November 23, 2019 /08:13AM / By Tom Kool of Oilprice.com
/ Header Image Credit: Oilprice.com
Oil prices are on course to close the week
higher, with WTI trading close to its highest level since September.
Oil prices rebounded midweek on signs of a tighter physical
market and more rumors that OPEC+ would extend the production cuts. But the
market is still awaiting direction from the U.S.-China trade war - every
utterance in either direction regarding tariffs has an immediate price impact.
For now, markets are optimistic, but still cautious.
credit outlook cut on high spending. Moody's Investors
Service cut ExxonMobil's (NYSE: XOM) debt outlook to negative, due to a "substantial" cash burn. The oil major is taking on debt in order to finance a
heavy spending program, aimed at ramping up development in Guyana and the
Permian, and the company is borrowing to cover its dividend. "The company's
high level of growth capital investments cannot be funded with operating cash
flow and asset sales at projected levels given ExxonMobil's substantial
dividend payout," Moody's said. The ratings agency projects Exxon's negative
cash flow at $7 billion this year and a further $9 billion next year.
to sell $25 billion in assets. In part because of high
spending, ExxonMobil plans to sell $25 billion in assets across the
globe in order to free up cash. Exxon will focus on a handful of major projects
in Guyana, Mozambique, Papua New Guinea, Brazil and the United States. Legal
challenges could delay Trans Mountain Expansion. Legal
challenges to the Trans Mountain Expansion could further delay the beleaguered
pipeline project. Experts say a court decision may not be reached until late
2020, but additional challenges could push the project's final approval off
until the end of 2022 in a worst-case scenario.
cargo cancelledâ€¦but still paid for. A Singaporean gas
importer cancelled an LNG cargo but still agreed to pay for it, according
to Reuters. The move is an ominous sign, pointing to
a state of oversupply for the LNG market.
halts fracking. California Governor put a temporary ban on new fracking permits and also
barred steam-injected oil drilling. The decision comes after a serious oil
spill earlier this year at a Chevron (NYSE: CVX) site.
Moreover, Gov. Gavin Newsom spoke about the need for a "phase out" of fossil
Johan Sverdrup at 300,000 bpd. Equinor's
(NYSE: EQNR) giant Johan Sverdrup oil field is producing at 300,000 bpd, only weeks after
starting up, meaning it is ahead of schedule. It is on track to reach 440,000
bpd next summer.
Jersey doubles offshore wind target. New Jersey
Governor Phil Murphy doubled its offshore wind target to 7.5
gigawatts by 2035, which would be enough electricity for 3.2 million homes.
on track to burn double the carbon budget by 2030. The
world is on track to burn twice as much fossil fuels by 2030 as can be
allowed while remaining below 1.5C of warming. "We're in a deep hole - and we
need to stop digging," Mans Nilsson, executive director of the Stockholm
Environment Institute (SEI), told The Guardian.
Gates tech breakthrough. A clean energy startup backed
by Bill Gates announced a major breakthrough in its concentrated solar
geopolitical turmoil puts supply at risk. While OPEC
wrestles with a global supply surplus, turmoil in several member states could
continue to put production at risk. Above all is Iraq, which is producing 4.6
mb/d. Ongoing protests have raised concerns about its oil operations. "We kind
of had a second Arab Spring, but it's been under the radar," said Helima Croft, chief commodities
strategist at RBC Capital Markets. "The real question is what is going to
happen in Iraq."
Global growth to slow. The OECD said that global GDP growth will slow to
2.9 percent this year, and stay at about that rate through 2021. It's the
weakest expansion since the financial crisis a decade ago. Last year, GDP grew
by 3.5 percent. Worse, the OECD said these weren't temporary problems. "It
would be a mistake to consider these changes as temporary factors that can be
addressed with monetary or fiscal policy: they are structural," OECD Chief
Economist Laurence Boone said. "Without coordination for trade and global
taxation, clear policy directions for the energy transition, uncertainty will
continue to loom large and damage growth prospects."
Mass bans new gas hookups. The town of Brookline,
Massachusetts passed a ban on natural gas residential hookups
for new construction and major renovations, making it the first to do so on the
east coast. The move comes after a series of similar bans in several California
frackers lose almost everything. Farris and Dan Wilks
made $3.5 billion in 2011 when they sold their shale company, and they invested
that money back into the sector, buying land and taking stakes in a series of
companies. Bloomberg reports that many of those investments have
lost much of their value.
plastics bet, BP and Shell invest in recycling. BP (NYSE: BP) and
Royal Dutch Shell (NYSE: RDS.A) announced several moves to invest, innovate and
scale up new recycling options. The companies are trying to develop
technologies to recycle single-use plastics. The investments are intended to
cut down on the epidemic of plastic pollution, but also amount to a bet on the future growth of plastics production.
unveils electric "cybertruck." Elon Musk unveiled the trapezoidal looking electric
truck, called the "Cybertruck." The electric pickup truck will start at
$39,900, but has multiple variations and will go into production in 2021.
to study health impacts of fracking. Under pressure
from local communities after a surge of rare cancers in Southwestern
Pennsylvania, the state's Governor Tom Wolf said that his administration would spend $3 million on a pair of
studies to investigate the health impacts on the public from the shale gas
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