U.S. President Donald Trump touted America’s energy independence and vowed that the oil industry will never again be reliant on hostile foreign suppliers in a speech in Midland, Texas.

“We’re also here to send a clear message to the zealots, radicals, and extremists trying to shut down your industry and to make America subservient to foreign producers. That won’t happen to this nation again,” President Trump said in the speech that was part campaign speech and part an attempt at a morale boost to the Permian basin producers and workers who have seen the worst of the oil price and demand crash in recent months.

“We will never again be reliant on hostile foreign suppliers. We will defend your jobs, and we will defend the Lone Star State,” President Trump said, announcing some immediate actions to boost American energy.

One is that export authorizations for American liquefied natural gas (LNG) can now be extended through 2050. President Trump also signed four permits approving pipeline and railway infrastructure between Texas and Mexico.

“This will include two permits allowing the export of Texas crude to Mexico — a giant victory for the workers of this state that you’ve been after for many years,” President Trump said.

The President also thanked Saudi Arabia, Russia, and OPEC+ for coming together to cut 9.7 million bpd of their combined production in May and June and for stabilizing oil prices.

“This action stabilized world oil prices that had been in a freefall, and saved millions of energy jobs, and frankly, it saved your industry. Four months ago, people were very, very concerned about that industry. And now it’s just going to be a question of how fast will you put people on,” President Trump said.

Producers in the Permian have been reeling from the oil price crash, and bankruptcies have been mounting in recent weeks.

Earlier this month, the Odessa Development Corporation (ODC) launched ‘The Permian Fuels America’ task force to protect the U.S. industry from oil market manipulation initiated by other countries, convince refiners to buy American oil, and retain the oil workers during this downturn.

Tsvetana Paraskova for Oilprice.com (view full article here)

Oil prices hit a four-month high on Tuesday as the promise of major stimulus packages in the EU and the U.S. counter-balanced an increase in COVID cases.

Chart of the Week

–    U.S. liquid fuels consumption is expected to continue to rise in the second half of 2020, but will remain below pre-pandemic levels until August 2021, according to a new forecast from the EIA.

–    For the full year, the EIA sees gasoline demand averaging 8.3 mb/d, down 1 mb/d year-on-year, or a 10 percent decrease.

–    Still, the EIA’s forecast is at the optimistic end of most predictions. For instance, the agency sees jet fuel demand being down only 12 percent next year. Other analysts see long-lasting scars to aviation.

Market Movers

–    Marathon Petroleum’s (NYSE: MPC) Tesoro High Plains pipeline was ordered to shut down for the first time in 67 years after the U.S Department of Interior’s Bureau of Indian Affairs determined the pipeline trespassed on Native American land. The pipeline moves Bakken oil through North Dakota.

–    Halliburton (NYSE: HAL) jumped more than 8 percent after reporting second-quarter results that beat expectations. Halliburton “inked simply outstanding results vs. expectations… [as] structural cost cuts are clearly bearing fruit,” Tudor Pickering Holt analysts say. Halliburton took a $2.1 billion impairment.

–    Total (NYSE: TOT) secured financing for its $15 billion Mozambique LNG project.

Tuesday, July 21, 2020

Oil prices rose sharply on Tuesday. Despite bad coronavirus news in the U.S., which could weaken demand, there are high hopes for economic stimulus. The European Union agreed to a historic stimulus, and the U.S. Congress appears intent on passing yet another trillion-dollar economic package. Crude prices hit four-month highs on Tuesday.

Chevron buys Noble for $5 billion. Chevron (NYSE: CVX) announced the purchase of Noble Energy (NASDAQ: NBL) for $5 billion, an all-stock deal worth $13 billion when including debt. The move adds U.S. shale assets in the DJ Basin and, crucially, a large presence in the Eastern Mediterranean. The deal was the first major M&A move since the onset of the pandemic. Related: Newcomer Brazil Steals Market Share In Key Asian Oil Market

Australian LNG hit by impairments. Australia’s LNG sector has been hit hard by multiple impairments from domestic and international gas companies. Woodside Petroleum (ASX: WPL) recorded a $4.37 billion impairment, and Royal Dutch Shell’s (NYSE: RDS.A) massive $15-$22 billion write-down was led by Australian LNG. “Realized prices have dropped dramatically due to global oil oversupply and demand destruction from the pandemic,” a Woodside executive said on an investor call.

Natural gas prices fall. Natural gas prices fell sharply on Monday after data showed another dip in U.S. LNG exports.

Fewer canceled U.S. LNG cargoes for September. The volume of U.S. LNG cargoes canceled by buyers for September slowed compared to preceding months. The exact number is unclear, but Reuters reports that somewhere between 15 and 26 cargoes have been canceled for September delivery, a smaller number than the 40 to 45 reported for July and August. Cheniere Energy (NYSE: LNG) (NYSEAMERICAN: CQP) has the most canceled cargoes.

