May 22, 2019 05:30 AM / By Tom Kool Editor, Oilprice.com
Today, 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.
- In 2018, production declines averaged 33,000 bpd per month,
a rate that accelerated to 135,000 bpd per month in the first quarter of 2019.
The rig count fell from 70 rigs in 1Q2016 to just 24 in 1Q2019.
BP (NYSE: BP) and Royal Dutch
Shell (NYSE: RDS.A) will donate $1 million each to a Republican-backed plan to tax carbon
emissions at a rate of $40/ton of CO2, with revenues sent to taxpayers as a
“dividend.” The proposal would also gut environmental regulations.
- Natural gas prices rose to five-week highs after a dip in production and rising temperatures, which
should lead to higher demand.
Total (NYSE: TOT) and Eni (NYSE:
E) have stopped payments to Russian oil companies who sold them contaminated crude.
The European firms said that they would only resume payment when a compensate
deal can be reached.
Tuesday May 21, 2019
Oil was flat at the start of trading on Tuesday, still caught between U.S.-Iran
tensions on the one hand, and the downside risk of the U.S.-China trade war.
OPEC+ considers production increase. OPEC+
reportedly discussed two options for increasing production in the second half
of the year. According to Reuters, the group weighed a plan that would end over-compliance
with the cuts, which could add 0.8 mb/d of supply back onto the market. Or, the
group could agree to trim the cuts from 1.2 to 0.9 mb/d. However, the group
will wait until the June meeting in Vienna to make a decision, and many members
are inclined to extend the cuts.
ExxonMobil pulls Iraq staff. ExxonMobil
(NYSE: XOM) evacuated staff from southern Iraq, following the
U.S. decision to withdraw embassy personnel from Baghdad. The West Qurna 1
project has not seen production affected. Iraqi officials said the withdrawal
of oil workers was unwarranted.
Trump says China trade deal can’t be “50-50.” President
Trump said that any trade deal with China must skew in favor of the U.S. because
of past trade actions by China. The message seems to lower odds of a
breakthrough in the weeks ahead. Meanwhile, the Trump administration lifted steel tariffs on Mexico and Canada.
Corporate spending slowed in first quarter. U.S.
capital spending rose 3 percent in the first quarter year-on-year, down from a 20 percent
jump in spending in the first quarter of 2018. The data raised the prospect
that the U.S. economy could slow in the second half of this year.
Financial stress in shale sector. Bankruptcies in
the U.S. energy sector are “trailing only those in the discretionary consumer
goods sector,” Bloomberg News reported. Oilfield services giant Weatherford International PLC,
recently delisted from the New York Stock Exchange, may need to file for Chapter 11 bankruptcy. The company lost $2.8 billion last year. Other
signs of stress are emerging in the shale patch with Halcon
Resources (NYSE: HK) also a financial wreck. The SEC is investigating Alta Mesa (NASDAQ: AMR) for
potential fraud in financial reporting. “A lot of people see the $60 or $70 and
assume everything is great,” said Spencer Cutter, an analyst at Bloomberg
Intelligence. “I think 2019 is going to be a bigger year for bankruptcies than
U.S. shale on track for 16 percent growth. U.S.
shale operators are on course to boost production by 16 percent this year,
according to Rystad Energy. That could put output up 1.1 to 1.2 mb/d by the end of
the year. “Despite temporary challenges faced in the beginning of the year,
E&P companies are set to deliver on their original production and capital
targets, with some being well positioned to perform above initial expectations.
US shale players can still be expected to deliver around 16% oil growth in
2019,” Veronika Akulinitseva, senior analyst at Rystad Energy. “Several
operators have in fact raised their production guidance for the remainder of
IMO rules could send Brent to $90. Forthcoming
rules on sulfur fuels in the maritime sector could push Brent up to $90 per barrel, according to Bank of America Merrill Lynch. That forecast
hinges on a resolution of the U.S.-China trade conflict and ongoing demand
Texas advances bill to punish pipeline protestors. The
Texas legislature is working on a bill that would impose stiff penalties on
pipeline protestors. The legislation classifies pipelines as critical infrastructure, and
trespassers could receive a third-degree felony and the prospect of 10 years in
prison. The bill passed the Texas Senate on Monday. Similar bills have cropped
up in North and South Dakota, and have come in reaction to the Dakota Access
protests from 2016.
BlackRock under pressure to stop funding fossil fuels.
