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Saturday, September 12, 2020 / 07:00AM / by Tom Kool of Oilprice.com / Header Image Credit: Oilprice
While bearish sentimenthas returned to oil markets due to what appears to be a weakening demandrecovery, oil prices climbed on Friday morning after steep losses earlier inthe week.
Friday, September 11th, 2020
Oil prices edged up just a bit during midday trading on Friday, with Brentclimbing back above $40 per barrel. Sentiment remains more pessimistic than inprevious weeks.
OPEC+in a bind as demand softens. Low prices are hitting OPEC+members, just as they began ramping up production. Should OPEC stay on course withthe cuts, hoping that demand recovery picks up next year, enduringlow-for-longer oil prices that crush OPEC budgets? Should they cutdeeper?
ExxonMobilputs Guyana FPSO on hold. ExxonMobil (NYSE: XOM) suspended workon a third floating production, storage and offloading vessel in Guyana. Thecompany awaits approval from the government of Guyana for its Payaraproject.
U.S.CFTC: Climate change presents dangers to financial system. Areport from the U.S. Commodity Futures Trading Commission concluded thatclimate change poses risks to the stability of financial markets. "A worldwracked by frequent and devastating shocks from climate change cannot sustainthe fundamental conditions supporting our financial system," the report said.While not new, the conclusion carries weight coming from the top commoditiesregulator.
Trumpto ban offshore drilling in Florida, Georgia and South Carolina. TheTrump administration said it would block offshoreoil drilling in Florida, Georgia and South Carolina. While the Atlanticseaboard remained a speculative and arguably uncompetitive region for drillers,the Eastern Gulf of Mexico has long been prized (and off limits) to theindustry. Up until now, the administration has supported opening up thatsection for drilling, but with the key battleground state of Florida up forgrabs, Trump reversed course.
Ubercommits to 100 percent EVs by 2040. Uber (NYSE: UBER) committed tomaking its fleet 100 percent electric by 2040, and it also said it would spend$800 million on transitioning drivers to EVs through 2025. Lyft (NASDAQ:LYFT) previously said it would meet the target by 2035,although without financial support for drivers.
Investorssue over potential Anadarko fraud. A searingBloomberg report detailsthe alleged fraud committed by top management at Anadarko Petroleum. A formerengineer alleges the company defrauded investors by overstating the size of anoffshore oil field. Former CEO Al Walker walked away with $100 million when thecompany was sold.
Enbridgeto resume Line 5. Enbridge (NYSE: ENB) will restart theeastern segment of the Line 5 pipeline in Michigan.
Enterprisecancels Permian pipeline. Enterprise Products Partners(NYSE: EPD) scrapped theproposed Midland-to-Echo 4 oil pipeline project, a 450,000-bpd pipeline thatwould carry Permian oil to the Gulf Coast. The decline of production and theweak market led to the decision.
Floatingstorage on the rise again. Oil is filling up in vessels atsea again as the contango deepens. "The market is soft and bearish and floatingstorage is returning again," a market source told Reuters.
Oilmarket turns pessimistic again. The EIA reported asurprise jump in crude stocks and weaker gasoline demand,adding to bearish sentiment. Covid-19 cases are rising in Europe and India, andIndia’s oil demand is expected to contract this year for the first time in overfour decades. "It will take three years for global oil demand to recover fromCOVID to its new normal, assuming we have a vaccine or a cure," analysts atBank of America wrote ina report this week.
BPspends $1.1 billion on offshore wind. BP (NYSE: BP) purchased a50 percent stake U.S. offshore wind assets from Equinor (NYSE:EQNR) for $1.1 billion.
Elliothopes to derail Chevron takeover of Noble. Hedgefund Elliott Management Corp., which holds a large stakein Noble Energy (NYSE: NBL) is pushing thecompany to abandon its plans to sell itself to Chevron (NYSE:CVX), arguing that the proposed deal undervalues Noble.
UBSadvises clients to pick sustainable investments. SwissBank UBS Group said thatit is telling its clients to invest in sustainable investments, the first majorfinancial institution to do so. The bank handles $2.6 trillion in assets.
Optionsmarket says Exxon’s dividend in danger. The options marketis increasingly skeptical of ExxonMobil’s (NYSE: XOM) abilityto maintain its dividend. "Right now, the options market is forecasting an implieddividend range of somewhere between about 30 and 50 cents over the nextdividend period, declining to somewhere between 20 and 30 cents this time nextyear. That would be a significant cut from the 87 cents [Exxon is] currentlypaying," Michael Khouw, chief investment officer at Optimize Advisors, said Tuesdayon CNBC’s "Fast Money."
Lawsuitsagainst Big Oil. New lawsuits for climate change damages against theoil majors were filed this week by several governments, including Charleston,South Carolina, the city of Hoboken, New Jersey, and the state of Delaware.
Copperdemand to surge on clean transition. The global need forcopper could increase by an estimated 350% by 2050, with current reservesdepleting sometime between 2035 and 2045, according to a new report.Copper prices continue to rise, topping $6,800 per ton this week.
Naturalgas prices on the rise as supply stagnates. Contracts fornatural gas delivery at Algonquin city-gates, Transco Zone 6 New York andTennessee Zone 6 for December, January and February have moved up to$6.63/MMBtu, $6.03/MMBtu, and $6.61/MMBtu, respectively. Natural gas supply hita relative peak (temporarily perhaps) late last year, falling as drillerscutback amid low pricing. Lower supply is tightening up the market heading intowinter.
Coloradodrillers sink on new setback proposal. The Colorado Oiland Gas Conservation Commission voiced support for2,000-foot setbacks, significantly larger than current rules. The commissionwon’t vote until October, but the share prices of Colorado-focused drillerssank on the news.
Appalachiandrillers "red ink" in Q2. An analysis ofnine Appalachian-focused shale gas drillers found that the group collectivelyposted $134 million in negative free cash flow for the second quarter.
Seedsof commodity "super cycle" being planted. While it couldbe years before prices shoot up again, the deep cuts in investment in new oilcapacity could sow the seeds of the next boom. India, China and otherfast-growing nations could shorten thedowntime before the next boom begins.
HurricaneEnergy slashes reserves. UK-based HurricaneEnergy (LON: HUR) slashed itsreserves in the West of Shetland area. Its Lancaster field now holds anestimated 58 million barrels, down from 486 million barrels. The company’sstock price plunged by more than 50 percent.
Credit:
The post Oil PricesCreep Higher Despite Bearish Sentiment first appeared in Oilprice.com on September 11, 2020.
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