November 02, 2019 /07:00AM / By Tom Kool of Oilprice.com
/ Header Image Credit: Oilprice.com
Oil markets received a rare bullish bounce on Friday morning
as the rig count fell once again and China released some positive manufacturing
data, but the overall trend in markets remains decidedly bearish
Oil received a jolt on Friday morning on unexpectedly positive manufacturing data from China and a continued rig count collapse,
although it doesn't put to rest concerns about an economic slowdown.
Economic uncertainty continues to dominate the oil market narrative,
and markets await the next move in the trade war.
pipeline spills, TC Energy declares force majeure. TC Energy's
(TSE: TRP) Keystone Pipeline ruptured and spilled more than 9,000 barrels of oil in North Dakota
this week. The company declared force majeure on shipments from the 590,000-bpd
pipeline. WCS prices fell by more than $3 to a discount of about $20 to WTI,
the largest discount since prior to the mandatory production cuts announced by
Alberta at the start of the year. "If you start to see this situation where
flows are reduced for a long period of time, that's when you'll see a price
impact" on both WTI and WCS, Mike Walls, an analyst at Genscape Inc.,
told Bloomberg. Meanwhile, Alberta lifted production curtailments for producers who are
shipping oil by rail.
leaves Canada. Encana (NYSE: ECA) said it
was moving its headquarters from Canada to the U.S. and changing its name to
Ovintiv Inc. "Sadly, I cannot say I am surprised, as Encana has been shifting
its efforts to the U.S. for years, in large part due to harmful policies in
Canada," Sonya Savage, Alberta's energy minister said in a statement.
war hurdles remain despite soothing words. President
Trump has raised expectations that a partial trade deal is all but a done deal,
but hurdles remain. Reuters reports that Trump's insistence on China buying as much
as $50 billion in farm products - more than twice as much as China bought in
the year before the trade war - is a sticking point. Bloomberg also reported
that Chinese officials are not optimistic about a comprehensive deal, as they
do not trust Trump to stick to the terms of any agreement. Still, press reports
suggest there is momentum in the near-term for a partial deal.
admin may back off auto freeze. The Wall Street
Journal reports that the Trump administration is reconsidering
its freeze on fuel economy standards, and instead might opt for 1.5 percent
annual increases, putting it closer to the Obama-era proposal.
budget deficits widens to $50 billion. Saudi Arabia's
budget deficit is expected to widen to $50 billion next year.
earnings fall by half. ExxonMobil (NYSE: XOM) reported
earnings of $3.17 billion in the third quarter, down from $6.24 billion a year
oil workers join protests. Oil workers in Iraq's
southern provinces are beginning to join anti-government protests, according
to Iraq Oil Report. For now, Iraqi production has not been affected.
SA production hits record high. Total SA
(NYSE: TOT) saw its output rise to 3.04 mb/d in the third quarter, up 8 percent
from a year earlier. "The environment remains volatile, with uncertainty
about hydrocarbon demand growth related to the outlook for global economic
growth and in a context of geopolitical instability," Total noted in a
results statement. Profits stood at $3.02 billion.
Tillerson takes witness stand. In the trial of ExxonMobil
(NYSE: XOM), former CEO and former Secretary of State Rex
Tillerson took the witness stand. He disputed allegations that his company defrauded investors
over its risk to climate change and regulation.
services scrap equipment. Bloomberg reports that the surplus of fracking equipment is being
stripped for parts and sold off, rather than merely being idled. The industry
is expected to use around 13 million horsepower at the end of 2019, out of 25
million horsepower available. Bloomberg reports that around 2.2 million
horsepower - about 10 percent of industry capacity - is headed for the scrap
gives greenlight to Nord Stream 2. Denmark gave approval to the controversial Nord Stream 2 pipeline,
which is the last major hurdle standing in the way of construction. The U.S.,
along with some countries in Eastern Europe, oppose the project. More than 87
percent of the project is already built and the project could be completed
within the next few months.
manufacturing data contracts sharply. Factory data
from China showed a six consecutive month of contraction, and
activity fell faster than expected. "We expect the official manufacturing PMI
to remain sluggish in coming months, the growth slowdown could gather pace, and
markets could become more volatile in coming months," said analysts from Nomura
in a note. New data on Friday, however, was more positive.
said worsening economy could slow returns. Royal Dutch
Shell (NYSE: RDS.A) said that a deteriorating in the economy could hit
returns, and could put a $25 billion share buyback plan into doubt. Shell beat
earnings estimates, but its share price fell anyway. "The prevailing weak
macroeconomic conditions and challenging outlook inevitably create uncertainty
about the pace of reducing gearing to 25% and completing the share buyback
program within the 2020 timeframe," Shell's CEO Ben van Beurden said in a
Arabia eyes carbon trading. Saudi Arabia said it plans
on launching a cap-and-trade scheme to reduce emissions and help diversify the
economy. "We will come soon with a suggestion on carbon trading that would be a
fair carbon trading system ... And I think it will work," Prince Abdulaziz bin
Salman said at the Future Investment Initiative conference
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