Wednesday, September 25, 2019
/08:47AM / By Tom Kool of Oilprice.com / Header Image
Credit: 24/7 Wall St.
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
- The EIA forecasts world energy consumption rising by 50 percent between 2018 and 2050.
Most of the growth comes from non-OECD, particularly Asia.
- By sector, industry will account for the bulk of
the growth, a term that includes mining, refining, manufacturing, agriculture
and construction. Energy use in industry will rise by 30 percent through 2050.
- Transportation energy use rises by 40 percent
over that timeframe, again led by Asia.
- The source of the energy matters. Renewables are
the fastest growing source through 2050, and will surpass petroleum and other
liquids on an absolute basis. Renewables grow at an annual rate of 3.1 percent
between 2018 and 2050.
- NRG Energy (NYSE: NRG) unveiled a plan to achieve
zero carbon emissions from its power generation assets by 2050. By 2025, the
company plans to cut emissions in half.
- BP (NYSE: BP) and Korea Gas signed a 15-year agreement
for U.S. LNG. KOGAS will buy 1.58 million metric tons from the Freeport LNG
terminal or Calcasieu Pass beginning in 2025.
- Continental Resources (NYSE: CLR) and
Resources (NYSE: CXO) were both downgraded by Citigroup. Citi
analysts see long term value but want to wait for "clarity" on well performance
and free cash flow potential.
Tuesday September 24, 2019
Oil prices sank on Tuesday on news that Saudi Aramco was on track to bring
production capacity back online by the end of the month. That allowed oil
traders to shift their sights back to concerns about the slowing global economy.
Still analysts argue that the lack of a risk premium on the price of oil is
remarkable given the scale of the attack on Abqaiq.
Aramco to restart full output next week. A Saudi
source confirmed to Reuters that the Abqaiq
facility will return to pre-attack production levels by next week. Oil prices
fell on the news. But that comes after the Wall Street Journal reported on Monday that
repairs could take months longer
than expected. Saudi sources told the WSJ that some repairs could take as long
as eight months. Aramco is reportedly reshuffling the types of
oil it is sending Asian customers, informing buyers in India and China that it
will ship heavy oil rather than light oil.
Aramco IPO unlikely this year. Reuters reports
that Saudi Aramco is unlikely to move forward with its public offering this
year. Sources said that in the wake of
the Abqaiq attacks, the IPO may be pushed off until 2020 or 2021.
UK, Germany and France blame Iran for attacks. In
a sign of rising pressure on Iran following the Abqaiq attacks, several
European powers sided with the U.S. in
blaming Iran. The U.S. has vowed to maintain and even step up the maximum
pressure campaign, but has so far declined to push for military retaliation.
Iran released the British tanker that it had detained since July, a move that
could ease tensions.
UN-backed report says investors unprepared for climate disruption.
A UN-backed report concludes that investors
are making long-term decisions based on flawed forecasts. Technology innovation
and forthcoming regulations on carbon will render business-as-usual forecasts
obsolete, the report says. In concrete terms, coal will peak globally by 2022,
oil by 2028 and natural gas by 2040. Renewables will meet roughly half of all
electricity globally by 2030 and nearly all of it by 2050.
Pensions and insurers promise climate action.
Insurers and pension funds managing a combined $2.3 trillion in assets pledged on Monday to shift
their portfolios to align with the Paris Agreement. These funds represent some
of the largest pools of capital, so a significant shift would reverberate
across multiple markets. Notably, some of the largest banks did not go
along with the climate announcement.
Oil and gas under fire at UN meeting. Protestors,
as well as the UN and global leaders, pressured oil executives to
do more on climate change. The UN estimates that oil and gas production needs
to contract by 20 percent by 2030 and by 55 percent by 2050 in order to meet
climate goals. For its part, industry executives promoted carbon capture and
solutions for methane emissions, proposals that are intended to keep production
Millennials could doom oil and gas. The fossil
fuel industry has a generation problem. Younger
cohorts are opposed to oil and gas because of climate change, which threatens
the industry in several ways. Drillers are having trouble recruiting talent;
investment funds are under pressure to divest; lifestyle changes are
undercutting demand; and policy changes could threaten even greater systemic
Permian slowdown, but not for majors. Rig counts
and drilling activity continues to fall in the Permian basin, but there is a
two-track dynamic unfolding. The oil majors are still drilling with gusto,
while independent E&Ps are coming under intense shareholder pressure to cut
back. The Houston Chronicle reports that ExxonMobil
(NYSE: XOM) has filed for 470 drilling permits this year.
ConocoPhillips plans to drill wells in Alaska. ConocoPhillips
(NYSE: COP) plans to drill seven exploratory wells in Alaska's
National Petroleum Reserve (NPR-A). "We want to get more confidence around the
geology and reservoir characteristics of the field, so that's one of the
reasons we pushed back our startup date to around 2025-26 now for the Willow
development," Conoco's Alaska Vice President Scott Jepsen said last week, referring
to an oil discovery the company made in 2017.
German economy flashing warning signs.
Manufacturing activity in Germany contracted sharply in August, offering
further evidence that the German economy is on the verge of recession. "Manufacturing seems to be in a deep and deepening slump, and there's now some
evidence that the services sector is also starting to slow. That broader
weakness suggests 4Q will be another poor quarter for economic growth," Jamie
Rush of Bloomberg said.
Abandoned oil and gas wells cost millions. A
report from the Government Accountability Office found that abandoned oil and
gas wells from bankrupt drillers could cost the government $46
million to $333 million in reclamation liabilities.
under stress from buckling shale gas drillers. Several
Appalachian pipeline companies could come under financial pressure as the
region's shale gas drillers demand pricing renegotiations, according to S&P.
1. Fear Of An Iran
War Sends Oil Prices Up - OIR 200919
2. The Biggest Day
For Oil In 50 Years - OIR 170919
3. Average Prices
Of PMS, AGO, HHK and Cooking Gas - August 2019
4. Platts: Oil
Could Test $80 After Attacks In Saudi Arabia
5. Nigeria LNG
Seeks $10B Funding To Expand Operations With A Seventh Train
6. Oil Prices Set
To Rise After Saudi Arabia Drone Attacks; Saudi Arabia Cuts Oil Output By 5m
7. Oil Demand
Destruction: A Trade War Reality
Sentiment Creeps Back Into Oil Markets - OIR 130919
9. Weakening Shale
Productivity Very Bullish For Oil Prices
10. Bolton Firing
Threatens Bullish Sentiment - OIR 100919
11. What Is Saudi
Arabia's Best Oil Strategy?
Sentiment Creeps Back Into Oil Markets - OIR 060919