Tuesday, March 03, 2020 /08:28
PM / By Tom Kool of Oilprice.com / Header Image Credit: Oilprice
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.
Chart of the Week
- U.S. oil production averaged 12.23 mb/d in 2019, up 1.24 mb/d
(11 percent) from a year earlier.
- But the growth rate in 2019 was down from 17 percent in
- The EIA estimates the U.S. will
average 13.2 mb/d in 2020 and 13.6 mb/d, with most of the growth in the
- Chevron (NYSE: CVX) is offering buyouts in an
effort to cut its payroll, particularly in its shale gas unit. The company
notified Pennsylvania officials that it would eliminate 320 jobs in the state.
- EQT (NYSE: EQT) saw its shares raised to Buy by MKM
Partners, but the analysts trimmed their price target to $10 from $12. The gas
giant's shares have bounced around between $5 and $6 in recent weeks.
- Tellurian (NASDAQ: TELL) announced a plan to cut
spending and reorganize financing in the face of a rapid shift in market
uncertainty. The LNG exporter is hoping to extend maturity on some of its debt.
The company's shares fell more than 70 percent last week.
Tuesday, March 3, 2020
Oil prices staged a rebound at the start of the week, in part from investors
buying the dip, but mostly because of emergency action from central banks and
promising noises from OPEC members. Interest rate cuts could cushion the
economic blow. But the spread of the coronavirus is far from contained, and
uncertainty and downside risk remain.
cuts rates by 50 basis points. The U.S. Federal Reserve
moved quickly to cut interest rates, slashing them by half a point on Tuesday. "The coronavirus poses evolving risks to economic activity," the Fed said in a statement. "In light of
these risks and in support of achieving its maximum employment and price
stability goals, the Federal Open Market Committee decided today to lower the
target range for the federal funds rate by 1/2 percentage point."
Global GDP to slow. The OECD said that global GDP growth
will slow to 2.4 percent, down from 2.9 percent previously. That is its best-case
scenario, with downside risk related to the coronavirus.
could cut without Russia. OPEC may agree to deeper supply
cuts this week, although it is not clear whether or not Russia will go along.
Russian President Vladimir Putin said over the weekend that Moscow is content
with current prices. "Saudi Arabia wants to hold prices from falling, but
Russia is still not agreeing. So the only way might be for OPEC to cut alone,
which will not send a good signal to the market," an OPEC source told Reuters. On Tuesday, a
Russian oil executive said that a 1-mb/d cut
would balance the market.
production hits 10-year low. OPEC's oil production fell to 27.84 mb/d in
February, down 510,000 bpd from a month earlier. That was also the lowest level
of output in 10 years.
admin to unveil Arctic drilling plan. The Interior
Department is set to finalize a plan for selling
acreage in the Arctic National Wildlife Refuge (ANWR).
majors facing decline. The oil majors face poor returns,
increasing hostility from investors, long-term demand concerns and low prices.
The oil and gas industry "has reached a mature and declining phase, with a weak
financial outlook," according to a new report.
could buy Occidental acreage for $1 billion. The state of
Wyoming is in talks to purchase millions
of acres of land from Occidental Petroleum (NYSE: OXY),
a sum that could range between $1 and $3 billion. Occidental is in need of
asset disposals in order to pay down debt. Wyoming sees an opportunity in
mining, ranching and oil and gas drilling. Critics say the move would expose
the state even more to extraction industries - already the state's revenues are
declining with the demise of coal.
to return $80 billion to shareholders. Chevron (NYSE:
CVX) outlined its medium-term plans in an investor presentation
on Tuesday, saying that it would dish
out $80 billion to shareholders over the next five years. It also said that it
would maintain spending at between $19 and $22 billion over that period.
billion in stranded assets. The oil and gas industry could
be sitting on $900 billion in stranded
assets, a massive value that could be wiped out if the world accelerates
efforts to slash emissions.
canceled. One of the most highly-anticipated oil
conferences, the IHS CERAWeek conference, was canceled because of the
Oil demand to fall by 220,000 bpd. Oil consultancy FGE cut its forecast for 2020
demand, estimating an outright contraction in global consumption by 220,000
stress deepens. U.S. shale companies were not making a lot
of money prior to the coronavirus outbreak. With WTI in the mid-$40s, the
financial vice is tightening. "[West Texas Intermediate] at $50 a barrel does
not work for US shale," Matt Portillo, a managing director at Tudor, Pickering,
Holt & Co, a Houston-based investment bank, told the FT.
releases methane plan. ExxonMobil (NYSE: XOM)
released a plan to cut methane
emissions from its operations. The plan calls for plugging leaks, better record
keeping and new equipment.
refineries suffering from too much capacity. Profits for
China's oil refiners fell 42 percent in 2019
from a year earlier, a notable figure that predates the coronavirus. The sector
is dealing with overcapacity.
vehicle fleet improves fuel economy. The U.S. vehicle fleet
hit a record for fuel
efficiency, with the fleet average rising to 25.1 miles per gallon in 2018, up 0.2
mpg from a year earlier.
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