oil prices hit 18 year low in largest drop in 29 years; natural gas prices end at a 24 year low; DUC backlog at 7.1 months

oil prices hit an 18 year on the way to their largest weekly drop in 29 years; natural gas prices ended at a 24 year low; natural gas rigs were at a 41 month low; DUC wells are down 9.7% year over year, their backlog is at 7.1 months

oil prices ended down nearly 30% this week, despite rising nearly 24% on Thursday in the largest single day price jump in history, as the economic impact of the coronavirus pandemic and the Saudi-Russian oil price war continued to destabilize pricing...after falling 23% to $31.73 a barrel for the same reasons last week, the contract price of US light sweet crude for April delivery opened more than 6% higher at $33.75 a barrel Monday morning in an initial response to the Fed's emergency interest rate cut to 0% on Sunday, but those gains quickly evaporated as traders interpreted the Fed move as panicked and desperate while the Saudis continued to flood global markets with $25 oil, driving US prices down more than 10% to a session low of $28.03 per barrel before recovering to close at $28.70 a barrel, a loss of $3.03 on the day...oil prices continued falling Tuesday as Goldman Sachs slashed its oil forecast to $22 and others forecast oil prices in the teens, with US crude closing $1.75 lower at a 4 year low of $26.95 a barrel, as recession fears and the Saudi price war continued to weigh on markets...oil prices steadied early on Wednesday after the API had reported a drop in U.S. inventories of crude, gasoline and distillates, but then plunged as governments worldwide accelerated lockdowns to counter the coronavirus pandemic, prompting fears of a global economic collapse, with U.S. crude futures falling $6.58, or 24.4%, to settle at $20.37 a barrel, the 3rd largest price drop on record and the lowest oil price in more than 18 years....however, the entirety of that price drop was reversed in the first 4 and a half hours of trading on Thursday, as oil prices briefly spiked 36% to $27.71 a barrel after remarks by Trump that he might intervene in the Saudi-Russian price war on the way to an increase of $4.85, or 23.8%, the biggest one day price jump on record, with US crude settling at $25.22 a barrel, as traders absorbed news of a plethora of central bank and government interventions to combat the economic fallout from the coronavirus pandemic and as Russia indicated it would like to see higher prices...Thursday's rally continued into early Friday, with US crude reaching $27.89 a barrel in the early hours, but by 11:00 AM, it had sunk back to $25.02 a barrel on the way to a $19.46 a barrel nadir, before recovering to rise 15% from there to close at $22.43 a barrel, down $2.79 or 11.1% to $22.43 a barrel on the day, even as the world’s richest nations poured unprecedented aid into their economies to stop a coronavirus-driven global recession...prices thus finished the week more than 29.3% lower than the prior week, the largest one week percentage drop since 1991, as some traders saw oil demand shrinking as much as 10 to 20 million barrels a day (10-20%) as drivers stay home and flights are grounded across the world...

with that, here's a graph of 20 years of front month oil prices:

the above graph is a screenshot of the interactive price chart for the front month oil contract at Barchart.com, "the leading provider of real-time or delayed intraday stock and commodities charts and quotes", and it shows the range of prices for the nearest oil futures contract as a vertical bar for each month over the past 20 years....this graph was generated by taking the price quotes for what is called the "front month" oil futures contract, or the contract that is being quoted as "the price of oil" daily, with the each monthly contract price being replaced by the next month's price when trading in that contract expires on the 4th business day prior to the 25th calendar day of the month preceding the contract month... you might also note that each bar has two small horizontal appendages: the one on the left is the opening price for the month the bar indicates, while the appendage on the right is the month's closing price...as you can see, oil prices are now down to a level not seen since March 2002, and well below the lows of late 2015 to early 2016, when oil prices had crashed after OPEC after flooded the global oil market & caused a collapse in prices which put hundreds of US oil companies into bankruptcy...

natural gas prices also fell out of bed this week, sliding to a 24 year low on Wednesday, which was then matched at Friday's close...after rising 9.4% to $1.869 per mmBTU last week on hopes that the collapse in oil prices would prompt drillers to cut back on both oil and gas production, the contract price of natural gas for April delivery fell 5.4 cents, or 3% on Monday, on a rising awareness that the coronavirus pandemic would reduce natural gas demand, and despite forecasts for cooler weather and greater heating demand in the US over the next two weeks than was previously expected...the economic slowdown continued to pressure prices as they fell 8.6 cents on Tuesday, with forecasts for milder weather and less heating demand next week also pushing prices lower...April natural gas then plunged 12.5 cents or 7% to $1.604 per mmBTU on Wednesday, their lowest price since 1995, tracking lower alongside the day's 24% collapse in oil prices, as travel bans sparked by the coronavirus slashed the global outlook for energy demand...with the Thursday natural gas storage report close to expectations, natural gas followed other markets higher and rose 5 cents, only to fall back by the same amount on Friday to end the week back at $1.604 per mmBTU, the lowest weekly close since August 1995, and leaving the front-month contract down over 14% this week, its biggest weekly decline since November.

