Oil Prices Crash on Weak Demand - OIR 080920


Tuesday, September 08, 2020   /06:40 PM / by Josh Owens of Oilprice.com / Header Image Credit: Oilprice.


Proshare Nigeria Pvt. Ltd.

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.

Proshare Nigeria Pvt. Ltd.

Chart of the Week
Proshare Nigeria Pvt. Ltd.

Chart of the Week

  • U.S. gasoline prices over Labor Day weekend averaged $2.22 per gallon nationwide, the lowest price for this time of year since 2004.
  • Gasoline consumption fell to 5.85 mb/d in April 2020, but rebounded to 90 percent of year-ago levels by the end of June. 
  • However, demand has plateaued since then. Gasoline demand remains 9 percent below the five-year average. 

Market Movers

  • Hess (NYSE: HES) and ExxonMobil (NYSE: XOM) announced their 18th oil discovery in Guyana.
  • CNX Resources (NYSE: CNX) increased its free cash flow guidance from $300 million to $350 million for 2020.
  • Royal Dutch Shell (NYSE: RDS.A) restarted its Prelude LNG project, which has been offline since February due to technical issues.

Tuesday, September 8, 2020

Oil prices fell sharply on Tuesday, dragged down by a broader selloff in tech stocks but also from a darkening demand outlook. Brent dipped below $40 per barrel for the first time since June. Brent's three-month timespread has widened to its largest contango since May, a symptom of an increasingly weak market. "Today's oil-price move is a clear sign that the market now seriously worries about the future of oil demand," said Paola Rodriguez-Masiu, an oil market analyst with Rystad Energy.

Saudi Arabia cuts oil prices. Saudi Arabia cut the price for its oil that it ships to Asia, a closely-watched price marker that often sets the tone for the global market. Saudi Aramco cut the price for its Arab Light for October delivery by $1.40 per barrel. The price cut suggests demand is weak. A Bloomberg survey found that only 4 in 10 refiners in Asia said they were interested in buying more Saudi crude.

IEA: Oil demand has stalled. The IEA joined the growing chorus of voices who see the oil demand recovery stalling out. "It doesn't seem like a massive stock draw seems to be happening yet," Keisuke Sadamori, Director of Energy Markets and Security at the IEA, told Reuters. "We are not seeing a robust pickup in refining activity, and jet fuel is the big problem".

Hedge funds turn bearish on oil. Hedge funds and other money managers recently swung in a bearish direction. For the week ending on September 1, investors sold the equivalent of 40 million barrels in the six most important petroleum futures and options contracts, according to Reuters. 

ExxonMobil's financial pressure mounts. ExxonMobil (NYSE: XOM) faces a cash shortfall of about $48 billion through 2021, according to a Reuters analysis. The widening cash flow gap may require deep spending cuts, asset sales, and/or more debt. Exxon has already added $23 billion in debt this year. Analysts are even beginning to see the sacrosanct dividend as no longer untouchable. 

Tesla's shares plunge after missing S&P 500. Tesla's (NASDAQ: TSLA) shares plunged by nearly 20 percent during midday trading on Tuesday after missing out on being included in the S&P 500. It was the largest single-day loss since February. As of last week, Tesla's shares likely priced in the inclusion in the S&P, according to Bloomberg. 

ESG scrutiny heightens on metal miners. The ESG (environmental, social, and governance) investment trend is gaining popularity, but with that comes more scrutiny. Bank of America estimates that $600 billion in market value was erased from companies after "ESG controversies," such as revelations on poor labor or environmental practices. Reuters reports that investment banks and analysts are increasing their scrutiny on cobalt miners in the Democratic Republic of Congo. 

China to fast-track hydrogen cars. China is rolling out a package of policies aimed at boosting sales of hydrogen fuel cell technologies and developing the supply chain. The strategy is focused on long-haul trucks. 

Shale producers race for permits ahead of elections. U.S. shale companies are racing to scoop up drilling permits on federal land ahead of the presidential election. Democratic Presidential candidate Joe Biden has said he would put a halt to new drilling on public lands. Permitting on federal land has jumped by 80 percent in the Permian in the last three months. Through August 24, drillers have secured 974 permits on federal land in the Permian this year, compared to 1,068 permits for all of last year. 

LNG investment dries up. No new LNG export projects could be approved this year for the first time in two decades, according to Reuters. Some analysts say it is possible that one or two projects go forward, while others say none will receive FID. Before the pandemic, analysts expected as much as 70 million tonnes per year of new capacity to receive the go-ahead.

