occurring now that will likely see increases from
elsewhere in 2020, according to JBC Energy. Norway, Brazil and Guyana will ramp
up new projects in 2020. Non-OPEC countries outside of the U.S. have 820,000
bpd in the pipeline. 2020 is expected to be the strongest year-on-year growth
outside of OPEC in 15 years.
investors swallow up unwanted natural gas assets. The
U.S. shale gas industry is in the doldrums, but investors with deep pockets
are buying up assets on the
cheap. Dallas Cowboys owner Jerry Jones invested more than $1 billion in Comstock
Resources (NYSE: CRK), which is targeting the Haynesville
shale. There are a handful of other similar examples, which amount to bets that
some companies will survive the shake out. "Having deep pockets willing to step
into the fourth quarter of a gas bloodbath creates unique opportunities that
appear late cycle when traditional capital is exhausted," SunTrust Robinson
Humphrey analysts wrote in a recent note. Tudor Pickering summed it up: "The
punch line is simple," the analysts wrote, "survive in 2020 to thrive in 2023."
- NLNG Takes Final Decision To
Achieve Train 7 Project
- Bullish Sentiment Keeps Oil
Above $60 - OIR 241219
- Nigerian Governors Forum Laud
Dangote On Petrochemical Refinery Project
- Bullish Sentiment Remains
Despite Oil Price Dip - OIR 201219
- Oil Prices Head Higher Despite OPEC
Skepticism - OIR 171219
- Average Prices Of PMS, AGO, HHK
and Cooking Gas - November 2019
- The Oil Bulls Are Back Despite
Bearish Fundamentals - OIR 131219
- Oando Plc Announces the
Successful Signing of Two Gas Supply Agreements with NLNG
- NEITI Launches Beneficial
- OPEC Deal And Trade War Pause
Push Oil Up - OIR 101219
- Tullow Shares Plummet 70% After
Group Cuts Production Outlook
- Oil Jumps On Saudi Surprise -
- How Much Crude Oil Do You
- Oil Markets Remain Hopeful Of
OPEC Cuts - OIR 031219
- Oil Inches Higher As OPEC
Optimism Returns To Markets - OIR 261119