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Uncategorised 8th June 2020

OPEC+ To Extend The 9.7 M bpd Cut By One Month; It Means 100,000 Barrels Less Than In June, And Almost 10% Of The Global Supply

OPEC+ agreed over the weekend to extend the cut in oil production until July 31. Mexico has not signed up to the new agreement. The return of 2 million barrels of crude oil to the daily supply will be postponed until that date. In addition, it was determined that Iraq and Nigeria, which have so far failed to comply with the agreed production cuts, will carry out an additional reduction in July.

Oil rigTC

World economy 5th June 2020

OPEC+ Will Extend Supply Cuts And Continue To Monitor Their Effects

Renta 4 | Finally OPEC+ may have reached a tentative agreement to extend production cuts and the member countries could meet as soon as this weekend to sign it. Saudi Arabia and Russia wanted a firm commitment from those countries which were evading their quotas. So they have finalised an accord with Iraq to meet not only its share of the cuts, but even to compensate for past breaches.

oilsands

World economy 1st June 2020

Oil: North American Production Is Recovering From Shut-Ins…

BofA Global Research | The collapse in global oil benchmarks and weak North American differentials forced US and Canadian E&Ps to quickly dial back activity in order to avoid the cash burn from negative operating margins. Producers shut-in output, choked back wells, deferred completions and well starts, and pulled forward or extended oil sands maintenance to avoid exposure to low prices. In total, May oil curtailments may have exceeded 2.5mn b/d across the US and Canada and many producers pre-maturely announced plans for additional shut-ins during June. Since many of these plans were unveiled, oil prices have strengthened to levels where shutting-in no longer makes sense and should actually encourage producers to quickly restore production. For this reason, we expect June curtailments, particularly in the US, to be a fraction of the previously announced levels.

oil spain1

Spanish economy 27th April 2020

Historic Drop In The Oil Price: How Will It Affect The Spanish Economy?

Caixabank Research | A fall in the price of oil provides a boost to the economy of countries that are net importers of crude oil, as is the case for Spain. Cheaper oil equates to an increase in the real disposable income of households, such that it also supports aggregate consumption. However, the health crisis that has gripped us following the COVID-19 outbreak will result in this boost derived from a lower oil price not being reflected in the economy, at least for the time being.

oil futures

World economy 21st April 2020

Doing the oil market’s dirty work

Bank of America Global Research | Oil futures have collapsed by more than 60% since the start of the year, with the WTI front month contract testing $20/bbl several times in recent weeks. The dramatic decline in prices is attributable in part to the oil price war, but the primary driver has been demand. As coronavirus fears forced governments around the world to shut down their economies, demand for refined products has been hit particularly hard.

fossil fuels

Ibex, Markets 7th April 2020

After Covid19, The Situation Will Not Be Easy For Fossil Fuel Suppliers

Alphavalue | One might wonder why equity investors bet on being long on oil last week when the Brent was reaching new lows. In fact on Tuesday, Brent prices hit 20-year lows in the $22/barrel range. It could be one of the surprising examples of how much risk can be taken when there is talk about, or hopes for, stimulus. At that point, even the strongest fundamentals tend to be ignored.

OPEC post mortem

World economy 4th March 2020

Pre-OPEC Meeting : Will The Organization Restore Brent Backwardation?

Nitesh Shah (Wisdom Tree) | With the coronavirus spreading around the world, the market is understandably scared that demand for crude oil will fall hard this year. Brent oil prices have fallen from a peak of US$68/barrel in the first week of January to US$56/barrel currently (24/02/2020). We believe that the backwardation in the Brent oil futures curve is generated by the fact that OPEC is ready to intervene.

iran us

Markets, World economy 12th January 2020

What US-Iran tensions mean for investors

Neil Dwane (Allianz) | The financial markets are signalling that the situation in the Middle East won’t get out of hand, but US-Iran friction could continue for some time. The defence industry and oil and gas-related sectors could remain well-supported, but overall we believe investors should be cautious yet patient. Look to higher-quality stocks with lower correlations to the broader market and “hunt for income” if headline volatility is a risk you wish to avoid.

Ecuador leaves the OPEC to avoid production cuts

World economy 3rd January 2020

Ecuador Leaves The OPEC To Avoid Production Cuts

The decision was announced last October and came into effect in the new year. The Government of Lenín Moreno decided to leave the cartel, led by Saudi Arabia, to escape the procuction cuts, with which the organization intends to boost oil prices. Oil is the second largest source of income for Ecuador’s coffers.