and here's what a graph of 20 years of natural gas prices looks like:

like the oil graph, this graph is a screenshot of the interactive price chart for the front month natural gas contract at Barchart.com, showing the range of prices for the nearest natural gas futures contract as a vertical bar for each month over the past 20 years....like the oil graph, this graph was generated by taking the price quotes for the "front month" natural gas futures contract, or the contract that is being quoted as "the price of oil" daily, with the each monthly contract price being replaced by the next month's price when trading in that contract expires, which for natural gas contracts occurs on the on the 3rd last business day of the month prior to the contract month....as you can see, current natural gas prices are now the lowest on this 20 year graph, a few cents below the lows hit in late February and early March 2016, and at a level not seen since August 1995...you can access the graph showing the complete natural gas price history using the link to the interactive graph above, which we chose not to include here because it displayed poorly.. 

the natural gas storage report from the EIA on the week ending March 13th indicated that the quantity of natural gas held in underground storage in the US fell by 9 billion cubic feet to 2,034  billion cubic feet by the end of the week, which left our gas supplies 878 billion cubic feet, or 76.0% higher than the 1,156 billion cubic feet that were in storage on March 13th of last year, and 281 billion cubic feet, or 16.0% above the five-year average of 1,816 billion cubic feet of natural gas that has been in storage as of the 13th of March in recent years....the 9 billion cubic feet that were withdrawn from US natural gas storage this week was near the consensus estimate for a 8 billion cubic feet withdrawal from a survey of analysts by S&P Global Platts, but was much less than the average 63 billion cubic feet of natural gas that have been pulled from natural gas storage during the second week of March over the past 5 years, and also way less than the 91 billion cubic feet withdrawal reported during the corresponding week of 2019.. 

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 13th indicated that a ​big ​increase in our oil exports reduced the week's ​domestic ​oil surplus, but we were still left with a ​modest amount of oil to add to our stored commercial supplies, the nineteenth addition ​of oil ​to storage in the past twenty-seven weeks....our imports of crude oil rose by an average of 127,000 barrels per day to an average of 6,539,000 barrels per day, after rising by an average of 174,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 968,000 barrels per day to 4,378,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,161,000 barrels of per day during the week ending March 13th, 841,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells rose by 100,000 barrels per day to 13,100,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 15,261,000 barrels per day during this reporting week..

meanwhile, US oil refineries reported they were processing 15,820,000 barrels of crude per day during the week ending March 13th, 119,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that an average of 279,000 barrels of oil per day were being added to to the supplies of oil stored in the US....so looking at that data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 838,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+838,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed...however, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we'll continue to report them, just as they're watched & believed as accurate by most everyone else...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....   

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,351,000 barrels per day last week, now 4.5% less than the 6,649,000 barrel per day average that we were importing over the same four-week period last year....the 279,000 barrel per day addition to our total crude inventories was all added to our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be 100,000 barrels per day higher at a record 13,100,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at ​a record ​12,600,000 barrels per day, while a 5,000 barrel per day increase Alaska's oil production to 478,000 barrels per day had no impact on the rounded national total....last year's US crude oil production for the week ending March 15th was rounded to 12,100,000 barrels per day, so this reporting week's rounded oil production figure was 8.3% above that of a year ago, and 55.4% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 86.4% of their capacity in using 15,820,000 barrels of crude per day during the week ending March 13th, the same capacity utilization of the prior week, ​and still near the recent average refinery capacity utilization for the second week of March, historically the time of year that refineries change​ ​over to summer blends and undergo​ annual​ maintenance...nonetheless, the 15,820,000 barrels per day of oil that were refined this week were 2.3% less than the 16,198,000 barrels of crude that were being processed daily during the week ending March 15th, 2019, when US refineries were operating at 88.9% of capacity....

with the modest increase in the amount of oil being refined, gasoline output from our refineries was a bit higher, increasing by 18,000 barrels per day to 9,974,000 barrels per day during the week ending March 13th, after our refineries' gasoline output had increased by 199,000 barrels per day over the prior week... after this week's increase in gasoline output, our gasoline production was half a percent higher than the 9,925,000 barrels of gasoline that were being produced daily over the same week of last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 19,000 barrels per day to 4,686,000 barrels per day, after our distillates output had increased by 57,000 barrels per day over the prior week...but even after this week's increase in distillates output, our distillates' production for the week was 4.8% less than the 4,923,000 barrels of distillates per day that were being produced during the week ending March 15th, 2019....

