Tuesday, May 12, 2020 /06:52
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.
- Production from U.S. coal-fired power plants fell to 966,000 GWh in
2019, the lowest level since 1976. The 16 percent decline was also the largest
in percentage terms in history.
- The EIA attributes the decline largely to increased output
from natural gas and wind turbines.
- Coal-fired capacity fell to 229 GW in 2019, down from a
peak of 318 GW in 2011.
- Energy Transfer (NYSE: ET) posted an $855 million loss
for the first quarter, including a $1.3 billion impairment. The pipeline
company said it would cut capex by another $400 million.
- California Resources (NYSE: CRC)
said in an SEC filing that absent a debt
restructuring, there is "substantial doubt about the Company's ability to
continue as a going concern."
- Weatherford International (OTCMKTS: WFTLF) reported
a net loss of $966 million in the first quarter. The company emerged from
bankruptcy in late 2019.
Oil prices rose strongly on Tuesday,
following promised cuts from Saudi Arabia, the UAE, and Kuwait. Ongoing supply
curtailments around the world are boosting sentiment, raising hopes that the
storage crisis could potentially be averted.
Arabia to cut an additional 1 mb/d. Saudi Arabia said it would cut by
another 1 mb/d on Monday, lowering production to about 7.5 mb/d in June. The
cuts are made "in an effort to support the stability of global oil markets," the Kingdoms said. But the additional Saudi cuts could simply create more room
for U.S. shale to rebound. "A depressing thought for OPEC+ must be that
side-lined production in the magnitude of 3.5-4.5m bl/day in the US and Canada
will be the first to reap the rewards of the production cuts by OPEC+," SEB
said in a statement.
punts on oil production cuts. Just a week after Texas
killed the idea of mandatory production cuts, regulators in Oklahoma decided against taking
similar action on Monday.
Energy posts $8.3 billion loss. Chesapeake
Energy (NYSE: CHK) posted an $8.3 billion loss in the first
quarter, including an $8.5 billion write-down on its assets in Texas, Wyoming,
and Louisiana. The company is on the brink of bankruptcy.
oil faces an existential crisis. Canada has already shut in
644,000 bpd of production and debt is mounting, even for some of the country's
larger producers. "The balance sheets of some very good companies are not as
strong as they should be," Tim McMillan, president of the Canadian Association
of Petroleum Producers, told Reuters.
engineer graduates losing industry offers. With hiring
down, some job and internship offers are being rescinded, putting newly
graduated petroleum engineers in a bind. The human capital losses to the oil
and gas industry could be significant, and fewer and fewer young people
will move into the business.
cuts output by 70 percent. Continental Resources (NYSE: CLR)
says it shut down 70 percent of its production. Another
producer, Callon Petroleum (NYSE: CPE), also announced on Monday it had
further reduced activity, including the suspension of all completion activity
in April and moving to one active drilling rig by mid-May.
sees possible peak demand. BP (NYSE: BP)
boss Bernard Looney said that the global
pandemic was only "adding to the challenges of oil in the years ahead," potentially leading to peak demand. "It's not going to make oil more in demand.
It's gotten more likely [oil will] be less in demand," Looney said in an FT interview. "Could it be
peak oil? Possibly. Possibly. I would not write that off," he added.
produce diesel glut. Facing a tidal wave of gasoline,
refiners switched over to producing relatively more diesel, where margins were
better. Now, there is a glut of diesel too.
judge upholds decision canceling Keystone XL permit. A
federal judge in Montana upheld a recent ruling that canceled an environmental
permit for the Keystone XL pipeline. More importantly, the decision also
canceled the Nationwide Permit 12 program, a fast-track permitting process for
thousands of energy projects across the United States.
