February 26, 2019 06:09 PM / By Tom Kool Editor, Oilprice.com
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
- In December 2018, the U.S. shale industry produced about 65
billion cubic feet per day (bcf/d) of natural gas (70 percent of U.S. total dry
gas production). The shale industry also produced 7 million barrels of oil per
day, or nearly two-thirds of total U.S. oil production.
- A decade ago, most oil and gas production came from
The U.S. EIA just added data coverage for the Mississippian formation, an up-and-coming shale
play in Oklahoma within the Anadarko basin. The formation is not necessarily new,
but production is on the upswing after the introduction of newer completion
- Range Resources (NYSE: RRC) saw
its share price jump nearly 2 percent after it beat Wall Street estimates for its fourth
quarter earnings. The company sees production rising by 6 percent this
- Bank of America Merrill Lynch issued “Buy” ratings for Anadarko Petroleum (NYSE:APC), Hess (NYSE:HES),
Energy (NYSE:DVN) and Concho Resources (NYSE:CXO),
noting higher production and more restrained spending.
- Global LNG demand will rise 11 percent this year after increasing by 9
percent in 2018, according to Royal Dutch Shell (NYSE: RDS.A).
Tuesday February 26, 2019
Oil prices fell on Monday but opened up flat on Tuesday, looking to stabilize.
President Trump is trying to thread a needle by keeping the U.S. economy from
slowing down, while also trying to head off further increases in oil prices.
Trump lowers oil prices. President Trump’s tweets
calling on OPEC to lower oil prices may have triggered a price decline on
Monday. “His comment that the world is too fragile to take the rising prices is
likely to have contributed to the price slump,” Commerzbank wrote in a note.
“OPEC is pretty much caught between a rock and a hard place: either it cuts
production as agreed, or even more sharply, thereby risking provoking the anger
of the US president. Or it allows the oil price to fall back below $60 per
barrel given that non-OPEC production, especially in the US, is on the rise.”
Trump delays trade war again. President Trump
cited significant progress in his decision to delay the implementation of
tariffs on Chinese goods. A comprehensive trade deal remains a very difficult
task, but the Trump administration is keen to dial back on the trade war. The
development removes, for the time being, one of the greatest bearish factors
facing the oil market.
Nigeria slaps oil majors with back taxes. Nigeria
has ordered foreign oil companies working in the country to pay nearly $20
billion in back taxes. Royal Dutch Shell (NYSE: RDS.A), Chevron
(NYSE: CVX), ExxonMobil (NYSE: XOM), Eni (NYSE:
E), Total SA (NYSE: TOT) and Equinor
(NYSE: EQNR) were each asked to pay between $2.5 and $5
billion, according to Reuters. Several of the companies said they were reviewing the
Venezuela paying premium for imported fuel. Venezuela
has reportedly been forced to pay heavy premiums for fuel imports from Russia
and Europe, according to Reuters. The U.S. cut off shipments of diluents to the country,
and PDVSA has had to look elsewhere, but has been forced to pay higher prices
as many sellers around the world decline to do business with the company.
Venezuelan oil storage filling up. Unable to find
enough buyers for its crude oil, Venezuela is reportedly running out of storage
space. Bloomberg estimates that more than 8 million barrels of oil are stashed on
roughly 16 ships sitting idle along the country’s coast. Some of the joint
ventures lowered production at their upgraders this week. For instance, the
PDVSA-Rosneft upgrader is not processing heavy crude because of a lack of storage
space. So far, data is lacking, but PDVSA will likely suffer from greater
upstream production declines as it may have to shut in output.
U.S. announces new sanctions on Venezuela. The
possibility that the crisis in Venezuela settles in for a protracted conflict
increased after the failed aid delivery over the weekend. The U.S. announced
new sanctions – modest ones compared to previous rounds targeting PDVSA – but
Venezuela’s foreign minister declared that the “momentum of the coup is over.” Opposition leader
Juan Guaidó traveled to Colombia and met with U.S. Vice President Mike Pence,
but it is unclear if or when he can return to Venezuela.
Exxon askes SEC to block shareholder vote. ExxonMobil
(NYSE: XOM) is trying to block a shareholder proposal that
would direct the company to set targets for greenhouse gas emissions
reductions. The oil major told the U.S. Securities and Exchange Commission that
the shareholder resolution, which could be voted on at the annual meeting in
May, is misleading. “Exxon is trying to deny shareholders’ right to vote on a
significant climate risk concern,” New York State Comptroller Thomas DiNapoli,
who manages the state’s pension fund that is pushing the proposal, told Reuters.
Exxon partners with Microsoft. ExxonMobil
(NYSE: XOM) inked a deal with Microsoft (NASDAQ: MSFT) to use cloud-computing
technology to analyze reams of data on the oil company’s operations in the
Energy traders prepared for chaos on threat of hard-Brexit.
With only a few weeks to go before the UK officially exits the European Union,
and the Brexit plan more muddied than ever, energy traders are starting to make plans for the possibility of a chaotic situation. Because of the
links to the continent for natural gas, carbon allowances, and electricity, the
ramifications for a no-deal Brexit could be significant.
India launches airstrikes in Pakistan. Indian
fighter jets launched airstrikes on what they saw were terrorist camps in Pakistan, raising
fears of a geopolitical clash between the two nuclear powers on the
sub-continent. More than 300 people were killed. Pakistan Prime Minister Imran
Khan ordered the armed forces and citizens to “remain prepared for all
Devon Energy to spin off Canadian and Barnett assets. Devon Energy
(NYSE: DVN) announced plans to sell or spin off its Canadian and Barnett assets,
with the goal of becoming a “pure-play” U.S. shale company. The streamlined
company would focus on four main oil plays: the Delaware (Permian basin),
STACK, Powder River Basin and the Eagle Ford. Unloading Canadian heavy oil
assets, as well as some gas operations in the Barnett shale, will allow the
company to its breakeven price, with expectations of free cash flow at $46 per
Saudi Aramco warns of under-investment. Saudi
Aramco’s CEO reportedly warned about the possibility of a supply gap in the
years ahead due to under-investment in oil and gas. He spoke at the
International Petroleum Week conference in London, where he said that U.S.
shale would not be able to cover the supply shortfall while electric vehicles
would disappoint. “I can assure you there will be an impact,” he said.
1. Oil Prices Up On
Trade Optimism - OIR 220219
2. Oil Markets
Poised For A Breakout - OIR 190219
3. OPEC Cuts Oil
Production, U.S.-China Trade Deal Looks Positive - OIR 150219
4. Axxela Achieves
Initial Issuer Rating of BBB (NG); Outlook Stable
5. Average Prices
of PMS, AGO, HHK and Cooking Gas – January 2019
6. European Majors
Set To Weather Oil Price Volatility - Fitch
7. Oil Market
Tightens On OPEC Cuts– OIR 120219
8. What Is Keeping
Oil Prices Subdued? – OIR 080219
9. Bank Of America:
Oil Demand Growth To Hit Zero Within A Decade
10. Oil Rally Halts
On Economic Concerns – OIR 050219
11. Crude Oil
Trading Terms You Need to Know
12. Oil Rises 18% In
Best January On Record
13. The Nigerian
Upstream Oil and Gas Report - Wind In The Sails