despite the increase in our gasoline production, our supply of gasoline in storage at the end of the week ​decrease​d​ for the seventh week in a row, after twelve consecutive increases, falling by 6,180,000 barrels to 240,819,000 barrels during the week ending March 13th, after our gasoline supplies had decreased by 5,049,000 barrels over the prior week....our gasoline supplies decreased by even more this week because the amount of gasoline supplied to US markets increased by 247,000 barrels per day to 9,696,000 barrels per day, while our exports of gasoline fell by 142,000 barrels per day to 603,000 barrels per day, while our imports of gasoline fell by 22,000 barrels per day to 688,000 barrels per day....but even after this week's big inventory decrease, our gasoline supplies were only 0.3% lower than last March 15th's gasoline inventories of 241,503 ,000 barrels, and close to the five year average of our gasoline supplies for the same time of the year...

similarly, with the decrease in our distillates production, our supplies of distillate fuels decreased for the 18th time in 24 weeks and for 33rd time in the past 49 weeks, falling by 2,940,000 barrels to 125,120,000 barrels during the week ending March 13th, after our distillates supplies had decreased by a near record 6,404,000 barrels over the prior week....our distillates supplies fell by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 385,000 barrels per day to 4,013,000 barrels per day, and because our exports of distillates fell by 174,000 barrels per day to 1,356,000 barrels per day, while our imports of distillates fell by 45,000 barrels per day to 263,000 barrels per day....after this week's inventory decrease, our distillate supplies at the end of the week were 5.4% lower than the 132,242,000 barrels of distillates that we had stored on March 15th, 2019, and fell to about 11% below the five year average of distillates stocks for this time of the year...

finally, even after the jump in our oil exports, our commercial supplies of crude oil in storage rose for the twenty-first time in thirty-eight weeks and for the thirty-third time in the past 52 weeks, increasing by 1,954,000 barrels, from 451,783,000 barrels on March 6th to 453,737,000 barrels on March 13th ....but even after 8 straight increases, our crude oil inventories slipped to ​almost 3% below the five-year average of crude oil supplies for this time of year, even as they remained 27.2% higher than the prior 5 year (2010 - 2014) average of crude oil stocks after the second week of March, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels​ and continued rising​....since our crude oil inventories had generally been rising over the past year, except for during this past summer, after generally falling until then through most of the prior year and a half, our oil supplies as of March 13th were 3.2% above the 439,483,000 barrels of oil we had in commercial storage on March 15th of 2019, and 5.9% above the 428,306,000 barrels of oil that we had in storage on March 16th of 2018, while at the same time remaining 14.9% below the 533,110,000 barrels of oil we had in commercial storage on March 17th of 2017...    

This Week's Rig Count

the US rig count decreased for the 22nd time in the past 27 weeks during the week ending March 20th, and is now down by 28.7% from the last rig count of 2018.....Baker Hughes reported that the total count of rotary rigs running in the US decreased by twenty rigs to 772 rigs this past week, which was also down by 244 rigs from the 1066 rigs that were in use as of the March 22nd report of 2019, and 1,157 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business...

the number of rigs drilling for oil decreased by 19 rigs to 664 oil rigs this week, which was also 160 fewer oil rigs than were running a year ago, and ​considerably less than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 1 to 106 natural gas rigs, which was the least number of natural gas rigs active since October 21st of 2016, and hence was a 41 month low for natural gas drilling​, down by 86 gas rigs from the 192 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California... a year ago, there were no such "miscellaneous" rigs deployed..

offshore drilling activity in the Gulf of Mexico remained at 19 rigs this week, with 18 Gulf rigs deployed in Louisiana waters and one rig still drilling offshore from Texas...that's now one less than the number of rigs that were deployed in the Gulf a year ago, when 17 rigs were drilling offshore from Louisiana and three rigs were operating in Texas waters...with no rigs deployed off other US shores elsewhere at this time, the current Gulf of Mexico rig count is thus equal to the national offshore rig total, as it has been all winter...

the count of active horizontal drilling rigs decreased by 17 rigs to 696 horizontal rigs this week, which was the fewest horizontal rigs active since December 13th 2019, and also 204 fewer horizontal rigs than the 900 horizontal rigs that were in use in the US on March 22nd of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count was down by four rigs to 27 vertical rigs this week, and those were down by 26 from the 53 vertical rigs that were operating during the same week of last year....on the other hand, the directional rig count was up by one rig to 49 directional rigs this week, but those were also down by 14 from the 63 directional rigs that were in use on March 22nd of 2019...

