Saturday, June 20, 2020 /08:00
AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice
OPEC+ compliance sent oil prices to a
3-month high, despite fears that a second wave of COVID-19 would drive demand
and prices down
June 19th, 2020
Oil prices have shrugged off concerns
about rising coronavirus infections, with WTI hitting $40 per barrel in early
trading on Friday, a three-month high. "OPEC+ has done a good job turning
things around and stronger demand also helps," said Carsten
Fritsch, an analyst at Commerzbank AG.
tightens up compliance. OPEC's Joint Ministerial Monitoring
Committee (JMMC) met and demurred on whether it would extend production cuts
again. But Iraq and Kazakhstan presented plans on how they would increase their
compliance, a move welcomed by oil markets. "That could be an extra piece of
bullish news for the market, which may see the two nations removing some
supply," said Bjornar Tonhaugen from Rystad Energy.
puts sanctions on Mexican company for dealing with Venezuela.
The U.S. Treasury Department slapped sanctions on Mexican
trading company Libre Abordo SA de CV for buying Venezuelan oil.
Aramco cuts jobs. Saudi Aramco is cutting hundreds of
jobs as it hopes to reduce costs. First-quarter profit for Aramco was down 25
percent from a year earlier.
shale dominance over. U.S. shale production could fall by half over
the next year due to the massive drop in the rig count, putting overall
American oil production below 8 mb/d within a year's time. It will take years
before production will rebound anywhere close to pre-pandemic levels.
to take $1.4 billion write down. Schlumberger
(NYSE: SLB) said it would take
a $1.4 billion impairment due to layoffs and restructuring.
Energy skips interest payment. Chesapeake
Energy (NYSE: CHK) skipped an interest
payment of $13.5 million ahead of a widely-expected bankruptcy filing. The
company has about $9 billion in debt and only had about $82 million in cash on
hand at the end of March.
ramp up gasoline processing. Gasoline demand in the U.S.
inched a bit lower last week, ending consecutive weeks of gains. At the same
time, refiners have ramped up run rates for five weeks straight. "Refiners
might have declared victory a little early and it's going to be problematic," John Kilduff, a partner at Again Capital Management, told Reuters.
Vatican urges fossil fuel divestment. The Vatican urged Catholics to
divest from armaments and fossil fuels, and to also closely monitor investments
in mining companies.
considers Texas plant. Tesla (NASDAQ: TSLA) is
considering a new
manufacturing facility in central Texas, and the new gigafactory would likely
build the Cybertruck electric pickup, and/or the Model Y SUV.
aims for cobalt-free batteries. Tesla (NASDAQ:
TSLA) hopes to eliminate cobalt
completely from its battery cells.
Oil & Gas Operating LLC files for bankruptcy. Private-equity-owned
Chisholm Oil & Gas Operating LLC filed for Chapter
11 bankruptcy protection this week. The shale driller suffered from falling
prices as well as operational challenges in Oklahoma.
considers flaring rules. The Texas Railroad Commission
directed its staff to consider recommendations on how to reduce flaring. "This
is now the opportune time to implement meaningful reforms to reduce flaring
before oil and gas production climbs back to previous highs," Commission
Chairman Wayne Christian said.
predicts $100 oil. "The reality is the chances of oil going
toward $100 at this point are higher than three months ago," JP Morgan's head
of oil and gas research for EMEA, Christyan Malek, said.
Sachs: Renewables to outpace fossil fuels. Global
investment in renewable energy is set to surpass oil and gas for the first time
ever next year, according to Goldman Sachs. The bank said that the cost
of capital for oil and gas is much higher than for renewables, and the
divergence is "structurally constraining the oil & gas industry's ability
Oil demand slowing before Covid-19. Primary energy demand
growth slowed to just 1.3
percent in 2019, and the majority of that came in the form of renewable energy,
according to BP (NYSE: BP).
admin takes Keystone XL to Supreme Court. The Trump
administration has asked the Supreme
Court to revive a permit program that would revive permits for an array of
pipeline projects, including Keystone XL. Earlier this year, a Montana judge
suspended the U.S. Army Corps of Engineers' permit program that greenlights
projects with little review of their impact on waterways.
Hub cash prices crash to a 22-year low. Cash Henry Hub and
other US Southeast physical gas benchmark prices fell to their lowest levels in
over 20 years, as canceled LNG cargoes back up natural gas within the U.S.,
according to S&P Global Platts. Cash Henry Hub prices settled at $1.38/MMBtu on June 16, the lowest
price since 1998.
layoffs, Enbridge buyouts. Ovintiv (NYSE: OVV) (formerly
Encana) confirmed a spate of
layoffs in Colorado and Texas. Also, Enbridge (NYSE: ENB) said that
800 employees are taking voluntary buyouts.
to sell Australia LNG. Chevron (NYSE: CVX)
put up for sale its
minority stake in North West Shelf LNG in Australia, the country's largest and
oldest gas export project.
to go 100 percent EV. Lyft (NASDAQ: LYFT) said it would
offer rides only in electric vehicles by 2030.
Related News - Previous Oilprice Intelligence Report
- Oil Markets Have Finally Found Stability - OIR 160620
- The Oil Price Rally May Have Gone Too Far
- Why Oil
Prices Didn't Rally After The OPECplus Extension
- Oil Prices
Surge As OPECplus Nears Deal - OIR 050620
- Oil Rallies
Towards $40 as OPECplus Nears Deal - OIR 020620
- Oil Prices Slide As U.S.-China Tensions Spike
- Will U.S.
Shale Survive If Oil Hits $40?
- Is The Oil
Rally Coming To An End?
- The Oil Bulls Are Back - OIR 190520
- A Relentless Oil Price Rally - OIR 150520
Related News - Oil and Gas
- Average Prices of PMS, AGO, HHK and Cooking Gas - May 2020
- OPECplus Cuts Could Be Deeper for Longer
- Why Oil Prices Didn't Rally After The OPECplus Extension
- The Deregulation Farce; What's The Way Forward?
- OPECplus Deal Fails To Give Prices Major Boost
- Saudi Arabia Increases Its Oil Prices By Most In Two Decades
- OPECplus Extends Deeper Production Cut to July
- PPPRA Removes Existing PMS Price Cap; Commences Market Based Pricing Regime
- The Conundrum in the Retail Pricing of PMS
- Crude Oil Production Cuts Will Spur Nigeria's Negative Growth in Q2 2020 - PFI Capital