China looks to build an espionage hub in Iran. A 25-year deal between China and Iran will include a large-scale roll-out of electronic espionage and warfare capabilities focused around the port of Chabahar. Iran is increasingly becoming a client state of China. 

Colombia's oil industry shows signs of recovery. Colombia's oil industry appears to be recovering, posting the third consecutive month of rig count increases, according to Baker Hughes. 

Germany threatens to pull the plug on Nord Stream 2. Germany's foreign minister declined to rule out sanctions on the Nord Stream 2 pipeline if Moscow did not provide more answers on the poisoning of Russian opposition leader Alexi Navalny. "I hope...that the Russians do not force us to change our position on Nord Stream," Heiko Maas said.


The post Oil Prices Crash on Weak Demand first appeared in Oilprice.com on September 08, 2020.


Proshare Nigeria Pvt. Ltd.

Related News - Previous Oilprice Intelligence Report

  1. Oil Prices Fall Below $43 on Demand Concerns - OIR 040920
  2. Oil Prices Could Rise to $65 - OIR 010920
  3. Oil Prices Fall As Hurricane Fears Subside - OIR 280820
  4. Gulf Of Mexico Storms Push Oil Prices Higher - OIR 250820
  5. Oil Tumbles On Shaky Recovery Prospects - OIR 210820
  6. Bullish Sentiment Is Building In Oil Markets - OIR 180820
  7. Oil Prices Fall Back After A Brief Rally - OIR 140820
  8. Oil Prices Rally On New COVID Optimism - OIR 110820
  9. COVID Fears Cause Oil To Fall Back After A Brief Rally - OIR 070820
  10. Oil Prices Climb Despite Growing Demand Fears - OIR 040820
  11. Economic Turmoil Leaves Oil Trapped At $43 - OIR 310720
  12. OPEC Prepares For Long-Term Demand Risks - OIR 280720
  13. Oil Prices Stuck At $42 - OIR 240720
  14. Oil Jumps on the Prospect of Two Trillion-Dollar Stimulus Packages - OIR 210720
  15. OPEC-Plus News Is Holding Oil Prices Back - OIR 140720
  16. Oil Returns to $42 After COVID Correction - OIR 100720
  17. Oil Prices Range Bound As Pipelines Come Under Pressure - OIR 070720
  18. The Oil Rally Has Stalled Once Again - OIR 030720
  19. Oil Markets On Edge As Second Wave Hits - OIR 300620
  20. Oil Prices Fall Below $41 as a "Second Wave" of COVID Hits - OIR 260620


Proshare Nigeria Pvt. Ltd.

Related News - Oil and Gas

  1. Towards a Comfort Zone for the Oil Price
  2. PPMC Increases Ex-depot Price of PMS to N151.56 per Litre
  3. Axens Selected for BUA Group Integrated Refinery and Petrochemical Project in Nigeria
  4. Nigeria Prepares for an Extended Period of Low Oil Prices
  5. Petroleum Industry Bill - Is There Light At The End of The Tunnel?
  6. Average Prices of PMS, AGO, HHK and Cooking Gas - July 2020
  7. Recovery in Oil Market Extends to the Third Consecutive Month
  8. August 2020 Oil Market Update: Unprecedented Supply Cuts, Some Countries Still Faltered - NOVA
  9. Labeling of Agbami as Crude or Condensate Divides Oil Market
  10. The Nigerian Oil and Gas Industry Update: Urgent Need for Reforms
  11. Nigeria's Failing Refineries
  12. Big Oil Has Been Bruised By The Pandemic, But It Is Not In Retreat
  13. United Bank for Africa Provides $200 Million for Nigeria's Petroleum Industry
  14. NBCC Forum: Experts Call For Increased Investments In Oil and Gas Mid-Stream Production
  15. Mining: Resuscitation of Ajaokuta Steel Company - An End in Sight?
  16. Large And Unexpected Crude Build Halts Oil Rally
  17. OPECplus Cuts Tapering Reflects Recovering Oil Demand
  18. Average Prices of PMS, AGO, HHK and Cooking Gas - June 2020
  19. Oil and Gas Update: Downstream Oil and Gas at a Crossroads
  20. Movement in Oil Prices and What It Means for Nigeria
  21. Insulating Nigeria from Perennial Oil Price Volatility
  22. Saudi Arabia Eyes Total Dominance In Oil And Gas
  23. PPPRA Releases Advised Price for PMS for the Month of July 2020; Raises Pump Price to N140


Proshare Nigeria Pvt. Ltd. 

Related News