|Day's Range||24.16 - 24.76|
(Bloomberg) -- Crude steadied in Asia, holding under $25 a barrel as traders weighed whether output cuts being discussed by the world’s top producers would be enough to offset an unprecedented demand loss from the coronavirus outbreak.Futures in New York rose as much as 3.5%, after sliding more than 9% on Tuesday. Saudi Arabia and Russia are hammering out terms to a production agreement, with OPEC+ talks planned for Thursday and a G-20 meeting of energy ministers set for Friday, according to people familiar with the matter, although a deal hinges on some form of cooperation from the U.S.There are grounds for optimism on that front. The U.S. Energy Information Administration slashed its oil output forecast by almost 10%, saying it now expects the nation to pump an average of 11.8 million barrels a day in 2020. The 2021 estimate was cut to just over 11 million. The country is currently producing 13 million barrels a day.Read More: In the Big OPEC++ Output Deal, Who’s In and Who’s Out?The industry-funded American Petroleum Institute reported a 11.9 million barrel increase in weekly nationwide crude stocks, according to people familiar with the matter. That’s above analyst expectations for a 9.25 million barrel rise. The industry group also reported a 6.8 million barrel jump in oil stocks at the Cushing, Oklahoma hub, which would be the largest in data going back to April 2004 if the EIA confirms that in its report Wednesday.Exxon Mobil Corp. plans to slash its spending by $10 billion -- more than any other supermajor oil explorer has cut to weather the unprecedented market collapse -- and yet its production in North America’s biggest shale region is still forecast to rise.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The ongoing price crash triggered by the coronavirus and the oil war has in many ways hammered investments into upcoming African, Latin American and Asian plays
(Bloomberg) -- The U.S. cut its 2020 oil production forecast by more than 1 million barrels a day, as collapsing crude prices and plummeting demand threaten to shutter production in the country’s biggest fields.Production is expected to average 11.76 million barrels a day through December, down from a previous forecast of 12.99 million barrels, the Energy Information Administration said on Tuesday. The agency also trimmed its 2021 output expectations by 1.6 million barrels a day to just over 11 million daily barrels.The report comes just days before OPEC, Russia and other producers meet to negotiate a round of coordinated output curbs meant to stem crude’s historic plunge. President Donald Trump, who has been trying to broker a deal to end the price war between the Saudis and Russians, faces pressure from his counterparts to join in a global supply-cut agreement after prices plunged to their lowest levels in almost two decades.The latest forecasts reinforce comments that Trump made just a day ago about low oil prices already forcing U.S. oil producers to cut back.“The cuts are automatic if you’re a believer in markets,” he told reporters late Monday. “They’re already cutting. If you look, they’re cutting back. It’s the market. It’s demand. It’s supply and demand. They’re already cutting back and they’re cutting back very seriously.”Massive SurplusThe EIA also slashed its 2020 global petroleum supply forecast by 2.7 million barrels a day, and reported a looming supply surplus of 11.4 million daily barrels in the second quarter. That would eclipse the 10 million barrel-a-day production cut Trump has suggested OPEC+ shoulder in a bid to resuscitate the market.The agency’s 2021 forecast bottoms out at 10.91 million barrels a day in March 2021. That would amount to a production cut of almost 2 million barrels a day from the all-time high of 12.87 million barrels in November 2019.The Energy Department attributed its gloomy production outlook to “unprecedented worldwide demand impacts of Covid-19 coupled with the disruptive actions of the ongoing dispute between OPEC + nations,” agency spokeswoman Shaylyn Hynes said in a statement. “The Secretary is confident that both of these forces are temporary, and the market will recover,” she said, referring to Energy Secretary Dan Brouillette.The market rout -- spurred by coronavirus-related lockdowns and a price war for market share between the Saudis and Russians -- has already forced shale explorers to pare back their budgets. With storage rapidly filling up and nowhere for excess barrels to go, some companies are already starting to shut in wells.Net Importer“The U.S. oil industry is being wrestled to the ground by the Russians and Saudis,” Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts, said before the report was released. “Involuntary participation is the best way to put it.”EIA forecasts that the U.S. will return to being a net importer of crude oil and petroleum products in the third quarter of 2020 and remain a net importer in most months through the end of the forecast period. The agency expects Brent, the global benchmark crude, to average $33.04 a barrel this year, down from earlier expectations of $43.30.The U.S. will join in a discussion of energy ministers from the Group of 20 industrialized nations on Friday that will follow the OPEC + meeting, the Energy Department said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Russia on Tuesday confirmed its participation in the meeting of leading oil producers set for April 9, joining Saudi Arabia and the rest of the OPEC members. The conference, due to be held via a video link, had been initially scheduled for April 6 but was delayed amid a war of words between Russia and Saudi Arabia. "Oil prices are holding their ground with market expectations building on an agreement for an output reduction of 10 million barrels per day (bpd), or at least close to 10 million bpd," BNP Paribas (PA:BNPP) analyst Harry Tchilinguirian told the Reuters Global Oil Forum.
Additionally, gold futures rose 0.7% to $1,705.10/oz, after earlier climbing to a new seven-year high of $1,742.20, while EUR/USD traded at $1.0875, up 0.8%.
(Bloomberg) -- From Russia’s northeastern coast of Sakhalin to the Permian basin in the U.S., oil is going cheap as sellers slash prices in a desperate attempt to attract buyers.Refiners across the world have made deep cuts to crude-processing rates due to slumping consumption and a growing fuel glut, leaving producers struggling to find buyers for their cargoes. Sellers, meanwhile, are aggressively dropping the price of their oil while they tussle for the remnants of demand, with the prospect of forced output cuts looming as global storage swells.In recent days, benchmark crude prices have rallied in the financial markets, primarily due to speculation that the world’s largest producers might reach some sort of truce to halt the price war. However, gloom persists in the physical markets, where actual barrels of oil are bought and sold, with crude still trading well below benchmark levels.For example, the spot differential for Russia’s Sokol was at a discount of about $8 a barrel against Dubai crude this week, according to traders who asked not to be identified. That’s the lowest in more than five years and a whopping $11 less than the last reported deal for the grade. Australia’s Varanus traded at a discount of between $13 and $14 against London’s Dated Brent, compared with a 50-cent premium for the previous cargo.U.S. crudes have declined to multi-year lows against benchmark Nymex crude oil futures because suppliers are running out of space to store barrels.Last week, the discount for West Texas Intermediate crude trading in Midland, Texas, America’s shale capital, fell to the lowest level since 2018. Offshore grade Heavy Louisiana Sweet oil plunged to the weakest discount to oil futures in data going back to 1991. Another offshore crude Mars Blend, a regional sour benchmark, tumbled to the lowest level in over a decade.Storage tanks the world over are filling fast, including at the 45 million-barrel Saldanha Bay terminal, a key hub in Africa. Scores of supertankers have also been charted for long-term plays, to be used as floating storage.“One could argue that currently there is a disconnect between the futures prices and the physical differentials which is pointing towards a more distressed market,” researchers at the Oxford Institute for Energy Studies said in a report.The study noted that the movement of price differentials -- the gap between the price for physical crude and its benchmark -- has been more extreme than for futures prices. It also highlighted that the weakness in grades like CPC Blend and Murban is due to high yields of jet fuel and naphtha, a component in gasoline production.The consumption of jet fuel to gasoline has plummeted as governments try and curb the spread of the coronavirus pandemic by forcing people to stay at home. While China remains a bright spot as people return to work and factories begin to reopen after a prolonged shutdown, activity at Indian ports has slowed and the nation’s refiners are curbing processing amid a crippling lockdown.See also: Oil’s Apocalyptic April Could Reverberate for Years to ComeHowever, oil traders still have their sights on sending unsold crude to Asia, even as refinery margins in the region swing between profits and losses. The market phenomenon known as super-contango, where prompt crude prices are sharply below cargoes for delayed delivery, means that the cost of chartering a tanker can be offset by such gains, making the strategy viable.Even so, the question is where exactly in Asia can they send their supplies right now to get some relief. Recently, a tanker that was initially booked to send U.S. crude to India, based on fixture reports, was sent to China instead. Indian refineries have issued force majeure notices to defer their crude deliveries because the virus-led quarantines have crushed fuel consumption.(Updates with details on U.S. crude market activity in fifth and sixth and final paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
G20 oil ministers are set to meet on Friday to discuss what could be the biggest ever oil production cut in history, but the effect of the output reduction might not have a large impact on devastated oil markets
Guyana’s political impasse is a major potential threat to the nation’s oil boom and its development and continues to hold the nation in a deadlock
Russia’s oil production dropped slightly in the first days of April, just as it is set to join talks with other majors oil producers about a ‘massive’ production cut
The Zacks Analyst Blog Highlights: TC Energy, Imperial Oil, Suncor Energy, Canadian Natural Resources and Kinder Morgan
(Bloomberg) -- The oil-price war isn’t doing any favors for Saudi Aramco’s bondholders one year on from the state-owned company’s debut on international capital markets.Trumpeted at the time as one of the most anticipated offerings of the year, the $12 billion of bonds have just clocked an 8.2% loss in March, their worst ever monthly performance, as crude prices more than halved. The outlook isn’t good either. Baltimore-based T. Rowe Price, which manages $1.2 trillion, says the securities will remain under pressure as long as the world’s top oil producers fail to agree on supply curbs.“It’s been, for the market, a reality check,” said Willem Visser, a T. Rowe fixed-income analyst. “Aramco tries to project itself as being a triple-A rated credit that’s bigger and better than the other oil majors, but people forget about the political risk.”Aramco’s $3 billion of bonds due 2029 now trade with a higher yield than the government’s debt of similar maturity.That contrasts with a year ago, when the energy giant issued its Eurobonds. The notes priced with a lower yield than those of the government itself, a rarity in corporate bond markets.Equity investors have also been hit. Aramco listed around 1.5% of its stock in the Saudi capital of Riyadh in December. Its market value has fallen from a peak of $2 trillion to $1.7 trillion. The stock remains below the 32-riyal listing price it surrendered a month ago.Aramco’s assets have still suffered less than those of peers such as Mexico’s state oil company Pemex, said Sergey Dergachev, a senior money manager at Union Investment Privatfonds GmbH in Frankfurt. That’s because it remains “one of the strongest oil and gas names in the emerging-market universe,” he said.While the oil crash has already caused Aramco to slash planned capital expenditure, it will be “very comfortable” with oil at $30 a barrel, chief financial officer Khalid Al-Dabbagh told investors in March. Brent crude prices are around $33 per barrel after rebounding 37% last week on hopes of a deal between producers. However, a meeting of the OPEC+ alliance scheduled for Monday was postponed to Thursday as Saudi Arabia and Russia traded barbs over who was to blame for the collapse in oil prices.“We like Aramco’s fundamentals, but think the valuations are now just fair rather than attractive,” said John Bates, a corporate-bond analyst in London with PineBridge Investments Europe.(Updates prices in sixth, eighth paragraphs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s risk-on early in the day, with COVID-19 numbers supporting riskier assets. Updated figures and news from OPEC will influence later, however.
(Bloomberg) -- President Donald Trump said he doesn’t think he’ll have to impose tariffs on imported oil to blunt the impact of a price war between Russia and Saudi Arabia, but held out the option to protect U.S. oil producers.“I would use tariffs if I have to,” he said at a White House news conference on Sunday, restating his position from Saturday’s briefing. “I don’t think I’m going to have to.”The U.S. has been in talks with Russia and Saudi Arabia about cutting excess production that’s cratered global oil prices, including calls between Trump and the leaders of both nations. But despite Trump’s assertion last week the two countries would cut production by 10 million to 15 million barrels, no agreement has been reached.“We want to save a great industry,” Trump said of the U.S. oil industry. “If they don’t get along, I would do that, yeah, I would do tariffs, very substantial tariffs.”Read more: Negotiators Race for Global Pact With U.S. Role in BalanceOPEC+, the former alliance between the Organization of Petroleum Exporting Countries and Russia, delayed a meeting aimed at ending the price war on Saturday after fresh tension between Riyadh and Moscow over who was to blame. The alliance will tentatively plan to meet virtually on April 9 instead of Monday. Brent futures dropped as much as 12% on Sunday.The International Energy Agency said that the deepest production cuts in the oil industry’s history wouldn’t be able to steady oil markets, where demand has collapsed because of the coronavirus outbreak.“It was the virus that killed it,” Trump said of the industry. He also noted again that low prices have benefits to the U.S. economy, a top oil consumer.“I’m seeing 91 cents a gallon out on the road,” he said. “A lot of people are happy. I see very inexpensive jet fuel, we’re trying to save the airline industry.”(Updates with additional Trump remarks beginning in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
World stock markets jumped on Monday, encouraged by slowdowns in coronavirus-related deaths and new cases in some global hot spots, while oil prices tumbled again due to a delay in talks between Saudi Arabia and Russia to cut supply. The U.S. dollar was little changed against a basket of peers and sterling turned negative versus the greenback and euro after news that UK Prime Minister Boris Johnson was moved to intensive care as he grew sicker with COVID-19. In New York State, Governor Andrew Cuomo said that despite an increase in the number of cases and deaths, a daily decline in new hospitalizations and other data suggested a possible plateau in the crisis.
(Bloomberg) -- Saudi Arabia, Russia and other OPEC+ nations are racing to negotiate a deal to stem the historic oil price crash, with the G-20 taking center stage to bring into the fold the U.S. and other energy producers.U.S. Energy Secretary Dan Brouillette held a “productive discussion” over the phone with his Saudi counterpart Prince Abdulaziz bin Salman, the U.S. government said, a further sign that the diplomatic talks continue apace.The talks still face significant obstacles: a meeting of producers from OPEC+ and beyond -- which has been delayed once already -- is only tentatively scheduled for Thursday. Russia and Saudi Arabia want the U.S. to join in, but U.S. President Donald Trump has so far shown little willingness to do so as part of a deal between the Organization of Petroleum Exporting Countries and its allies.As an alternative, oil diplomats are planning an emergency meeting of G-20 energy ministers for Friday, part of an effort to bring the U.S. and other big oil producers outside the OPEC+ alliance -- such as Canada and Brazil -- on board, according to two people familiar with the situation.Brouillette said on Monday that Washington was “going to encourage the Saudis as chair of the G-20 to perhaps convene an energy ministerial toward the end of the week” as a forum to discuss the oil market. “I expect that that’s going to happen later this week,” he said.Crude prices have fallen 50% this year, as the economic effects of the coronavirus pandemic have knocked out about a third of global demand. The price crash is so dramatic that it’s threatening the stability of oil-dependent nations, the existence of U.S. shale producers, and poses an extra challenge to central banks. Industry officials say that if a deal to cut supply in an orderly way isn’t reached, the market will simply force producers to slash output as storage space runs out.The aim of talks, first revealed by Trump last week, is to cut oil production by about 10% -- the biggest ever coordinated reduction. Crude rallied on Trump’s comments but pared those gains as the diplomatic intricacies became clearer. Brent futures fell 2% on Monday, trading near $33 a barrel.Russia and Saudi Arabia are “very, very close” to reaching a deal on oil-production cuts, Kirill Dmitriev, chief executive officer of the Russian Direct Investment Fund, said in an interview with CNBC.However, even if a deal is struck for as much as 10 million barrels per day, that will barely dent the supply glut, which is estimated at as much as 35 million barrels a day. In some corners of the physical market prices have already turned negative, and traders have been putting oil into tankers at a record pace to store it at sea.Jump TogetherSaudi Arabia and Russia both say they want the U.S., which has become the world’s largest producer thanks to its shale revolution, to join the cuts. But Trump had only hostile words for OPEC on Saturday, threatening tariffs on foreign oil, though at a briefing late Sunday he said he didn’t expect he’d have to use them. The G-20 may be an easier forum for the U.S. to embrace than OPEC.