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of March 20th, the second column shows the change in the number of working rigs between last week's count (March 13th) and this week's (March 20th) count, the third column shows last week's March 13th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 22nd of March, 2019...    

as you can see, the rigs withdrawn from the Permian basin accounted for the majority of this week's rig decline, as well as the lions share of the horizontal rig pullback...in the Texas Permian, six rigs were pulled out of Texas Oil District 8, or the core Permian Delaware​,​ and two more rigs were pulled out of Texas Oil District 7C, or the southern Permian Midland...since the Permian basin rig count was reduced by a total of 13, we can therefore figure that the 5 rigs that were pulled out in New Mexico had been drilling in the western Permian Delaware...elsewhere in Texas, an Eagle Ford rig was pulled out of Texas Oil District 1, while Texas Oil Districts 5 and 9 both lost rigs that weren't associated with a major shale basin....the Williston shale rig came out of North Dakota, and while Oklahoma saw a rig pulled out of the Cana Woodford, it also had one added in the Granite Wash basin, which means that Oklahoma also saw three rigs pulled out of basins not tracked separately by Baker Hughes...one of those could have been a natural gas rig, since the sole natural gas rig reduction this week also came out of one of those "other" basins that Baker Hughes doesn't itemize...

DUC well report for December

Tuesday of this past week saw the release of the EIA's Drilling Productivity Report for March, which includes the EIA's February data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the twelfth month in a row, this report showed a decrease in uncompleted wells nationally in February, as drilling of new wells decreased and completions of drilled wells increased.....for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 60 wells, falling from a revised 7,697 DUC wells in January to 7,637 DUC wells in February, which now is 9.7% fewer DUCs than the 8,454 wells that had been drilled but remained uncompleted as of the end of February of a year ago...this month's DUC decrease occurred as 1,014 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during February, down by 2 from the 1,016 wells that were drilled in January and the lowest number of wells drilled since June 2017, while 1,074 wells were completed and brought into production by fracking, an increase of 12 well completions from the 1,062 completions seen in January, but still down from the 1160 completions seen in February of last year....at the February completion rate, the 7,637 drilled but uncompleted wells left at the end of the month now represents a 7.1 month backlog of wells that have been drilled but are not yet fracked, down from the 7.3 month backlog of a month ago...

both oil producing and natural gas producing regions saw DUC well decreases in February, even as two of the seven major basins saw modest DUC increases...the number of DUC wells remaining in the Oklahoma Anadarko decreased by 49, falling from 752 at the end of January to 703 DUC wells at the end of February, as 61 wells were drilled into the Anadarko basin during January while 110 Anadarko wells were being fracked....at the same time, DUC wells in the Eagle Ford of south Texas decreased by 13, from 1,373 DUC wells at the end of January to 1,360 DUCs at the end of February, as 159 wells were drilled in the Eagle Ford during February, while 172 already drilled Eagle Ford wells were completed....in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 12 to 446, as 133 Niobrara wells were drilled in February while 145 Niobrara wells were completed....on the other hand, DUC wells in the Bakken of North Dakota increased by 13, from 839 DUC wells at the end of January to 852 DUCs at the end of February, as 97 wells were drilled into the Bakken in January, while 84 of the drilled wells in that basin were being fracked...in addition, the Permian basin of west Texas and New Mexico saw its total count of uncompleted wells rise by 11, from 3,490 DUC wells at the end of January to 3,482 DUCs at the end of February, as 454 new wells were drilled into the Permian, while 443 wells in the region were being fracked....

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 9 wells, from 574 DUCs at the end of January to 565 DUCs at the end of February, as 74 wells were drilled into the Marcellus and Utica shales during the month, while 83 of the already drilled wells in the region were fracked....in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory decrease by 1 well to 230, as 36 wells were drilled into the Haynesville during February, while 37 Haynesville wells were fracked during the same period....thus, for the month of February, DUCs in the five major oil-producing basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 50 wells to 6,842 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 10 wells to 795 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

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Judge halts federal leasing in Ohio forest » - A federal judge, in a 72-page ruling, has halted oil and natural gas leasing in the Wayne National Forest in southern Ohio, Kallanish Energy reorts. U.S. District Judge Michael Watson said the U.S. Forest Service and the Bureau of Land Management failed to consider the negative impacts of hydraulic fracturing or fracking on air quality, endangered species and watersheds under the National Environmental Policy Act. The judge, based in Columbus, Ohio, said the agencies had failed to consider the impacts of fracking in the Utica Shale on regional air quality, the endangered Indiana bat and the Little Muskingum River. Watson has ordered the federal agencies to redo their environmental analysis of the harms that could be caused by fracking in the 240,000-acre federal forest before leasing can proceed. It is likely that a scheduled March sale including Ohio properties by the BLM will be postponed. The court will rule later on whether two previously held BLM lease sales in the Wayne should be voided. In May 2017, four conservation groups had sued the Forest Service and the BLM over plans to proceed with lease sales in the Wayne. In late 2016, the federal agencies had announced plans to lease 40,000 acres in the Wayne to O&G producers. BLM has conducted lease sales in the federal forest in recent years. There are more than 1,200 vertical-only wells in the national forest that is a mix of federal, state and private land sin southeastern Ohio.

Judge Blocks New Lease Sales in Ohio's Wayne Natl Forest -  Radicalized leftist groups pretending to care about the environment, including the Center for Biological Diversity, Sierra Club and Ohio Environmental Council, have struck again. In May 2017 the three groups sued the U.S. Forest Service and U.S. Bureau of Land Management (BLM) to block the sale of leases for oil and gas drilling in Ohio’s Wayne National Forest (WNF). Last week a federal judge ruled in their favor. The court has effectively blocked all future lease auctions for WNF and is considering overturning two previous auctions. This is a DIRECT attack on the property rights of private landowners.

Estimates Show Ohio Oil Production Shattered 19th Century Record Last Year - Oil production in Ohio last year likely surpassed the state’s all-time record set in 1896 if estimates included in the Ohio Oil and Gas Association’s (OOGA) annual Debrosse Memorial Report prove accurate.According to the report, combined conventional and unconventional oil production hit 27.9 million bbl in 2019, up from 22.7 million bbl in 2018 and well above the 23.9 million bbl record set in 1896. In the 19th century, a boom in the Trenton Limestone for a time turned the state into the nation’s leading crude producer.The bulk of last year’s oil volumes, or 24.9 million bbl, were produced by horizontal wells mostly drilled to the Utica Shale. Conventional vertical wells drilled to shallower formations such as the Clinton Sandstone accounted for 2.9 million bbl, according to Debrosse report estimates. While the state’s horizontal well operators are required to report production data quarterly, vertical operators report are required to submit their data every year by March 31.Combined conventional and unconventional natural gas production reached 2.8 Tcf, up from 2.4 Tcf in last year’s report. Nearly all gas production came from the Utica, according to the estimates, which aligned with official production data issued last month for horizontal wells. Unconventional oil estimates in the Debrosse report also aligned with year-end figures released by the state.Oil production in Ohio has undulated with commodity prices since 2012, when Utica development started ramping up. Natural gas prices declined last year and sent more operators to liquids-rich acreage.Beyond oil volumes, many of the metrics included in the OOGA report remained steady. Drilling permits in the state fell 5% year/year to 468, while completions were flat over the same time at 406.Similar to 2018, Ascent Resources LLC at No. 1 and Gulfport Energy Corp. at No. 2 were the state’s most active operators by wells drilled last year. An affiliate of Encino Energy LLC, which acquired all of Chesapeake Energy Corp.’s Utica assets in 2018, displaced Antero Resources Corp. as the third most active operator. Appalachian pure-play Antero has shifted its focus to liquids-rich acreage in West Virginia as gas prices have fallen.Ascent accounted for 28% of the wells drilled in the state last year, while Gulfport accounted for 14% and EAP Ohio LLC accounted for 10%. Ascent also drilled the most footage of any operator in the state last year at 2.3 million feet.  Overall, footage drilled by operators was flat in 2019, but still high at 6.5 million feet as producers continue drilling longer, more efficient wells. Last year’s total was well above the 1.8 million feet drilled in 2011, when the first commercial Utica production was reported.

Natural gas producer Gulfport Energy taps debt restructuring adviser –sources (Reuters) - Natural gas explorer and producer Gulfport Energy Corp has hired an investment bank to help it tackle its roughly $2 billion debt pile following a collapse in energy prices, people familiar with the matter said on Wednesday. The move makes Gulfport the latest energy company to seek debt restructuring advice amid an oil price war between Saudi Arabia and Russia, and the coronavirus pandemic. Reuters reported on Monday that shale pioneer Chesapeake Energy Corp also tapped debt restructuring bankers and lawyers. Gulfport has retained Perella Weinberg Partners LP, and its energy advisory arm Tudor, Pickering, Holt & Co, to help study options to improve its finances, four sources familiar with the matter said, adding no debt restructuring move is imminent. Gulfport Energy had been grappling with low gas prices and a board challenge from activist investor Firefly Value Partners before energy stocks cratered this month. The Oklahoma City-based company has lost four-fifths of its market value since the start of the year, and now has a market capitalization of $90 million. With operations in the Utica shale of Ohio and the SCOOP play of Oklahoma, Gulfport had already cut its planned capital expenditures this year by 50%, as it sought to reduce costs and drill less while gas prices remain low. Gulfport had about $2 billion of total debt and around $643 million of available liquidity at the end of 2019, according to a February investor presentation. The company’s profits last year were wiped out by a $2 billion impairment charge. A Gulfport bond maturing in 2023 is trading around 33 cents on the dollar with a presumptive yield of 52.5%, according to Refinitiv Eikon data, indicating investors see the company in financial distress.

Coronavirus And Slumping Prices Hit Ohio Valley’s Oil & Gas Sector - Energy producers, utilities and energy sector workers across the Ohio Valley are adjusting operations and bracing for continued economic impacts as the fast-moving coronavirus pandemic continues to unfold. Efforts to limit the spread of the virus include shuttering schools and businesses and limiting travel, all of which reduce demand for energy. The federal government is moving to stabilize the economy, including a possible bailout for oil and gas producers.Oil prices fell to their lowest level in 18 years Wednesday as travel restrictions tighten and air travel plunges. Crude was trading at $20.48 Wednesday afternoon. Natural gas prices were causing Appalachian Basin producers anxiety earlier this year while they were hovering near $2. On Wednesday that price fell to about $1.60. Although it’s hard to nail down an exact number, the natural gas industry supports thousands of jobs across the region and contributes millions of dollars in taxes to state governments. In West Virginia, for example, drillers paid $146 million in severance taxes to the state in 2019. Projections for 2020 are $98 million, according to the state tax department. Falling oil prices are being driven both by shrinking demand due to the coronavirus and the price war between Saudi Arabia and Russia, which flooded the market with cheap crude, said Mark Agerton, an assistant professor at the University of California, Davis who studies energy and resource economics. He said while drillers in the Marcellus and Utica shale formations will undoubtedly see an impact from lower prices, he believes as big oil-producing regions like the Permian Basin slow oil production, associated gas production there will fall too, which could benefit drillers in the Appalachian Basin.

Northeast petrochemical hub plans draw incentives but also opposition - Supporters of a new petrochemical hub in the Northeast appear just as determined as those opposing it due to environmental concerns.  The potential for the development of a petrochemical industry in the Northeast of the United States has brought along tax credits and other incentives but also staunch environmental opposition. Ohio, Pennyslvania and West Virginia officials want to attract companies that would take natural gas liquids from the Marcellus and Utica shale formations to make petrochemicals in an attempt to create jobs and tax revenue. Environmental groups that fear air pollution or chemical accidents seem equally determined. They want to keep petrochemicals away from this region, home to the world’s first petrochemical plant. Shell is carrying out the most advanced project in Monaca, Pennsylvania. It is building an ethane cracker and polyethylene (PE) complex that will start service early in the 2020s decade. Thailand’s PTT Global Chemical has done some site work in Belmont County, Ohio, but has yet to make a final investment decision on a similar cracker and PE complex. In addition to plants processing ethane, there is also plenty of propane available for potential propane de-hydrogenators and polypropylene plants as well as a large need for storage, pipelines and related infrastructure. Incentives aim to get Thai company to reach FID Private non-profit organization JobsOhio will contribute $20 million on top of previous grants to get PTTGC to confirm the investment in this area along the Ohio river valley, The Times Leader reported on Feb. 8, 2020. The funds will go to Bechtel, which is set to become the contractor in the project if it moves forward, according to The Times Leader, a newspaper in Martins Ferry, a city in Belmont Country that sits along the western bank of the Ohio River. PTT Global Chemical had considered investment in an ethane cracker and PE plant since 2015. PTTGC already bought land but a final investment decision (FID) remained elusive. The Thai embassy in Washington D.C. said on Feb. 18 that a decision on the FID will be announced in 2020. In July 2019 JobsOhio awarded PTTGC’s project $30 million for site preparation. PTTGC and its South Korean partner, Daelim, committed at the time $35 million to site works. In 2016 JobsOhio provided $14 million to demolish a previous plant at the site.

Shell suspends work on multibillion-dollar cracker plant in Beaver County - Shell Chemicals said Wednesday it will temporarily halt its multibillion-dollar project to build an ethane cracker plant in Beaver County because of coronavirus concerns. The company then plans to gradually ramp work back up at the sprawling site where about 8,000 people have been working. “The decision to pause was not made lightly,” Shell Pennsylvania Chemicals Vice President Hilary Mercer said in a statement. “But we feel strongly the temporary suspension of construction activities is in the best long-term interest of our workforce, nearby townships and the commonwealth of Pennsylvania,” Mercer added. The decision came hours after Beaver County government leaders called on Shell to suspend work on the project. “It’s time to shut down. Do what you have to do, but get to that point where we won’t have anyone on that site,” Beaver County Commissioner Dan Camp said at a news conference late Wednesday morning in front of the county courthouse in Beaver. Camp, who was joined by fellow Commissioners Tony Amadio and Jack Manning and state Reps. Jim Marshall, Rob Matzie and Josh Kail, said his office had received more than 500 calls in recent days from concerned residents and Shell employees and contractors. Callers reported crowded conditions on buses that take the project’s thousands of workers to and from the work site, limited hand sanitizer and other problems. “With 8,000 workers, if something happens there, our health care facilities will not be able to undertake what they will have to do,” Camp said, noting that the Heritage Valley Beaver hospital is equipped with only 40 ventilators. “There’s potential for a very catastrophic outbreak,” Manning added.

Shell suspends construction of Beaver County petrochemical plant to address coronavirus concerns - Shell said Wednesday it will temporarily suspend construction of its ethane cracker in Beaver County to prevent the spread of the novel coronavirus. Local elected officials had called on the company earlier in the day to voluntarily close the site, where about 8,000 people are working. Officials said they’d received hundreds of complaints from workers at the site about unsanitary and crowded conditions. Beaver County has two reported cases of coronavirus.Hilary Mercer, vice president of Shell Pennsylvania Chemicals, said in a news release that the shutdown is to allow the company to “install additional mitigation measures” that align with guidance from the Centers for Disease Control and Prevention to limit the spread of COVID-19.Once that’s done, Mercer said, “we will consider a phased ramp-up that allows for the continuation of safe, responsible construction jobs.” The news release did not say how long the shutdown could last.On Tuesday, the company talked publicly about actions it was taking to mitigate the coronavirus spread, even as some workers said they were concerned about close contact with others at the site.“The decision to pause was not made lightly,” Mercer said in the news release. “But we feel strongly the temporary suspension of construction activities is in the best long-term interest of our workforce, nearby townships and the Commonwealth of Pennsylvania.”

Financial fallout from coronavirus could devastate the fracking and plastics industries – —As the U.S. braces for the social and financial impact of the novel coronavirus pandemic, some financial analysts predict that two markets will be among those hit hardest: Fracking and plastics manufacturing.Ethane, a byproduct of fracking, is used to manufacture plastics. The fracking industry has already seen a massive downturn in recent years: The 30 biggest fracking companies lost a combined $50 billion between 2012 and 2017—a period when oil prices were much higher than they are now, before anyone had heard of coronavirus. The global rate of confirmed coronavirus cases rose to more than 197,000 on Wednesday. The Dow Jones Industrial Average has erased the gains it had made since 2017, global oil prices have fallen by half since the start of the year, and some analysts predict that oil prices could drop below $20 a barrel in the coming weeks. Natural gas prices rose slightly last week, but have since dipped back down. All of this is likely to have a ripple effect on the fracking industry, which is inextricably linked to the plastics manufacturing industry. In an attempt to salvage the industry (prior to the arrival of coronavirus), companies like Shell, Appalachian Resins, Braskem America, Aither Chemicals, and PTT Global have initiated plans to open plastics manufacturing plants that would create new demand for ethane. At least five new, massive plastics manufacturing facilities have been proposed throughout Appalachia along the Ohio River Basin in Pennsylvania, Ohio, and West Virginia. Each site is estimated to create demand for ethane from 1,000 new fracked wells each year. The facility closest to completion is the Shell ethane cracker in Beaver County, Pennsylvania, 33 miles northwest of Pittsburgh. President Trump visited it for a campaign rally in the summer 2019, touting his record of oil- and gas-friendly policies. The site has been in the news recently for refusing to shut down construction during the coronavirus pandemic, keeping some 6,000 workers coming in every day andrequiring them to gather in close quarters for daily meetings—a practice Shell agreed to halt only after whistleblowers contacted local media outlets to report "unsanitary conditions."

Closed Philadelphia refinery continues to leak toxic fumes -- Thursday, March 19, 2020  -- The Philadelphia Energy Solutions refinery continued to emit concentrations of benzene far above EPA's limit for the carcinogenic gas even half a year after a June 2019 catastrophic fire shut down the 150-year-old oil processing facility, newly released data shows.

