Tuesday, September 01, 2020 / 8:15
PM / by Josh Owens of Oilprice.com / Header Image
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
- From 2011 to mid-2020, roughly 95 GW of coal-fired capacity has
gone offline, with another 25 GW slated to shut down by 2025.
- The U.S. coal fleet will soon drop below 200 GW, down
from 314 GW at its peak in 2011.
- The remaining plants are underutilized because of coal's declining
- Total's (NYSE: TOT) Port Arthur
refinery is awaiting the restoration of
electricity in order to restart operations following Hurricane Laura. Citgo and
66 (NYSE: PXD) said that assessments of damage at their
facilities in Lake Charles could take days.
- Chesapeake Energy (NYSE: CHK)
hoped to cancel a $300 million
contract with Energy Transfer (NYSE: ET), but a court ruled in
Energy Transfer's favor.
- Enbridge (NYSE: ENB) said that an
offshore natural gas pipeline that services four offshore platforms in the Gulf
of Mexico remained out of commission
due to the hurricane.
Tuesday, September 1, 2020
Oil prices rose on
Tuesday on new manufacturing data from
both the U.S. and China, which surprised on the upside. The dollar also
weakened, adding some support to crude. Nevertheless, crude is showing few
signs of being able to break out from its current range.
Distressed shale assets from the last boom. Many of the M&A deals in U.S.
shale following the 2014-2016 oil market downturn are now "unworkable," according to Reuters.
Of the 50 largest acreage purchases between 2016 and 2019, 31 of them only add
value if Brent trades above $50 per barrel. For instance, Diamondback
Energy (NASDAQ: FANG) paid
roughly $54,977 per acre when it purchased Energen in 2018, a deal that would
now breakeven if Brent averaged $77 per barrel.
Gulf of Mexico output remains down. As of Monday, about 53 percent of
oil production in the Gulf of Mexico was still
shut-in, following the devastation from Hurricane
Laura. About 41 percent of natural gas production is shut-in. Personnel remain
evacuated from 117 production platforms or 18 percent of the total.
EVs still costly to produce. EVs will remain more costly
to manufacture than traditional gasoline and diesel-fueled vehicles for the
rest of the decade, according to new
research. EV manufacturing costs could average 16,000
euros by 2030, or 9 percent higher than conventional cars.
Goldman: Oil prices to jump to $65. Goldman Sachs expects Brent
crude to reach $65 a barrel in the third quarter of 2021, although it could end
the year lower, at $58 a barrel, according to Goldman Sachs analysts. "There is
a growing likelihood that vaccines will become widely available starting next
spring, helping support global growth and oil demand, especially jet," the
Goldman analysts said.
U.S. seizes websites involved in illegal oil trade. The United States announced today
that it has seized three websites used by sanctions-violators to trade in crude
oil, according to an official press release. The websites were, according to
the U.S. government, used by Iran to trade oil with Venezuela-two sanctioned
countries that are not allowed to trade oil at all, let alone with each other.
Natural gas prices sink on cooler weather. Natural gas prices sank early
on Monday on expectations of lower demand due to cooler weather and lower
liquefied natural gas (LNG) feed in the aftermath of Hurricane Laura passing
through the U.S. Gulf Coast.
Biden: "I am not banning fracking": In a speech on Monday in
Pittsburgh, Biden dismissed accusations that he would target oil and gas
drillers. "I am not banning fracking. Let me say that again. I am not banning
fracking. No matter how many times Donald Trump lies about me," Biden said.
UAE overproduces in August. The UAE breached its
OPEC+ quota in August, pumping 2.693 million b/d, according to S&P Global
U.S. SPR damaged from the hurricane. The U.S. Energy Department said on
Monday that the West Hackberry site of the Strategic Petroleum Reserve "sustained considerable damage" from Hurricane Laura.
Shipping companies profit amid downturn. Cost-cutting and removing
excess capacity have kept shipping margins in positive
territory this year.
Trump Administration Proposes Easing Oil and Gas Permitting
in National Forests. The Trump administration on Aug. 31 issued a
proposal that would make it easier to permit oil and gas drilling operations in
national forests, aligning permitting processes between the Forest Service and
the Bureau of Land Management. Environmental groups say the move will sidestep
U.S. gasoline demand fizzling. U.S. demand for gasoline surged
after bottoming out in April, but has flattened out in the past two months
below pre-pandemic levels. Stagnating demand raises concerns about the health
of the economic recovery. "The easy work has been done," Noah Barrett, an
energy analyst for Janus Henderson Investors, told the
WSJ. "That last 10% to 15% of lost demand is going
to be really hard to get back."