BlackRock, the world’s largest asset manager with over $6.5 trillion under
management, is under pressure to cut ties with fossil fuels. BlackRock is among
the top three shareholders in every oil major except for Total (NYSE:
TOT), according to the Guardian. Major institutional investors are starting to press the
company to reduce its funding of the oil and gas industry.
Australia LNG could benefit from U.S.-China trade war.
China announced retaliatory tariffs on U.S. LNG, raising levies from 10 to 25
percent beginning on June 1. Australia could benefit as China looks for alternatives.
Chevron to offer EV charging stations. Chevron
(NYSE: CVX) has begun offering some EV recharging ports at
several of its gas stations in California. The infrastructure was installed by
EVgo. The move is modest but signals a shift in strategy from the oil majors.
Earlier this year, Royal Dutch Shell (NYSE: RDS.A) purchased
Greenlots, a U.S.-based EV recharging developer.
U.S. sanctions coming on Nord Stream 2. U.S.
Secretary of Energy Rick Perry said that a sanctions bill on the Nord Stream 2
pipeline would come in the “not too distant future.” “The opposition to Nord
Stream 2 is still very much alive and well in the United States,” Perry told a briefing on a visit to Kiev for the inauguration of President
Volodymyr Zelenskiy. Separately, Gazprom said that delays in getting permits from Denmark could push off the
in-service date of the project into 2020 from late 2019.
Nigerian pipeline shut after fire. Nigeria’s Trans
Forcados pipeline remains shut down due to a fire even as Royal Dutch Shell (NYSE: RDS.A)
has not declared force majeure on shipments. The pipeline has a
capacity of 240,000 bpd.
Tesla in “Code Red Situation”. Tesla’s
(NASDAQ: TSLA) stock has fallen more than 20 percent in the past month and one analyst
said the company’s shares are in a “Code Red Situation.” The collapse comes
after the company closed offerings of new stock and convertible bonds to bring
in more liquidity. “With a code red situation at Tesla, Musk & Co. are
expanding into insurance, robotaxis, and other sci-fi projects/endeavors when
the company instead should be laser-focused on shoring up core demand for Model
3 and simplifying its business model and expense structure,” Wedbush analyst
Dan Ives told Bloomberg.
East Tensions Put Oil Markets On Edge – OIR 170519
2. 4 Geopolitical
Trends To Watch In 2019 - Oilprice.com
3. Sahara Energy,
Brooge Petroleum Partner To Build Up To 250,000bpd Refinery In Fujairah
4. Oil Jumps On
Middle East Tensions - OilPrice Intelligence Report
5. Average Prices
of PMS, AGO, HHK and Cooking Gas – April 2019
6. Shell Docked As
Nigerian Oil Community Wins Court Judgment in The UK
7. Oil Supply
Shortages Countered By Trade War – OIR 100519
8. Saudi Exports
Send Oil Prices Falling – OIR 070519
9. NNRC, Order
Paper Initiative, Others, Concerned Over Delays in Oil and Gas Reforms
10. Has The Oil
Rally Reached Its Limit? - OIR 030519
11. Oil Rebounds On Saudi Reassurances - OIR 300419
12. Oil Prices Crash As OPEC Prepares To Boost Supply -
13. Oil Hits 2019 High On Iran Sanctions – OIR 230419
14. Can Saudi Arabia Still Sway The Oil Market?
15. The Firm Floor Under Oil Prices - OIR 190419
16. Oil Bulls Undaunted By OPEC Fears - OIR 160419
17. Average Prices of PMS, AGO, HHK and Cooking Gas –
18. Oil Climbs For Sixth Straight Week - OIR 120419
19. GACN Issues Gas Purchase Order to Axxela and NGMC
Joint Mini LNG Project
20. Smart Money Is Piling Into Oil
21. Brent Breaks $70 On Libya Violence - OIR 090419
22. Oil Hits $70 On Libya Unrest, Crisis In Venezuela –
23. Sahara Group Canvasses Intra-Africa Solution for
Petroleum Sector Challenges
24. Axxela Now 100 Percent Owned by Helios
25. 5.32bn Litres of PMS Imported Into Nigeria in Q4 2018
26. Oil Hits 2019 High On Shale Slowdown - OIR 020419
27. Oil Breaks $60 As Bullish News Mounts - OIR 290319
28. Sahara Group Advocates Adoption of Uniform Petroleum
Products Standards in Africa
29. The World's Largest Oil Company And Petrochemical