Friday, July 24, 2020
Energy Petrochemicals and Plastics 74
1 Oil up on strong economic data, U.S.-China tensions cap gains
https://www.reuters.com/article/us-global-oil-idUSKCN24P04M
Oil prices rose on Friday, lifted by some supportive economic data, but tensions between the United States and China limited gains. Brent crude futures LCOc1 rose 3 cents to settle at $43.34 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 22 cents to settle at $41.29 a barrel.
For the week, Brent rose 0.5%, while U.S. crude rose 1.7%.
2 ‘It is going to be brutal’: What to expect as oil and gas majors unveil their second-quarter results
https://www.oilandgas360.com/it-is-going-to-be-brutal-what-to-expect-as-oil-and-gas-majors-unveil-their-second-quarter-results/
Oil and gas majors are likely to report “horrendous” second-quarter results over the next two weeks, energy analysts have told CNBC, with the three-month period through to the end of June widely expected to mark the “low point” of 2020.
“Big Oil” companies, referring to the world’s largest oil and gas majors, witnessed a historic fall in oil and gas prices during the second quarter as coronavirus lockdown restrictions coincided with an unprecedented demand shock.
3 Backwardation Is The Best Tool For OPEC
https://www.forbes.com/sites/markledain/2020/07/20/backwardation-is-the-best-tool-for-opec/
There are two trends on the supply side costing OPEC money. The first is the growth of shale over the past several years in excess of demand. Shale production proved resilient in multiple markets and technical advancements combined with cheap capital further accelerated development. The second trend is the refusal of Mexico to cut production and the commitment by Mexico to actually grow future production into a difficult market. Targeting backwardation in the price of oil, where the futures price is lower than the current price, is a tool that OPEC will likely now use against both these market participants.
4 Oil demand may climb new peaks in post-coronavirus world
https://blogs.platts.com/2020/07/21/oil-demand-coronavirus-new-peak/
While the coronavirus pandemic may have done permanent damage to oil consumption in the transport sector, strong growth in petrochemicals suggests peak oil demand could still be a couple of decades away.
Changing demand patterns also raise big questions as to how refineries and producers adapt in the post-pandemic world before demand falls from its eventual summit.
5 Commodity Resin Prices Rebound
https://www.ptonline.com/blog/post/commodity-resin-prices-rebound
Prices of four of the five major commodity resins were in various stages of an upward trajectory going into the third quarter. PET was the exception, with tabs mostly flat due to high domestic production and continued imports. Driving higher prices for the other resins were increased domestic demand (particularly for PE) and stronger export activity as North American suppliers regained their feedstock advantage once crude-oil prices jumped up to $40/bbl. Clouding the future outlook were uncertainties about the course of the COVID-19 pandemic and expectations for an active hurricane season ahead.
6 Weekly Resin Report: Strong Exports Push Spot Prices Higher
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-strong-exports-push-spot-prices-higher
The spot resin market remained quite busy last week, although trading in some materials and segments dropped from the very rapid rate seen in previous weeks. Polyethylene (PE) prices continued to rise, with some grades actually accelerating their ascent. Domestic railcar offerings for both PE and polypropylene (PP) were more prevalent early in the week. As material sold, few fresh offers came back, adding to the sense of snug supplies as producers push to implement price increases, reports the PlasticsExchange in its Market Update.
7 Buyers of U.S. LNG cancel September cargoes but pace slows
https://www.reuters.com/article/us-united-states-lng-exports-idUSKCN24M1AO
Buyers of liquefied natural gas (LNG) from the United States continued scrapping September loadings due to weak global gas demand but fewer cargos were cancelled than for the two previous months, industry sources said on Tuesday.
The exact number of cancellations was not immediately clear.
Two of the eight sources said as many as 25 or 26 cargoes might have been cancelled for September, while one source estimated 15 to 20 cargoes and another said it was less than 20. Some sources suggested more than 26 cargoes were scrapped.
8 Russia’s Central Bank Against Copying Mexican Oil Hedge
https://oilprice.com/Energy/Oil-Prices/Russias-Central-Bank-Against-Copying-Mexican-Oil-Hedge.html
Russia’s central bank doesn’t think that copying the Mexican oil hedge is a good idea, the Governor of Bank of Russia, Elvira Nabiullina said at a news conference on Friday, commenting on the idea that Russia could possibly insulate its budget from oil price crashes by adopting an oil hedging program.
Earlier his week, Russian news agency Interfax reported that Russia was considering whether to adopt a kind of state oil hedging program, similar to Mexico’s oil hedge, to protect government revenues from oil price crashes in the future.
9 U.S. refiners trim crude processing as recovery falters
https://www.reuters.com/article/us-global-oil-kemp-column-idUSKCN24O1LD
Refineries processed an average of 14.20 million barrels per day (bpd) last week, down from 14.34 million bpd two weeks ago, U.S. Energy Information Administration data shows.
The slowdown was barely perceptible but marks a significant change from the previous trend of strong and consistent growth since early May.
Refinery crude processing rates remain about 2.8 million bpd, or 17%, below the seasonal average over the past five years (“Weekly petroleum status report”, EIA, July 22).
10 U.S. crude, distillate stockpiles rise unexpectedly -EIA
https://www.reuters.com/article/us-usa-oil-eia-milestones-idUSKCN24N26H
U.S. crude oil and distillate inventories rose unexpectedly and fuel demand slipped last week, the Energy Information Administration said on Wednesday, as a sharp outbreak in coronavirus cases hit U.S. consumption.
U.S. crude production ticked higher and refined products supplied, a proxy for fuel demand, declined. The market has recovered from the doldrums of April, when U.S. prices briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the pandemic.