profits plunge; still most profitable company. Saudi
Aramco's (TADAWUL: 2222) said its first-quarter profits declined 25 percent to
$16.7 billion, and the company said it would also cut spending to between $25
and $30 billion, down from $32.8 billion previously. Aramco retained the claim
of the world's most profitable company. However, the second quarter will be
much worse, as Aramco's average sale price for its oil was $50 per barrel in
the first quarter. Meanwhile, the Saudi government imposed a series of austerity measures,
including a tripling of the VAT and cuts to benefits for government
Markit: Oil demand will bounce back. IHS Markit says the
road to recovery for oil demand will be rocky, but could bounce back by the end
of 2021, potentially leading to a supply shortage.
wave risks depression. Mark Zandi of Moody's Analytics
warned against reopening economies too fast. "If we get a second wave, it will
be a depression," Zandi told CNBC's "Trading Nation" on
Friday. "We may not shut down again, but certainly it will scare people and
spook people and weigh on the economy."
demand rebounding. With fears over the coronavirus hitting
public transit, car use could see a comeback, and with it, gasoline demand.
People are using more their cars because they are afraid to use public
transportation," Patrick Pouyanne, the chief executive of French oil giant Total (NYSE:
TOT), said. UK road traffic is back up, the FT reports.
recovery not likely. "A couple months ago I was optimistic,
I was hopeful, that maybe we would have a 'V'-shaped recovery - shut things
down, clamp down on the virus, and then have a quick recovery," Minneapolis
Federal Reserve Bank President Neel Kashkari said in an interview on the
PBS Newshour. But with a vaccine potentially a year or two away, "we are in for
unfortunately a slow, long recovery" from "devastating" job losses, Kashkari
income down 70 percent on bad energy loans. "Net income was
down 69 percent, predominantly driven by an increase in the provision for
credit losses across the Firm reflecting deterioration in the macroeconomic
environment as a result of the impact of the COVID-19 pandemic and continued
pressure on oil prices," JPMorgan Chase said last week.
Related News - Previous Oilprice
- Oil Holds Gains Despite Massive Unemployment - OIR 080520
- The Worst
May Be Over For Oil - OIR 050520
- A Rare Week
of Optimism For Oil Markets - OIR 010520
Season Will Be A Bloodbath For Oil Producers - OIR 280420
- A Very
Brief Oil Price Rebound - OIR 240420
- Oil Price
Mayhem - Is The Market Broken? - OIR 210420
- Oil Prices
Fall Towards $15 for WTI and $25 for Brent As Storage Nears Capacity - OIR
- Oil Prices Crash Towards $30 Despite Historic Cuts - OIR 100420
- Have Oil Bulls Got It Wrong? - OIR 070420
- Global Oil Production Is Set To Collapse - OIR 310320
- Oil Tumbles Towards $20 As Glut Grows - OIR 270320
- The Oil
Price Rebound Won't Last - OIR 240320
Related News - Oil and Gas
- Big Oil,
Little Oil Have Full Lives Ahead - FBNQuest
- Groups Advocate for Reforms in the Downstream Sector of the Oil and
Oil Majors Could Adapt to Low Prices
- Low Oil
Prices, Record Volatility Will Hasten US Energy Defaults
- Oil Price
Crash and Nigeria's Economy: Unlocking the Opportunity in Crisis
- Softness of
The Oil Market Today and Impact on Nigeria
- Ahead of
Tomorrow On WebTV: Discussions on COVID 19: Implications for The Nigerian
Prices of PMS, AGO, HHK and Cooking Gas - March 2020
- A Massive
Wave Of Shut-Ins Fails To Halt Oil Price Crash
- Oil Prices
Hit $26.45 for Brent Crude
Bargain Hunters Are Stocking Up On Ultra Cheap Crude Oil
Deal Reduces Downside Risks, Surplus Not Eliminated
Must Deregulate Its Petroleum Sector Post COVID-19 - Boniface Chizea
- IEA: Huge
Oil Build Threatens To Fill Up Global Storage Within Weeks
- Oil Hits
$20 for WTI and $30 for Brent After API Reports Mega Crude Inventory Build
- Oil Falls
As Saudi Arabia Launches New Price War With Record Discounts
- Oil Prices
Plunge On Grim IMF Economic Forecast