Tuesday, October 22, 2019
/07:00 PM / By Tom Kool 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.
- Natural gas inventories rose to 3,519 billion cubic feet
for the week ending on October 11. That marked the first week that inventories
exceeded the five-year average since September 22, 2017.
- According to the EIA, weekly injections into
inventory in three of the past four weeks surpassed 100 billion cubic feet, or
about 27 percent more than is typical for this time of year.
- Natural gas prices have fallen this year, and the strong
build in inventories creates very little room for price gains.
- Schlumberger (NYSE: SLB) announced a $12.7 billion
write-down, due in part to the weak oil market in North America.
- Royal Dutch Shell (NYSE: RDS.A) plans to sell its onshore
upstream assets in Egypt's Western Desert, shifting its focus to Egypt offshore
- Dominion (NYSE: D) signed a 420-MW renewable
energy deal with the state of Virginia, the largest-ever state procurement of
renewable energy. It will cover 30 percent of the state government's energy
needs by 2022.
Tuesday October 22, 2019
Oil prices edged up on Tuesday on reduced concerns surrounding both Brexit and
the U.S.-China trade war. As with both issues, sentiment seems to shift by the
hour, but at the start of the week, there were some small signs of progress on
and Schlumberger earnings hit by shale. Earnings reports
Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL) show
a hit to profits by the
slowdown in U.S. shale drilling. Both oilfield services giants reported
downbeat figures on the contraction in drilling in North America, while
striking a more optimistic note on international activity.
exits two projects in Kazakhstan. Royal Dutch
Shell (NYSE: RDS.A) decided to abandon two oil
projects in Kazakhstan after determining that they were unprofitable. The move
is a testament to the struggles of high-cost areas in the Caspian as well as
the increased scrutiny by the oil majors on project economics due to investor
to form minority government. Canadian Prime Minister Justin
Trudeau won reelection, emerging with the largest vote share, but with a
diminished block and short of a majority. That means he will likely form a
minority government with another party, with the NDP the obvious partner. NDP
Leader Jagmeet Singh has said that long distance pipelines should not be built
through provinces that don't want them, which may mean that the Trans Mountain
Expansion faces new hurdles. "It's pretty negative outcome from an
energy-sector perspective, "Tim Pickering, founder and chief investment officer
of Auspice Capital Advisors in Calgary, told Bloomberg. "This is a very,
very bad outcome for Alberta."
deal hopes seesaw. U.S. Commerce Secretary Wilbur Ross said on Monday that a trade
deal with China does not need to be finalized in November, as was suggested by
the "partial deal" agreed to earlier this month. The comment cut into hopes of
a deal, dragging down oil prices on Monday. But President Trump contradicted
that, saying the talks were on track for a November signing. Markets seesawed
on the news.
banks cut energy teams. As U.S. deal making dries up,
investment banks are cutting jobs on their energy teams, according to Reuters.
to investigate high gasoline prices. Citing gasoline prices
that are 30 cents per gallon higher than other states, California Governor
Gavin Newsome asked the state's attorney
general to investigate oil and gas suppliers for price-fixing.
Renewables to grow by 50 percent in 5 years. Global
renewable energy capacity could grow by 50 percent over the next five years,
according to a new report from the
International Energy Agency. However, while significant, the pace of growth is
still too slow to meet global climate targets. "Renewables are already the
world's second largest source of electricity," said Fatih Birol, the IEA's
executive director. "But their deployment still needs to accelerate if we are
to achieve long-term climate, air quality and energy access goals."
Neutral Zone could reopen. Kuwait and Saudi Arabia could
sign a deal to reopen the neutral zone oil fields within 45 days, according to Bloomberg. The fields have
been idled for several years, and have 500,000 bpd in capacity. Even if the
deal is made, production wouldn't necessarily come online since output levels
from the two countries are subjected to the OPEC+ agreement.
bets on oil hit 9-month low. The net-length on WTI dropped
to a nine-month low for the week ending on
October 15, a testament to the pessimism from investors and traders. "Demand is
the major obstacle here," said Greg Sharenow, portfolio manager at Pimco,
according to the Wall Street Journal.
bonds" the latest trick to raise funds. The Wall Street
Journal reported on the latest novel approach from the shale industry to find
capital. So-called "shale bonds," a type of asset-backed security, transfers
ownership in wells to financial vehicles, which then issue bonds to be paid out
over the wells' lifetime. The main problem? The production profile of shale
wells remain a moving target, and as the WSJ has previously reported, the
long-term production potential in the aggregate has disappointed relative to
what has been promised.
goes on trial. ExxonMobil (NYSE: XOM) goes on trial this week,
sued by the New York Attorney General over securities fraud. It's the
culmination of several years of investigation. The NY Attorney General alleges
that Exxon defrauded its shareholders when it essentially kept two versions of
its books, downplaying its risk to climate change and climate regulation. The
lawsuit argues that Exxon undercounted billions of dollars of costs. Litigation
risks have exploded for the oil industry, but this will be the first suit that
goes to trial.
Group quits oil export project. Carlyle Group
(NASDAQ: CG) said on Friday that it was
exiting a $1 billion proposed crude oil export terminal near Corpus Christi,
Texas. The company did not reveal why it withdrew. The proposed project is one
of about nine proposed export terminals along the Gulf Coast.
extends Chevron waiver in Venezuela. The U.S. government
decided to grant Chevron (NYSE: CVX) another three-month waiver,
allowing the company to continue to operate in Venezuela.
auction could raise $50 billion. An offshore oil auction in
Brazil could raise as much as $50 billion in November, according to Bloomberg. The November 6
auction could yield $25 billion in winning bids, plus payments to Petrobras
that the company has already made in the area.
to keep troops in Syria to protect oil fields. After
scathing blowback in Washington over his decision to greenlight a Turkish
invasion of Northern Syria, President Trump said that the U.S. would
leave behind troops to protect some oil fields.
count collapse continues. The U.S. oil and gas rig count fell again last week, this
time led by gas rigs.
- OPEC Faces
Critical Decision As Oil Drops Again - OIR 181019
Prices Of PMS, AGO, HHK and Cooking Gas - September 2019
- Oil Markets
Bearish Despite Rising Geopolitical Risk - OIR 151019
- A Long-Term
Crisis Looms For Oil
- Oil Prices
Rise On Trade War Optimism And Tanker Attack - OIR 111019
Closures May Only Offer Temporary Subsidy Reprieve
- The Impact
Of Impeachment On Trade War Talks - OIR 081019
- A Crisis
Looms Over U.S. LNG
Markets: Everything Is About Weak Demand
Optimism In Oil Won't Last - OIR 011019
- Oil Slides
As Middle East Tensions Fade - OIR 270919
Aramco Ramps Up IPO Preparations Despite Weakened Demand Outlook