Tuesday, April 07, 2020 /08:28 PM / by Tom Kool of Oilprice.com /
Header Image Credit: Katusa Research
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.
- Prices for RBOB gasoline futures have collapsed, and some
refineries have even faced negative margins for selling gasoline.
- That is a reflection of the deep decline in demand. Price
signals are telling refineries to cut back on production. U.S. gasoline demand
fell from 8.837 mb/d on March 20 to 6.659 mb/d on March 27.
- Refinery runs fell from 15.838 mb/d to 14.898 mb/d over the
- Total (NYSE: TOT) announced the sale of $400
million of assets in Liberia, Sierra Leone and Brunei.
- Continental Resources (NYSE: CLR)
says it will cut production
in April and May by 30 percent and suspend its dividend until further notice.
- Natural gas prices jumped by 8 percent on a
cooler weather outlook for much of the U.S.
April 7, 2020
OPEC+ is mulling a three-month production cut
agreement, according to TASS. Oil prices have climbed substantially since last
week on hopes of an agreement. There is still a great deal of uncertainty, but
OPEC+ has signaled a willingness to cut if the U.S. does too.
likely to cut if U.S. goes along. OPEC+ "are likely" to cut
production as long as the U.S. participates, according to Reuters. Oil ministers from
the G20 will also meet virtually on Friday, adding more momentum to global
negotiations. However, given the massive gap in oil demand, even a substantial
cut on the order of 10 mb/d may not rescue oil prices.
cuts spending by 30 percent. ExxonMobil
(NYSE: XOM) announced a cut in spending by 30
percent, lowering capex to $23 billion for 2020, down from $33 billion. The
largest reduction will come from the Permian, where the oil major says the
short-cycle nature of shale drilling will allow it to ramp back up when
warn about lower prices ahead. The recent rebound in
prices, with Brent moving into the mid-$30s, could be premature. "In our view,
however, judged by the bout of optimism reflected in prices of oil futures in
recent days, the market is still not realizing the severity of the oversupply
problem coming in April-May," Rystad Energy said in a statement. "With 28
million bpd oversupply in the oil market in April and 21 million bpd in May,
the global coordinated production cuts that are really needed may be too large
for the producers to accept, perhaps twice as large as the numbers that are
currently being discussed."
Short-term supply cuts of 10 mb/d. Citi estimates that supply
curtailments because of logistical bottlenecks and low prices could force 10
mb/d offline temporarily in April. Goldman Sachs put the figure at 5 mb/d.
Goldman warned that eventually the market will snap back because of the shut
ins. "This will likely be a game-changer for the industry," the Goldman
analysts said. "Once you damage the capital stock in oil it is an expensive and
time-consuming process to rebuild, assuming it can be rebuilt at all."
cuts more jobs. Halliburton (NYSE: HAL) will cut 350 employees in
Oklahoma, a month after furloughing 3,500 workers in Houston for 60 days.
in 10 U.S. counties on lockdown. According to Moody's,
roughly 8 in 10 U.S. counties are on some form of a lockdown. They account for
96 percent of U.S. GDP.
emissions spike. The increase in methane
emissions in 2019 was "one of the biggest we've seen over the past twenty
years," said Rob Jackson, a professor at Stanford. The increase in natural gas
production and consumption is a suspected culprit.
down in the Permian? Flaring in the Permian declined in the
first quarter, according to Rystad Energy. However, Earthworks, which tracks
venting and flaring in the Permian using optical imaging cameras, says that
Rystad's data does not include unlit flares, which the group says has been
increasing in the Permian since 2017. "Rystad's 'silver lining' of decreased
Permian flaring might be illusory," Sharon Wilson, an organizer at Earthworks,
starts on Keystone XL. TC Energy (NYSE: TRP)
said it started work on the
Keystone XL pipeline at the border crossing in northern Montana.
bankruptcies since 2015. An estimated 215 oil and gas
companies filed for bankruptcy in North America since 2015, according to a new
study from Haynes and Boone.
Texas falls in love with solar. The FT reports on the solar boom
in West Texas. Even oil and gas companies are turning to solar. "We put the
solar in to lower our carbon footprint but also to provide lower-cost
electrical power," says Vicki Hollub, Occidental's (NYSE: OXY) CEO.
under intense pressure. The crises of the coronavirus, the
collapse of oil prices and heightened pressure from Washington are presenting
new threats to the Venezuelan
majors raise $32 billion in debt. The oil majors - Royal Dutch
Shell (NYSE: RDS.A), ExxonMobil (NYSE: XOM), BP (NYSE: BP)
Equinor (NYSE: EQNR) - have raised $32 billion in new
debt in recent weeks. The majors have opted to take on more debt instead of
cutting their dividends.
considers tariffs on imported oil. U.S. shale drillers are
aggressively lobbying President Trump to impose tariffs on imported
oil, a policy that the majors including ExxonMobil (NYSE: XOM) oppose.
Trump has signaled that he would resort to tariffs if OPEC+ doesn't cut
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