Oil Prices Drop On OPECplus Uncertainty - OIR 011220

Oil & Gas
1458 VIEWS
Proshare - Facebook Proshare - Twitter Proshare - Linked In Proshare - WhatsApp
Proshare

Tuesday, December 01, 2020   /09:40 PM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com


In today's newsletter, 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.

 

Proshare Nigeria Pvt. Ltd.


Chart of the Week

 Proshare Nigeria Pvt. Ltd.



  • U.S. distillate inventories declined to 143 million barrels in mid-November, dipping back into five-year-average territory for the first time since May.

  • Inventories hit a high of 180 million barrels in July, just short of an all-time record high reached in 1982.

  • Distillate demand averaged 4.2 mb/d for the week ending on November 20, around the five-year average for this time of year. 

Proshare Nigeria Pvt. Ltd.



Market Movers

  • Repsol (BME: REP) said it would cut upstream CAPEX to 1.6 billion euros per year for 2021-2025, down from 2.4 billion euros in 2019.

  • ExxonMobil (NYSE: XOM) saw its stock rise after it announced an operational update, which included deep spending cuts (more below).

  • SandRidge Energy (NYSE: SD) shot up nearly 5% in early trading after closing on a new $30 million credit facility from Icahn Enterprises (NASDAQ: IEP)

Tuesday, December 1, 2020


Oil prices dipped on Tuesday as the OPEC+ meeting ran into some unexpected turbulence, with the three most influential members failing to agree on how best to proceed with production in 2021.

OPEC+ delays meeting as talks continue. OPEC+ postponed a decision on its next steps until Thursday after talks proved trickier than expected. Analysts expected the group to extend its current agreement by three months or so, rather than allowing the cuts to taper beginning in January. However, Reuters reports that some members are itching to increase production. Russia has suggested easing by 0.5 mb/d each month beginning in January. At the same time, the UAE is uncomfortable with low compliance levels of other members. 

Exxon takes historic $20 billion writedown. ExxonMobil (NYSE: XOM) said that it would write down as much as $17 to $20 billion in the fourth quarter, the largest writedown in modern history. The impairment was concentrated in natural gas assets across a wide geographic area: Appalachia, Rocky Mountains, Oklahoma, Texas, Louisiana, along with Western Canada and Argentina. The move dates back to a major blunder when Exxon purchased XTO Energy for $35 billion in 2010, an acquisition widely seen as a costly mistake. 

Exxon's new strategy. Exxon is also slashing capex to $20-$25 billion per year, down $10 billion from pre-pandemic guidance. The oil major said it would concentrate its focus on the Permian, Guyana, Brazil and its chemicals portfolio. Exxon is also seeking to protect its dividend, a $15 billion payout that analysts increasingly see as unsustainable

Invenergy breaks ground on massive Texas solar project. Invenergy LLC broke ground on a $1.6 billion solar project northeast of Dallas, which will be the nation's largest when it comes online in 2023. The WSJ reports on the solar boom in Texas.

Gazprom to restart Nord Stream 2 after a year-long delay. Gazprom will attempt to restart construction on the Nord Stream 2 pipeline, which has been held up for a year due to U.S. sanctions. Analysts believe that Russia has the ability to complete the project. Sanctions have targeted pipelaying vessels, which have complicated Russia's construction effort.

U.S. shale is broken. After many ups and downs, most analysts see U.S. shale production remaining flat for years, handing leverage back to OPEC+. "I see no more growth until 2022, 2023, and it will be very, very light in regard to the U.S. shale industry ever-growing again," said Pioneer (NYSE: PXD) CEO Scott Sheffield.

Shale drillers shift to gas. Higher natural gas prices and subdued crude prices have drillers shifting towards gas, a turnaround from much of the past decade. EOG Resources (NYSE: EOG) and Continental Resources (NYSE: CLR) have both increased their focus on gas, for example.

S&P to buy IHS Markit for $44 billion. S&P Global Inc. agreed to acquire IHS Markit Ltd. for about $44 billion, the companies said Monday. The all-stock deal is the largest of the year and will create a data behemoth. 

