OIL & ENERGY INSIDER
Oil prices are continuously rising despite the uncertainty surrounding COVID-19, with WTI nearing a two-month high on Friday morning
For further research, analysis and trade recommendations, make sure you read this morning's Global Energy Alert newsletter. From an analysis on Saudi Arabia's current economic crisis to the latest updates on COVID-19, it truly is a must-read.
Friday, May 15th, 2020
Oil prices appear to be rising relentlessly, with WTI bouncing above $28 per barrel, nearly at a two-month high. Market sentiment has been gaining steam as supply shut-ins mount and demand begins to come back. Still, the risk of another wave of coronavirus infections presents a major risk to the rally.
OPEC+ could keep cuts beyond June. “The ministers want to keep the same oil production cuts now which are about 10 million bpd, after June. They don’t want to reduce the size of the cuts. This is the basic scenario that’s being discussed now,” one OPEC+ source told Reuters.
Analysts see optimism in data. Oil timespreads have seen a narrowing contango, a sign of tightening in the oil market. “We believe stocks will be reduced gradually over the next 12 months or so,” said Rystad Energy head of oil markets Bjornar Tonhaugen. “Brent stabilizing above $30 gives the market confidence that frightening days of negative prices and record daily declines are behind us.”
Saudi oil “flotilla” delayed at ports. The flotilla of Saudi super tankers heading to U.S. ports have been delayed because there has been a shortage of the smaller ships used to lighten the load near shore.
Storage fears subside. Due to sharp cuts in oil production, the pace of inventory builds has slowed dramatically, easing fears of an acute shortage in storage capacity.
Iraq cuts 650,000 bpd from southern fields. Iraq cut 650,000 bpd from its massive southern oil fields in order to comply with the OPEC+ cuts. The reductions have been split between state-owned companies and the private international companies.
Exxon CEO under fire. ExxonMobil (NYSE: XOM) CEO Darren Woods is under scrutiny after Legal & General Investment Management, which oversees $1.5 trillion in assets, said it would vote against Woods as CEO and Chairman at the company’s upcoming shareholder meeting. The investment group cited Exxon’s “lack of strategic ambition around climate change,” while its European competitors “step up and reaffirm their sustainability ambitions.”
WoodMac: oil demand may not recover until 2026. Wood Mackenzie outlined several scenarios in a new report, all of which paint a pessimistic outlook for oil demand. The firm said it could take years for demand to recover, but ultimately, demand will probably peak within the next decade.
Fed warns economic damage will persist. Federal Reserve Chairman Jerome Powell warned of an “extended period” of economic damage. St. Louis Fed Chair James Bullard warned job losses could be permanent and businesses could fail “on a grand scale.”
WHO: Coronavirus may “never go away.” The World Health Organization warned that the world may live with COVID-19 indefinitely. “It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,” WHO emergencies expert Mike Ryan told an online briefing.
Venezuelan opposition wants “change of direction” from U.S. The Venezuelan opposition is reeling after the government easily thwarted a hapless coup attempt by American contractors. Opposition lawmakers have contacted the U.S. State Department and requested a change of direction, according to Bloomberg.
Nearly 600,000 clean energy jobs eliminated. The U.S. lost 447,000 clean energy jobs in April, taking the total job losses for the sector close to 600,000 since March.
Diamond Offshore takes stimulus, pays executives. Diamond Offshore (OTCMKTS: DOFSQ) took advantage of stimulus money passed by Congress, getting a $9.7 million tax refund. Then it asked a bankruptcy judge to reward top executives the same amount. Oil companies are receiving hundreds of millions of dollars in stimulus money. “This is a stealth bailout for the oil and gas industry,” Jesse Coleman, a researcher with Documented, told Bloomberg.
North Dakota to pay to cleanup orphaned wells. North Dakota wants to use $33.1 million in coronavirus aid to pay for cleaning up oil wells “orphaned” by the industry.
Alaska oil payout at risk. Alaska sends a check to every citizen every year as a dividend from oil revenues. This year, the check is expected to be about $1,000. But with revenues drying up, that payout is at risk.
Nigeria to cut oil by a quarter. Nigeria said that it would cut its oil production by 417,000 bpd, or about 23 percent of total output, to bring it in line with the OPEC+ agreement.
Tesla to unveil new low-cost battery. Tesla (NASDAQ: TSLA) is set to introduce a new low-cost battery with a longer range for its Model 3 in China later this year. The improvement will bring the cost of the car in line with gasoline vehicles.
BP said governments should press ahead with clean energy. BP (NYSE: BP) said that governments should “press ahead” with climate change policy. “We have got to do the energy transition — this isn’t an option,” BP CFO Brian Gilvary told the FT.
LNG price war could send gas into negative territory. Gas markets are oversupplied and LNG exporters are scrambling, looking for some combination of fighting for market share and storing excess supply. U.S. inventories of natural gas are expected to continue to rise this year.
