June 02, 2020 / 8:47 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.
The U.S. only sold 729,000 vehicles in the month of April, the
lowest since early 2010.
- Car sales were down 59 percent year-on-year, while light
truck sales were down 42 percent, a sign that consumers are making a slight
shift to trucks and SUVs.
- "The U.S. Energy Information Administration's (EIA)
estimates of the sales-weighted average fuel economies of 33.9 miles per gallon
(mpg) in March and 33.6 mpg in April are slightly lower than they would be if
market shares had remained the same as in 2019," the EIA wrote in a
- Hess (NYSE: HES) rose to its highest level
in three months after Citi upgraded its shares to Buy with a $60 price target.
- Parsley (NYSE: PE) said that it restored the "vast majority" of its shut in wells.
- Seadrill (NYSE: SDRL) has written down the value of
its drilling rigs by $1.2 billion and has hired a team to for debt
restructuring. The company intends to delist from the New York Stock Exchange
later this month.
June 2, 2020
Oil prices rose once again on rising
odds of an OPEC+ extension. Brent is now nearing $40 per barrel, a remarkable
comeback after crashing below $20 per barrel a little more than a month ago.
Arabia and Russia near deal on extension. Saudi Arabia and
Russia are close to inking a two-month
extension of the current oil production cuts, extending the agreement through
September 1. Saudi Arabia wants an extension through the end of the year while
Russia has favored easing the cuts in July. A
two-month extension would be a middle-ground compromise.
oil collapsing. In the North Sea, almost a third of the oil
left on the UK continental shelf is no longer economical to
extract. The rig count in the Gulf of Mexico has also fallen by almost half.
threatens trade retaliation. After the U.S. downgraded its
status with Hong Kong, following Beijing's new national security law in the
territory, China is now threatening to curtail
American farm purchases.
approves $20 billion mega petrochem project. In an effort
at infrastructure stimulus, China is reviving a $20 billion petrochemical
project in Shandong province. "The 400,000 barrel-per-day (bpd) refinery and 3
million tonne-per-year ethylene plant in Yantai, Shandong, the country's hub
for independent oil refineries, was proposed years ago but approval has been
slowing in coming because of China's struggle with excess refining capacity," Reuters reported.
of shipping falls on production cuts. The sharp oil
production cuts have led to a decrease in the cost of shipping. Prices for
chartering an oil vessel fell 77 percent from the
peak in March.
cuts dividend to a penny. Occidental Petroleum (NYSE: OXY) cut its quarterly dividend
by 91 percent, and shareholders will only receive one penny per share on July
15. In March, Oxy cut its dividend to 11 cents, from 79 cents previously.
activity at lowest level since 1949. The rig count fell to
301 rigs last week, the lowest level on record since 1949.
gas flaring to fall by half. The rate of gas flaring in the
Permian basin may decline from 600 million cubic feet per day (mcf/d) at the
beginning of the year to just 300 mcf/d in the second half of 2020. "In the
second quarter we will definitely see a massive decline," said Artem Abramov, head of
shale research at Rystad. "More or less all fracking activities are on hold.
Where there is still activity going on it is marginal."
PMIs rebounding. IHS Markit's Manufacturing Purchasing
Managers' Index for the Eurozone rose to 39.4 in May from
the low point in April of 33.4. Below 50 is still a contraction. Likewise, PMIs
in the U.S. are also beginning to rebound.
sales in China shrink. April was a bad month for EVs in
China - overall sales fell even as the broader car market grew. EV sales were
down 27 percent in China in April, but gasoline cars rose by 6 percent. Still,
Beijing boosted its target for EVs
to 25 percent of total sales by 2025, up from a previous goal of 20 percent.
warns investors about climate change. The International
Monetary Fund said that investors are not
ready for the effects of climate change. Companies affected by drought,
wildfires, floods and storms will see severe hits to their valuations, the Fund
said. The costs could top $1 trillion annually by 2050.
costs fall as demand shrinks. Chinese solar parts
manufacturers have cut costs for solar
components like wafers and cells by as much as 20 percent as demand growth has
slowed. Price cuts are bad for manufacturers, but it could also stoke
to turn oil refinery into renewable diesel facility. HollyFrontier
(NYSE: HFC) said it would repurpose its
Cheyenne refinery into a facility to production renewable diesel, which is
often made from soybean oil, recycled cooking oil and animal fats.
solar companies hiring oil and gas workers. The oil and gas
industry in Texas lost 90,000 jobs in the last few months. Clean energy
industries are also slashing payroll, but could rebound faster than fossil
fuels. "We are hiring oil and gas refugees for sure," Christian Fong, CEO at
Spruce Finance Inc., told E&E News. The company
plans on boosting staff by 30 percent.
Related News - Previous Oilprice Intelligence Report
- Oil Prices Slide As U.S.-China Tensions Spike
- Will U.S.
Shale Survive If Oil Hits $40?
- Is The Oil
Rally Coming To An End?
- The Oil Bulls Are Back - OIR 190520
- A Relentless Oil Price Rally - OIR 150520
- Oil Holds Gains Despite Massive Unemployment - OIR 080520
- The Worst
May Be Over For Oil - OIR 050520
- A Rare Week
of Optimism For Oil Markets - OIR 010520
Season Will Be A Bloodbath For Oil Producers - OIR 280420
- A Very
Brief Oil Price Rebound - OIR 240420
- Oil Price
Mayhem - Is The Market Broken? - OIR 210420
- Oil Prices
Fall Towards $15 for WTI and $25 for Brent As Storage Nears Capacity - OIR
Related News - Oil and Gas
- Crude Oil Production Cuts Will Spur Nigeria's Negative Growth in Q2
2020 - PFI Capital
Prices of PMS, AGO, HHK and Cooking Gas - April 2020
Oil and Gas Industry Update
Gas: Demand Pressure and Price Plunge hit LNG Revenue
- OMCs to
Resume Importation of Petrol
Litres of PMS Imported Into Nigeria in 2019 - NBS
- Ahead of
Tomorrow on WebTV: Discussions on Post COVID-19; Repositioning The
Nigerian Gas Industry
- OPEC Members Test the Depth of Crude Oil Reserves
- Big Oil,
Little Oil Have Full Lives Ahead - FBNQuest
- Groups Advocate for Reforms in the Downstream Sector of the Oil and
Oil Majors Could Adapt to Low Prices