New Asia trade pact could hurt U.S. LNG. Fifteen countries in the Asia-Pacific region-including China and Australia-recently signed the world's newest and largest trade pact. The Regional Comprehensive Economic Partnership (RCEP) Agreement is set to gradually reduce and, in some cases, eliminate, trade tariffs on goods, including commodities. The pact could further sideline U.S. exporters of energy to the world's most resource-thirsty region.

Volkswagen plans small EV. Volkswagen is accelerating plans for a mass-market small electric vehicle, with a price of between $24,000 and $30,000. 

Venezuela convicts Citgo executives. A judge in Venezuela convicted six oil executives at Citgo, five of which are American citizens. The so-called "Citgo 6" were arrested on corruption charges three years ago, but their lawyers argue that the charges are without evidence. 

Oil markets face a 200-million-barrel glut in 2021. Rystad Energy's balances show that should OPEC+ fail to amend its existing deal and increase its production, the world in January will face its biggest monthly glut since April 2020 with an average daily surplus of 3.1 million barrels for the month.

Bank of America rules out Arctic financing. Bank of America joined other major banks in ruling out funding for new oil and gas drilling in the Arctic. Goldman Sachs, Morgan Stanley, Wells Fargo, and Citi have all previously done the same. 

Enbridge gets Line 3 greenlight. Enbridge (NYSE: ENB) received final approval from Minnesota regulators to begin construction on its Line 3 replacement, which will roughly double the system's throughput. 

Japan and Kuwait strike major oil storage deal. Japan and Kuwait have struck a deal to store crude oil for Southeast Asia in Japan in a bid to boost the region's oil supply network, which is currently rather weak and vulnerable to supply outages.

Ford urges fuel economy deal with California. Ford (NYSE: F) is urging other major automakers to back a deal with California over fuel economy standards, as a way of aligning regulations with the incoming Biden administration. A week ago, GM (NYSE: GM) also abandoned the Trump administration's effort in favor of California's stricter standards.

 

Credit:

The post Oil Prices Drop On OPECplus Uncertainty first appeared in Oilprice.com on December 01, 2020.

 


Proshare Nigeria Pvt. Ltd.



Related News - Previous Oilprice Intelligence Report 

1.      Oil Markets Hopeful as OPECplus Meeting Looms - OIR 271120

2.     Oil Bulls Drive Prices Higher on Vaccine Success - OIR 241120

3.     Oil Demand Set to Rebound in 2021 - OIR 201120

4.     Oil Markets See Light At The End Of The Tunnel - OIR 171120

5.     Surge in COVID Cases Counters Oil Market Optimism- OIR 131120

6.     Oil Optimism Returns on Vaccine News - OIR 101120

7.     COVID Surge Keeps Oil Below $40- OIR 061120

8.     Why Oil Markets Aren't Focused On The Election - OIR 031120

9.     Oil Prices Dragged Down By COVID - OIR 301020

10.  Oil Demand In Doubt As COVID Cases Climb - OIR 271020



Proshare Nigeria Pvt. Ltd.

 

  

Related News - Oil and Gas 

1.      Average Prices of PMS, AGO, HHK and Cooking Gas - October 2020

2.     Ardova Signs Lubricants Deal With Shell in the Nigerian Market

3.     NBCC Forum: Stakeholders Highlight Benefits of Gas-Led Industrialization in Nigeria

4.     Petrol May Sell at N168 as PPMC Increases Depot Rate to N155

5.     Brent Oil Price Drops Below $38pp on Renewed Coronavirus Lockdowns

6.     China Sets Its Sights On Global EV Dominance

7.     NSE Forum: Stakeholders Urge Oil and Gas Companies To Leverage Capital Market 

8.     COVID Kills Another Oil Rally - OIR 161020 

9.     Average Prices of PMS, AGO, HHK and Cooking Gas - September 2020 

10.  NSE to Host Industry Leaders at Oil and Gas Sector Webinar 


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP