Opening Prices:
> WTI is down 965c to $31.63/Bbl, and Brent is down 1040c to $34.87/Bbl
> Natural gas is down 6.6c to $1.642/MMBtu
Closing Prices:
> WTI prompt month (APR 20) was down $10.15 on the day, to settle at $31.13/Bbl.
> In contrast, NG prompt month (APR 20) was up $0.070 on the day, to settle at $1.778/MMBtu.
The only rational explanation for the big drop in the oil price is that Saudi Arabia wants to punish Russia for not agreeing to cut production.
Note from Stifel at 8:56 AM CT
"We are lowering our ratings and target prices on several E&P stocks due to an impending oil price war. Russia's refusal to join the most
recent OPEC+ production proposal prompted Saudi Arabia to cut prices to its customers in Asia, the U.S., and Europe by $6-$8/Bo. While
the move could drive Russia back to the table to forge an agreement, it appears Vladimir Putin would like to see the U.S. market share of
global supply reduced significantly. This, coupled with an uncertain demand outlook, could cause our group to discount much lower oil prices
than our long-term forecast ($55 WTI, $60 Brent)."
Oil & Gas Prices - Mar 9
Oil & Gas Prices - Mar 9
Last edited by dan_s on Mon Mar 09, 2020 4:48 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Mar 9
LONDON (Reuters) - Global oil demand is set to contract in 2020 for the first time in more than a decade as global economic activity stalls due to the coronavirus, the International Energy Agency said on Monday.
The downward revision came as oil prices LCOc1 dropped as much as third in their biggest one-day fall since the 1991 Gulf War after Saudi Arabia launched a bid for market share following the collapse of an output pact with Russia. [O/R]
The energy watchdog said it expected oil demand to be 99.9 million barrels per day (bpd) in 2020, lowering its annual forecast by almost 1 million bpd and signalling a contraction of 90,000 bpd, the first time demand will have fallen since 2009.
The Paris-based IEA said in its medium-term outlook report that in an extreme scenario where governments fail to contain the spread of the coronavirus, which has affected over 100,000 people, consumption could drop by up to 730,000 bpd.
The virus has led to a sharp drop in industrial activity particularly in China and other Asian economies, as well as Italy, one of the worst affected places outside China. The virus has led to a slowdown in demand for ground and air transport.
IEA Executive Director Fatih Birol urged producers to “behave responsibly” in the face of the coronavirus crisis, after a deal on output restraint between OPEC, Russia and other producers collapsed last week, sending oil prices plunging.
“At such a time of uncertainty and potential vulnerability to the world economy... playing Russian roulette with the oil markets may well have grave consequences,” Birol told reporters.
Saudi Arabia, OPEC’s biggest producer, signalled it would pump more, sending oil prices down to levels that will place a strain its budget and those of other oil producers, and put a severe squeeze on producers of more costly U.S. shale oil.
Birol said the low oil prices could put many major crude producing nations such as Iraq, Angola and Nigeria under “huge” financial strain and fuel social pressures. < There will be a lot of pissed of attendees at the next OPEC meeting.
The downward revision came as oil prices LCOc1 dropped as much as third in their biggest one-day fall since the 1991 Gulf War after Saudi Arabia launched a bid for market share following the collapse of an output pact with Russia. [O/R]
The energy watchdog said it expected oil demand to be 99.9 million barrels per day (bpd) in 2020, lowering its annual forecast by almost 1 million bpd and signalling a contraction of 90,000 bpd, the first time demand will have fallen since 2009.
The Paris-based IEA said in its medium-term outlook report that in an extreme scenario where governments fail to contain the spread of the coronavirus, which has affected over 100,000 people, consumption could drop by up to 730,000 bpd.
The virus has led to a sharp drop in industrial activity particularly in China and other Asian economies, as well as Italy, one of the worst affected places outside China. The virus has led to a slowdown in demand for ground and air transport.
IEA Executive Director Fatih Birol urged producers to “behave responsibly” in the face of the coronavirus crisis, after a deal on output restraint between OPEC, Russia and other producers collapsed last week, sending oil prices plunging.
“At such a time of uncertainty and potential vulnerability to the world economy... playing Russian roulette with the oil markets may well have grave consequences,” Birol told reporters.
Saudi Arabia, OPEC’s biggest producer, signalled it would pump more, sending oil prices down to levels that will place a strain its budget and those of other oil producers, and put a severe squeeze on producers of more costly U.S. shale oil.
Birol said the low oil prices could put many major crude producing nations such as Iraq, Angola and Nigeria under “huge” financial strain and fuel social pressures. < There will be a lot of pissed of attendees at the next OPEC meeting.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - Mar 9
Hi Dan What is Russia's breakeven oil price? SA is $ 80? Is this Russian Roulette for both parties? How long can they play the game of chicken? Month ? Year?
What will happen to US producers?
Callon is trading like it is going out of business tomorrow. Friday $ 1.30 16% of book value Today $ .45 6% of book value ????
Is it not time for Callon et al to buy treasury shares??? 5% of book value ????? Why not?
@%?)+
What will happen to US producers?
Callon is trading like it is going out of business tomorrow. Friday $ 1.30 16% of book value Today $ .45 6% of book value ????
Is it not time for Callon et al to buy treasury shares??? 5% of book value ????? Why not?
@%?)+
Re: Oil & Gas Prices - Mar 9
Stock repurchase plans are difficult to fill because the exchanges limit how much and when they can buy shares.
CPE has 70% of Q1 oil hedged and 60% of full year oil hedged with SWAPs at $55.45. They should survive.
Saudi Arabia and Russia produce about 10 million bbls per day. So do the math. No matter how much money they have, loosing $15 million per day adds up fast.
With WTI at $50/bbl I expected U.S. oil production to drift lower after the peak in November.
If oil stays under $40, we will see a sharp decline in U.S. oil production because lots of companies will "hunker down" and spend only on necessary maintenance. This will hurt oilfield services firms the most and they will lay off a lot of people. I can't read Putin's mind, but maybe his goal is to force down U.S. oil production and global supply. Assuming COVID-19 fear fades this summer, oil demand will bounce back and so will the oil price. However, U.S.oil production will continue to fall through year-end.
Maybe Saudi Arabia is attempting to force Putin back into a production agreement. It will take time for this to play out.
CPE has 70% of Q1 oil hedged and 60% of full year oil hedged with SWAPs at $55.45. They should survive.
Saudi Arabia and Russia produce about 10 million bbls per day. So do the math. No matter how much money they have, loosing $15 million per day adds up fast.
With WTI at $50/bbl I expected U.S. oil production to drift lower after the peak in November.
If oil stays under $40, we will see a sharp decline in U.S. oil production because lots of companies will "hunker down" and spend only on necessary maintenance. This will hurt oilfield services firms the most and they will lay off a lot of people. I can't read Putin's mind, but maybe his goal is to force down U.S. oil production and global supply. Assuming COVID-19 fear fades this summer, oil demand will bounce back and so will the oil price. However, U.S.oil production will continue to fall through year-end.
Maybe Saudi Arabia is attempting to force Putin back into a production agreement. It will take time for this to play out.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group