Tuesday,
July 21, 2020 /10:03 PM / by Tom Kool of Oilprice.com / Header
Image Credit: Oilprice
Chart of the Week
Market Movers
Tuesday, July 21, 2020
Oil prices rose sharply on Tuesday. Despite bad coronavirus
news in the U.S., which could weaken demand, there are high hopes for economic
stimulus. The European Union agreed to a historic stimulus, and the U.S.
Congress appears intent on passing yet another trillion-dollar economic
package. Crude prices hit four-month highs on Tuesday.
Chevron buys Noble for $5
billion. Chevron
(NYSE: CVX) announced the purchase of Noble
Energy (NASDAQ: NBL) for $5 billion, an all-stock deal worth $13 billion
when including debt. The move adds U.S. shale assets in the DJ Basin and,
crucially, a large presence in the Eastern Mediterranean. The deal was the
first major M&A move since the onset of the pandemic.
Australian LNG hit by
impairments. Australia's LNG
sector has been hit hard by multiple impairments from domestic and
international gas companies. Woodside Petroleum (ASX: WPL) recorded a
$4.37 billion impairment, and Royal Dutch Shell's (NYSE: RDS.A) massive $15-$22
billion write-down was led by Australian LNG. "Realized prices have
dropped dramatically due to global oil oversupply and demand destruction from
the pandemic," a Woodside executive said on an
investor call.
Natural gas prices fall. Natural gas prices fell sharply on
Monday after data showed another dip in U.S. LNG exports.
Fewer canceled U.S. LNG cargoes
for September. The volume of
U.S. LNG cargoes canceled by buyers for September slowed compared to preceding
months. The exact number is unclear, but Reuters reports that somewhere between
15 and 26 cargoes have been canceled for September delivery, a smaller number
than the 40 to 45 reported for July and August. Cheniere
Energy (NYSE: LNG) (NYSEAMERICAN: CQP) has the most
canceled cargoes.
Brazil boosts oil exports to
Asia. Brazil's oil exports to Asia averaged 1.07 mb/d in
the first six months of 2020, a 30 percent year-on-year increase.
Saudi Arabia wants more than $40. The OPEC+ deal has succeeded in tightening up the
market and boosting oil past $40, but Saudi Arabia's Energy Minister, Prince
Abdulaziz bin Salman, has highlighted that although
OPEC itself does not have a price target, current prices are not sustainable
for the industry, leading to potential insecurity of supply in the long term.
EV investor craze continues. Tesla (NASDAQ: TSLA) saw its
market cap surge past $300 billion and investors are piling into other EV
makers. Tesla's shares have more than tripled this year. The market value of Nikola
Corp. (NASDAQ: NKLA), an electric truck startup, past Ford
(NYSE: F) last month, although the company's stock has since
retreated. The trend shows that investors increasingly believe that EV era will
arrive faster than previously thought. Carmakers are rushing to capture a
slice of the future, with GM (NYSE: GM) recently
announcing that it will develop 20 new EV models by 2023. Including hybrids,
the global auto industry will add 350 new models in the next few years.
North Dakota oil plunges 30
percent. North Dakota's oil
production plunged 30 percent from April to May, collapsing to just 850,000
bpd. It was the worst-ever monthly decline. "The second quarter of 2020
was a five-alarm fire for North Dakota's oil and gas industry," state
Mineral Resources Director Lynn Helms said on a
conference call. However, shut-in production is coming back online. Meanwhile,
the potential closure of the Dakota Access pipeline raises tough questions about the region's future.
EU to US: Stop threatening
sanctions. The EU warned the Trump
administration to stop threatening European companies with sanctions over the
Nord Stream 2 pipeline.
EU near green stimulus. After days of negotiating, the European Union has
agreed to a major stimulus package, including more than half a trillion euros
dedicated to green stimulus.
Total and Exxon idle workers in
Papua New Guinea. Total
(NYSE: TOT) and ExxonMobil (NYSE: XOM) have idled workers at the
Papua New Guinea LNG expansion project due to the pandemic. The project had
previously faced delays due to negotiations with the government.
New Mexico releases methane rule. New Mexico unveiled a draft methane regulation, with a target of capturing 98 percent of natural gas by
2026. The effort to cut flaring comes just as a federal judge shot down the
Trump administration's efforts to rescind federal methane regulations.
Meanwhile, the World Bank published a report that found
that gas flaring worldwide increased by 3 percent last year to the highest
level in more than a decade – 23 percent of the increase came from the U.S.
Halliburton a "Strong
Buy." Raymond James
issues a Strong Buy rating for Halliburton (NYSE: HAL) after the
oilfield services giant vastly exceeded expectations in its second-quarter
earnings. "Halliburton's 2Q20 was extremely strong as the company's quick
cost actions limited decremental margins in the face of the extreme decline
inactivity," the bank said.
Related News - Previous
Oilprice Intelligence Report
Related News - Oil and Gas
Signup with Facebook
Signup with Twitter