Brazil boosts oil exports to Asia. Brazil’s oil exports to Asia averaged 1.07 mb/d in the first six months of 2020, a 30 percent year-on-year increase.

Saudi Arabia wants more than $40. The OPEC+ deal has succeeded in tightening up the market and boosting oil past $40, but Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, has highlighted that although OPEC itself does not have a price target, current prices are not sustainable for the industry, leading to potential insecurity of supply in the long term.

EV investor craze continues. Tesla (NASDAQ: TSLA) saw its market cap surge past $300 billion and investors are piling into other EV makers. Tesla’s shares have more than tripled this year. The market value of Nikola Corp. (NASDAQ: NKLA), an electric truck startup, past Ford (NYSE: F) last month, although the company’s stock has since retreated. The trend shows that investors increasingly believe that EV era will arrive faster than previously thought. Carmakers are rushing to capture a slice of the future, with GM (NYSE: GM) recently announcing that it will develop 20 new EV models by 2023. Including hybrids, the global auto industry will add 350 new models in the next few years.

North Dakota oil plunges 30 percent. North Dakota’s oil production plunged 30 percent from April to May, collapsing to just 850,000 bpd. It was the worst-ever monthly decline. “The second quarter of 2020 was a five-alarm fire for North Dakota’s oil and gas industry,” state Mineral Resources Director Lynn Helms said on a conference call. However, shut-in production is coming back online. Meanwhile, the potential closure of the Dakota Access pipeline raises tough questions about the region’s future.Related: Can Saudi Arabia Extend The OPEC Deal Until 2022?

EU to US: Stop threatening sanctions. The EU warned the Trump administration to stop threatening European companies with sanctions over the Nord Stream 2 pipeline.

EU near green stimulus. After days of negotiating, the European Union has agreed to a major stimulus package, including more than half a trillion euros dedicated to green stimulus.

Total and Exxon idle workers in Papua New Guinea. Total (NYSE: TOT) and ExxonMobil (NYSE: XOM) have idled workers at the Papua New Guinea LNG expansion project due to the pandemic. The project had previously faced delays due to negotiations with the government.

New Mexico releases methane rule. New Mexico unveiled a draft methane regulation, with a target of capturing 98 percent of natural gas by 2026. The effort to cut flaring comes just as a federal judge shot down the Trump administration’s efforts to rescind federal methane regulations. Meanwhile, the World Bank published a report that found that gas flaring worldwide increased by 3 percent last year to the highest level in more than a decade – 23 percent of the increase came from the U.S.

Halliburton a “Strong Buy.” Raymond James issues a Strong Buy rating for Halliburton (NYSE: HAL) after the oilfield services giant vastly exceeded expectations in its second-quarter earnings. “Halliburton’s 2Q20 was extremely strong as the company’s quick cost actions limited decremental margins in the face of the extreme decline inactivity,” the bank said.

By Josh Owens for Oilprice.com (view full article here)

Saudi Arabia could use this summer record amounts of crude oil for producing electricity as more Saudis would stay at home rather than travel on vacation abroad because of the pandemic, according to Bloomberg estimates of analysts.

Saudi Arabia burns crude oil for power generation and this summer it could be on track to burn record volumes of crude to keep air conditioning on while temperatures outside could reach 120 degrees Fahrenheit.

The burning of more oil is a setback from earlier Saudi plans to reduce its reliance on crude for electricity generation. Saudi Arabia also has less natural gas to use for power generation this summer because the ongoing OPEC+ oil production cuts affect the associated natural gas production at its oil fields.

The Saudi choice for power generation this summer is either importing more natural gas or burning more crude oil, Carole Nakhle, chief executive officer at London-based consulting firm Crystol Energy, told Bloomberg.

“The second option is more likely and easier since the region has been doing this for years and decades and there is plenty of oil around today,” Nakhle said.

The higher crude-for-power-generation will absorb the extra crude oil production from Saudi Arabia after the OPEC+ cuts are eased from August 1, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said earlier this month.

Despite the higher production resulting from the eased cuts, the world’s largest oil exporter said last week that it would keep its crude oil exports in August at the levels from July.

“I can tell you that in the Kingdom Saudi Arabia, due to the increase in demand from utilities and other sectors, as lockdowns ease, we estimate approximately 500,000 barrels per day of extra demand in August. So, despite a higher production target in August, there will be no change in our exports,” Prince Abdulaziz bin Salman said last week at the Joint Ministerial Monitoring Committee (JMMC) meeting.

By Tsvetana Paraskova for Oilprice.com (view full article here)