11 Hydrocarbon gas liquids spot prices are generally bound by crude oil and natural gas – Today in Energy
https://www.eia.gov/todayinenergy/detail.php?id=44456
The combination of rapidly declining crude oil prices in March 2020 and relatively flat (and historically low) natural gas prices compressed hydrocarbon gas liquids (HGL) spot prices into a narrow price band from mid-March through the end of April 2020. This relatively narrow band has since widened as crude oil prices have increased and natural gas prices have remained low. Generally, HGL prices are based on their heat content and are bracketed by the prices of natural gas (the lower bound) and crude oil (the upper bound).
12 Could AMLO Cancel Mexico Energy Reform?
https://www.rigzone.com/news/wire/could_amlo_cancel_mexico_energy_reform-24-jul-2020-162822-article/
A former head of Mexico’s state oil giant Petroleos Mexicanos is testifying that lawmakers were bribed to pass a 2014 reform that opened the energy sector to private investment, President Andres Manuel Lopez Obrador said on Friday.
Lopez Obrador said that Emilio Lozoya, who was extradited from Spain this month to face corruption charges in Mexico, is shining light on how money was distributed to legislators.
13 Schlumberger Job Cuts to Top 21,000
https://www.rigzone.com/news/wire/schlumberger_job_cuts_to_top_21000-24-jul-2020-162817-article/
Schlumberger Ltd. posted its weakest sales in 14 years and is cutting one-fifth of its workforce while warning that new waves of Covid-19 could derail the nascent recovery in global energy demand.
The second-quarter rout was so bad for Schlumberger that it’s spending $1 billion on job severance in a move that will shrink staffing to an 11-year low. Various restructuring and impairment charges cost it another $2.7 billion, the company said Friday in a statement.
14 Baker Hughes posts second quarterly loss as oil slump slams demand
https://www.reuters.com/article/us-baker-hughes-results-idUSKCN24N1IF
Baker Hughes Co (BKR.N) posted its second consecutive quarterly loss on Wednesday and said it would continue reining in costs to prepare for a longer period of oil price volatility.
Oil producers stopped drilling new wells and drastically cut their budgets following a collapse in crude oil prices this year that clipped demand for services offered by Baker Hughes and rivals Schlumberger (SLB.N) and Halliburton (HAL.N).
15 Dow signals choppy recovery from pandemic blow, plans cost cuts
https://www.reuters.com/article/us-dow-results-idUSKCN24O189
Dow Inc chief executive officer said on Thursday it would probably take a couple of years for the chemical maker’s volumes and margins to rebound to pre-coronavirus levels, and laid out additional cost-cutting plans to cope with its fallout.
The company posted its first quarterly loss since its separation from the erstwhile DowDuPont conglomerate and forecast third-quarter sales below estimates, sending its shares down 4%.
16 Chevron picks Noble in biggest U.S. energy deal since oil crash
https://www.reuters.com/article/us-noble-energy-m-a-chevron-corp-idUSKCN24L143
Chevron Corp (CVX.N) said on Monday it would buy Noble Energy Inc (NBL.O) in a $5 billion all-stock deal, bolstering its shale presence as a plunge in crude prices have made assets cheaper.
The deal, the largest in the U.S. energy sector this year, comes more than a year after Chevron abandoned its offer for Anadarko Petroleum Corp, outmaneuvered by Occidental Petroleum Corp’s (OXY.N) higher bid.
17 Severe floods in China aggravate oversupply of some petrochemicals
https://www.icis.com/explore/resources/news/2020/07/23/10533124/severe-floods-in-china-aggravate-oversupply-of-some-petrochemicals
Heavy rains in various parts of China have caused severe flooding that has been disrupting logistics operations, thereby exacerbating oversupply of some petrochemicals, as well as oil products.
Flooding has hit twenty-seven provinces mainly in the central and western regions of the country since June, including the petrochemical hubs of Shandong, Jiangsu and Hubei.
18 Banks Backing Away from US Shale
https://www.rigzone.com/news/wire/banks_backing_away_from_us_shale-23-jul-2020-162806-article/
One of the key sources of funding for American shale is evaporating, just as the the sector needs it more than ever.
Banks lending against the oil and natural gas reserves of hundreds of independent U.S. drilling companies have pulled back from the sector at an unprecedented rate this year after energy prices slumped. There’s every indication they’re not done: Many in the industry expect further reductions to credit facilities in the fall, with higher costs and more stringent protections for lenders.
19 Saudi AC Demand May Curb OPEC Plan Impact
https://www.rigzone.com/news/wire/saudi_ac_demand_may_curb_opec_plan_impact-21-jul-2020-162780-article/
As the Middle East enters the hottest days of summer, Saudi Arabia is set to burn potentially record amounts of crude oil to run its power plants and keep its citizens comfortably air-conditioned.
Electricity consumption always soars around July and August, when temperatures in the kingdom can rise above 122 degrees Fahrenheit (50 degrees celsius). That compels the government to use crude or fuel oil in addition to the much cleaner natural gas that normally fires the plants. But this year the urge to drain oil is even stronger because of higher demand, with the coronavirus pandemic forcing many Saudis to cancel their summer holidays abroad.
20 Trial of ex-Pemex boss threatens to lift lid on Mexico’s ‘cash box’
https://www.reuters.com/article/us-mexico-corruption-analysis-idUSKCN24M0LQ
The trial of a former boss of Petroleos Mexicanos threatens to expose years of alleged malpractice at the state oil company and provide a canvas for Mexico’s leftist president to depict rot at the heart of government that he has vowed to clean up.
Once a symbol of Mexican self-reliance and ingenuity, the firm known as Pemex became increasingly beset by graft accusations and financial problems, crushed under a mountain of debt and taxes.