For further research, analysis and trade recommendations, make sure you read this morning's Global Energy Alert newsletter. From an analysis on Saudi Arabia's current economic crisis to the latest updates on COVID-19, it truly is a must-read.
Friday, May 15th, 2020
Oil prices appear to be rising relentlessly, with WTI bouncing above $28 per barrel, nearly at a two-month high. Market sentiment has been gaining steam as supply shut-ins mount and demand begins to come back. Still, the risk of another wave of coronavirus infections presents a major risk to the rally.
OPEC+ could keep cuts beyond June. “The ministers want to keep the same oil production cuts now which are about 10 million bpd, after June. They don’t want to reduce the size of the cuts. This is the basic scenario that’s being discussed now,” one OPEC+ source told Reuters.
Analysts see optimism in data. Oil timespreads have seen a narrowing contango, a sign of tightening in the oil market. “We believe stocks will be reduced gradually over the next 12 months or so,” said Rystad Energy head of oil markets Bjornar Tonhaugen. “Brent stabilizing above $30 gives the market confidence that frightening days of negative prices and record daily declines are behind us.”
Saudi oil “flotilla” delayed at ports. The flotilla of Saudi super tankers heading to U.S. ports have been delayed because there has been a shortage of the smaller ships used to lighten the load near shore.
Storage fears subside. Due to sharp cuts in oil production, the pace of inventory builds has slowed dramatically, easing fears of an acute shortage in storage capacity.
Iraq cuts 650,000 bpd from southern fields. Iraq cut 650,000 bpd from its massive southern oil fields in order to comply with the OPEC+ cuts. The reductions have been split between state-owned companies and the private international companies.
Exxon CEO under fire. ExxonMobil (NYSE: XOM) CEO Darren Woods is under scrutiny after Legal & General Investment Management, which oversees $1.5 trillion in assets, said it would vote against Woods as CEO and Chairman at the company’s upcoming shareholder meeting. The investment group cited Exxon’s “lack of strategic ambition around climate change,” while its European competitors “step up and reaffirm their sustainability ambitions.”
WoodMac: oil demand may not recover until 2026. Wood Mackenzie outlined several scenarios in a new report, all of which paint a pessimistic outlook for oil demand. The firm said it could take years for demand to recover, but ultimately, demand will probably peak within the next decade.
Fed warns economic damage will persist. Federal Reserve Chairman Jerome Powell warned of an “extended period” of economic damage. St. Louis Fed Chair James Bullard warned job losses could be permanent and businesses could fail “on a grand scale.”
WHO: Coronavirus may “never go away.” The World Health Organization warned that the world may live with COVID-19 indefinitely. “It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,” WHO emergencies expert Mike Ryan told an online briefing.
Venezuelan opposition wants “change of direction” from U.S. The Venezuelan opposition is reeling after the government easily thwarted a hapless coup attempt by American contractors. Opposition lawmakers have contacted the U.S. State Department and requested a change of direction, according to Bloomberg.
Nearly 600,000 clean energy jobs eliminated. The U.S. lost 447,000 clean energy jobs in April, taking the total job losses for the sector close to 600,000 since March.
Diamond Offshore takes stimulus, pays executives. Diamond Offshore (OTCMKTS: DOFSQ) took advantage of stimulus money passed by Congress, getting a $9.7 million tax refund. Then it asked a bankruptcy judge to reward top executives the same amount. Oil companies are receiving hundreds of millions of dollars in stimulus money. “This is a stealth bailout for the oil and gas industry,” Jesse Coleman, a researcher with Documented, told Bloomberg.
North Dakota to pay to cleanup orphaned wells. North Dakota wants to use $33.1 million in coronavirus aid to pay for cleaning up oil wells “orphaned” by the industry.
Alaska oil payout at risk. Alaska sends a check to every citizen every year as a dividend from oil revenues. This year, the check is expected to be about $1,000. But with revenues drying up, that payout is at risk.
Nigeria to cut oil by a quarter. Nigeria said that it would cut its oil production by 417,000 bpd, or about 23 percent of total output, to bring it in line with the OPEC+ agreement.
Tesla to unveil new low-cost battery. Tesla (NASDAQ: TSLA) is set to introduce a new low-cost battery with a longer range for its Model 3 in China later this year. The improvement will bring the cost of the car in line with gasoline vehicles.
BP said governments should press ahead with clean energy. BP (NYSE: BP) said that governments should “press ahead” with climate change policy. “We have got to do the energy transition — this isn’t an option,” BP CFO Brian Gilvary told the FT.
LNG price war could send gas into negative territory. Gas markets are oversupplied and LNG exporters are scrambling, looking for some combination of fighting for market share and storing excess supply. U.S. inventories of natural gas are expected to continue to rise this year.
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