“If the Americans don’t take part, the problem which existed before for the Russians and Saudis will remain -- that they cut output while the U.S ramps it up, and that makes the whole thing impossible,” said Fyodor Lukyanov, head of the Council on Foreign and Defense Policy, a research group that advises the Kremlin.Read more: Why OPEC-Russia Blowup Sparked All-Out Oil Price War: QuickTakeIt’s not clear if Russia and Saudi Arabia will require the U.S. to publicly commit to cut production -- a challenge in the private, fragmented American industry -- or if a compromise gesture would be enough. Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank, said Moscow would like the U.S. to lift some sanctions as a compromise.Even a passive role for the American shale industry, whose output is already expected to go into decline at current prices, may be enough for a deal, said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former oil official at the White House.“Russia and Saudi Arabia’s condition that they will only cut production if the U.S. does too is going to be satisfied, because market forces will drive U.S. output down around 1 million barrels a day this year,” said Bordoff.Back ChannelsRussia and Saudi Arabia -- which sparred publicly between themselves over the weekend -- have disagreed about how they would calculate the cuts, according to a person familiar with the talks.Russia favors using an average of the first quarter output as the baseline, while Saudi Arabia wants to use its current April production. The difference is huge: the kingdom pumped 9.8 million barrels a day on average between January and March. In April -- as it wages its battle for market share -- it’s producing more than 12 million.Any agreement will require diplomatic agility at a time when nations are devoting massive resources to fighting the pandemic itself. All three players -- Crown Prince Mohammed bin Salman, Russian President Vladimir Putin and Trump -- appeared to be maneuvering to avoid blame if talks fail. Yet the U.S. president has also said he’s confident there’ll be an agreement between Moscow and Riyadh to cut production.“The chances of a meaningful deal that delivers real production cuts are low but back-channel talks are ongoing,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. “Mohammed bin Salman is under heavy political pressure from Trump to demonstrate the Kingdom isn’t trying to bankrupt the U.S. shale industry.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
North Sea oil has a relatively high break-even price, and the coronavirus crisis has wreaked havoc on operators which have already sent home thousands of employees
(Bloomberg) -- Saudi Arabia, Russia and other large oil producers are racing to negotiate a deal to stem the historic price crash as diplomats said some progress was made on Sunday.The talks still face significant obstacles: a meeting of producers from OPEC+ and beyond -- delayed once -- is only tentatively scheduled for Thursday. Russia and Saudi Arabia want the U.S. to join in, but U.S. President Donald Trump has so far shown little willingness to do so.Oil diplomats are trying to stitch together a meeting of G20 energy ministers for Friday, as part of the effort to bring the U.S. on board, according to two people familiar with the situation.Crude prices have fallen 50% this year, as the economic effects of the pandemic have knocked out about a third of global demand. The price crash is so dramatic that it’s threatening the stability of oil-dependent nations, the existence of U.S. shale producers, and poses an extra challenge to central banks.Even the International Energy Agency, which represents nations that consume oil, is calling for action. And oil officials know that if a deal to cut supply in an orderly way isn’t reached, the market will force some producers to suspend output as storage on land and at sea fills up.The aim of talks, first revealed by Trump last week, is to cut oil production by about 10% -- the biggest ever coordinated reduction. Oil rallied on Trump’s comments last week, but then pared those gains as the diplomatic intricacies became clearer.Cut TogetherSaudi Arabia and Russia both say they want the U.S., which has become the world’s largest producer thanks to the shale revolution, to join the cuts. But Trump had only hostile words for OPEC on Saturday, and threatened tariffs on foreign oil.“If the Americans don’t take part, the problem which existed before for the Russians and Saudis will remain -- that they cut output while the U.S ramps it up, and that makes the whole thing impossible,” said Fyodor Lukyanov, head of the Council on Foreign and Defense Policy, a research group that advises the Kremlin.It’s not clear if Russia and Saudi Arabia will require the U.S. to publicly commit to cut production -- a challenge in the private, fragmented American industry -- or if a compromise gesture would be enough. Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank, said Moscow would like the U.S. to lift some sanctions as a compromise.Russia and Saudi Arabia -- which sparred publicly between themselves over the weekend -- have also disagreed about how they would calculate the cuts, according to a person familiar with the talks.But in another sign of progress, Norway -- which hasn’t joined any production cuts since 2002 -- signaled over the weekend it was ready to reduce unilaterally its output if others did. And a senior official from the oil-rich Canadian province of Alberta said it will dial into the oil meeting this week. Iraq’s oil minister said he was optimistic about a deal.Any agreement will require diplomatic agility at a time when nations are devoting massive resources to fighting the pandemic itself. It’s also a battle of wills between Putin, Saudi Crown Prince Mohammed bin Salman, and Trump. On all sides, there are maneuvers to avoid blame if negotiations fail.Trump said Saturday at a White House press briefing he’s opposed OPEC his whole life, and characterized it as a cartel, or monopoly. “I don’t care about OPEC,” he said. He threatened to use tariffs if needed to protect the domestic oil industry, even as he predicted that Saudi Arabia and Russia would come to an agreement.Meanwhile Saudi Arabia postponed its monthly price-setting event for exported oil. Saudi Aramco’s official selling prices for May will be pushed to Thursday, according to people familiar with the situation. The OPEC meeting has also been tentatively rescheduled for Thursday.The move allows the company to have a better idea of how negotiations are going before setting the prices that are its key weapon in its battle for market share. Last month, it also delayed the event in the midst of wrangling at OPEC+ and responded to the breakdown in those talks with a historic price cut -- launching the price war negotiators are now trying to unravel.(adds G20)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
While it is a shortened week, with economic data on the lighter side, there is still plenty for the markets to focus on and OPEC and COVID-19 in particular.
(Bloomberg) -- Saudi Arabia is delaying the release of its closely-watched monthly oil-pricing list until later this week as the kingdom spars with Russia over a potential meeting of global producers that would aim to halt the collapse in crude.State oil producer Saudi Aramco is now set to announce its official selling prices for May on Thursday, according to people with knowledge of the situation who asked not to be identified because the information is private. The OSPs, as the prices are known, were due on Sunday.Aramco is holding off on the announcement to await signs of what may happen when suppliers meet Thursday to discuss crude production. The company’s media office declined to comment on the delay.With the coronavirus pandemic gagging oil demand, benchmark Brent crude has plunged 48% this year. Saudi-Russian diplomatic barbs, which are opening a fresh rift between the world’s two largest oil exporters, jeopardize a deal to cut output and keep crude from tumbling further.The coalition known as OPEC+ had curbed production since 2017, but limits on its members’ output expired at the end of March after Saudi Arabia failed to persuade Russia to accept deeper cuts. While the Saudis have changed course and are now ramping up production to record levels, U.S. President Donald Trump said suppliers are open to pumping less to take 10 million to 15 million barrels of unwanted crude off the market.The debate over new production cuts poses a challenge for the world’s most valuable listed company as it tries to decide how to price its crude. By delaying its announcement, Aramco can better gauge the amount of oil it may have available to sell next month. The postponement would also give it time to deepen its price discounts should an OPEC+ deal fall apart, as Aramco is competing for sales in a glutted market.The kingdom’s energy ministry dictates Saudi oil output, so any decision by the Organization of Petroleum Exporting Countries, Russia and other producers would determine the amount of crude that Aramco can offer customers.Refiners and traders expect Aramco to cut pricing for May due to the collapse in demand. The delay could be interpreted as an effort to put the global price war on hold and give countries more room to negotiate reductions in output.This is the second consecutive time that Aramco has delayed its key pricing announcement beyond its traditional deadline of releasing the numbers by the 5th day of each month. When it comes, the decision may affect about 14 million barrels a day of exports from the Persian Gulf because other producers in the region often follow Aramco’s lead in setting prices for their own shipments.(Updates with date for pricing announcement in second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.