Trump admin prepares more sanctions on Venezuela. "We think our sanctions have been
extremely effective in reducing income to the regime but we think we can make
them more effective. So we are going to be doing some things to tighten up in
the near future," Elliott Abrams, U.S. Special Representative for Venezuela
said in a Reuters interview.
He did not specify but hinted that the new sanctions would include eliminating
exemptions offered to third parties buying Venezuelan oil.
Tesla to sell $5 billion in shares. Tesla (NASDAQ: TSLA) said it would sell as
much as $5 billion in shares "from time to time" in order to fund growth. The
company has plans to build new factories in Germany and in Austin, Texas,
following the recent completion of a plant in Shanghai.
Exxon considers job cuts. According to a memo sent to
employees Monday and obtained by Business
Insider, ExxonMobil (NYSE: XOM) is considering job cuts. The company is
looking at its upstream unit for "organizational efficiencies and lower
activity levels," according to the memo, including job cuts.
Total and Macquarie pursue 2 GW offshore wind in South Korea. Total (NYSE: TOT) will partner with
Macquarie Group's green bank to develop more than 2 gigawatts of floating wind
farms off South Korea, the latest push by the French oil and gas giant to
diversify into clean energy.
The post Oil Prices Could Rise to $65 first appeared in Oilprice.com on September 01, 2020.
Related News - Previous
Oilprice Intelligence Report
- Oil Prices
Fall As Hurricane Fears Subside - OIR 280820
- Gulf Of
Mexico Storms Push Oil Prices Higher - OIR 250820
- Oil Tumbles On Shaky Recovery Prospects - OIR 210820
Sentiment Is Building In Oil Markets - OIR 180820
- Oil Prices
Fall Back After A Brief Rally - OIR 140820
- Oil Prices Rally On New COVID Optimism
- OIR 110820
- COVID Fears
Cause Oil To Fall Back After A Brief Rally - OIR 070820
- Oil Prices
Climb Despite Growing Demand Fears - OIR 040820
- Economic Turmoil Leaves Oil
Trapped At $43 - OIR 310720
- OPEC Prepares
For Long-Term Demand Risks - OIR 280720
- Oil Prices Stuck At $42 - OIR
- Oil Jumps on the Prospect of Two
Trillion-Dollar Stimulus Packages - OIR 210720
- OPEC-Plus News
Is Holding Oil Prices Back - OIR 140720
- Oil Returns to
$42 After COVID Correction - OIR 100720
- Oil Prices
Range Bound As Pipelines Come Under Pressure - OIR 070720
- The Oil Rally
Has Stalled Once Again - OIR 030720
- Oil Markets On
Edge As Second Wave Hits - OIR 300620
- Oil Prices Fall
Below $41 as a "Second Wave" of COVID Hits - OIR 260620
Related News - Oil and Gas
- Nigeria Prepares for an Extended Period of Low Oil Prices
Industry Bill - Is There Light At The End of The Tunnel?
- Average Prices of PMS, AGO, HHK
and Cooking Gas - July 2020
- Recovery in Oil Market Extends
to the Third Consecutive Month
- August 2020 Oil Market Update:
Unprecedented Supply Cuts, Some Countries Still Faltered - NOVA
- Labeling of Agbami as Crude or
Condensate Divides Oil Market
- The Nigerian Oil and Gas
Industry Update: Urgent Need for Reforms
- Nigeria's Failing Refineries
- Big Oil Has Been Bruised By The
Pandemic, But It Is Not In Retreat
- United Bank for
Africa Provides $200 Million for Nigeria's Petroleum Industry
- NBCC Forum: Experts Call For
Increased Investments In Oil and Gas Mid-Stream Production
Resuscitation of Ajaokuta Steel Company - An End in Sight?
- Large And Unexpected Crude Build
Halts Oil Rally
- OPECplus Cuts Tapering Reflects
Recovering Oil Demand
- Average Prices of PMS, AGO, HHK
and Cooking Gas - June 2020
- Oil and Gas
Update: Downstream Oil and Gas at a Crossroads
- Movement in Oil Prices and What
It Means for Nigeria
- Insulating Nigeria from
Perennial Oil Price Volatility
- Saudi Arabia Eyes Total
Dominance In Oil And Gas
- PPPRA Releases Advised Price for
PMS for the Month of July 2020; Raises Pump Price to N140