A fight over fracking at a Pennsylvania steel mill is forcing a reckoning among Democrats - The Philadelphia Inquirer - Chardaé Jones grew up in Braddock, a town of 2,114 people about 11 miles southeast of Pittsburgh on the Monongahela River, and last year became mayor. She was used to the pollution. What she found more troubling was U.S. Steel’s plan, in the works now for more than two years, to lease 10 acres to a New Mexico-based oil and gas company to extract natural gas a mile beneath the surface using a controversial drilling technique known as fracking. “A lot of this area is in a flood zone,” she said. “We’re near a river. It just seems like a recipe for disaster.” As word spread, others grew suspicious of what the proposal might mean for public health. Some of them got elected to local and state office. And in January, a neighboring town revoked the gas company’s permit to build part of a well site on its land.  Opponents hope that might kill the proposal altogether — something that one prominent local Democratic politician, Lt. Gov. John Fetterman, warns could cause U.S. Steel to shut down the mill and force mass layoffs, even as the company promises to invest more than $1 billion into the mill and another Pittsburgh-area facility to make them more energy efficient. The company says the on-site natural gas source would significantly reduce its costs at a moment when the steel industry has faced new struggles. Some Democrats warn that a fracking ban would clear the way for President Donald Trump to again win the critical electoral battleground of Pennsylvania. The debate over fracking has “turned into this binary choice: Either you’re pro-fracking and you’re evil and you want the world to burn, or you’re against it and like virtue-signaling," said Fetterman, who once campaigned as a fracking opponent but supports the proposed drilling here and warns its defeat would jeopardize 3,000 “family sustaining union jobs.” “The truth is messy,”  \. “The biggest collision of those two [positions] in American politics is right here in Pennsylvania. It’s happening across the street there. And it’s happening anywhere else where you have a fringe of our party claiming you can walk away from all of this, and then at the same time lamenting, ‘where did all the jobs go?’ Where did all the union jobs go?' Or you wonder, ‘why are they voting for that crazy man in the red hat?’ Because he’s not trying to run my job out of existence."

Biden, in a first, says he opposes all new fracking - E&E News - Sen. Bernie Sanders recently suggested he would stay in the presidential race to push Joe Biden to the left.Last night he seemed to do exactly that.During a heated debate exchange, the former vice president said he would oppose new hydraulic fracturing projects — a significant escalation for Biden that his campaign quickly reversed."No more subsidies for the fossil fuel industry. No more drilling on federal lands. No more drilling, including offshore. No ability for the oil industry to continue to drill — period, [it] ends, number one," Biden said last night during a Democratic presidential debate.The former vice president later added: "No more, no new fracking." And after another back-and-forth, when Sanders said he was proposing to ban fracking "as soon as we possibly can" to save the planet, Biden responded: "So am I." The Vermont senator replied: "I'm not sure your proposal does that."Those moments could resonate through November's general election. Biden had until now resisted calls for a total fracking ban in favor of a more moderate approach: ending it on public lands while tightening emissions regulations for the industry on private lands. Biden's campaign said he misspoke while describing his policy. But it might not matter. Politically, Biden can't take those words back. They're already circulating courtesy of President Trump's reelection campaign and conservative media like The Daily Caller. On policy, a fracking ban has been more of a symbol than a road map; a president has few tools to unilaterally limit it on private land (Energywire, Dec. 6, 2019). Taken seriously — if not literally — his statement could alienate union workers whose jobs depend on fossil fuel projects in Pennsylvania and Ohio. That effect could be offset if it also excites the young and liberal voters who have made climate a top election issue. The question is whether they believe Biden.

EQT cuts capital spending $75M, takes other moves - EQT Corp. said Monday it has cut back on capital spending by another $75 million and said it was "well positioned for near-term durability and long-term sustainability" in the current volatile energy market. The Pittsburgh-based driller has been, since July, undergoing a top to bottom change that has streamlined operations, trimmed the workforce and shored up its finances while also reducing capex, which has dropped $200 million in the six months since EQT (NYSE: EQT) announced it. Total capital spending will be around $1.075 billion to $1.175 billion, which itself is much less than it was a year ago. EQT said it would cut back on development in the Utica Shale in Ohio. Cash flow will be an expected $225 million to $325 million, EQT said. Production will not be changed, with between 1.4 billion and 1.5 billion cubic feet of natural gas. EQT also announced that an agreement that will permanently release the firm transportation obligations of 15 percent of the company's load; firm transportation refers to the amount of money the company is obligated to pay to ship its natural gas. EQT didn't disclose the company but said it would cut its gas transmission expense by 4 cents per million cubic foot of natural gas but it would be offset by weaker average differentials. It also has been able to cut $350 million on collateral posting requirements.  EQT's news release didn't address the impact of COVID-19, but Rice's comments spoke to the turmoil in oil and natural gas markets that has happened since the virus spread across the world. A dive in the oil markets due to the virus and the Russia-Saudia Arabian price has slowed down the Permian Basin, the U.S. oil play that has also had an impact on demand for Marcellus Shale natural gas.

PIPELINES: Feds: Ex-Mariner East technician falsified safety docs -- Thursday, March 19, 2020 -- A former technician working on Energy Transfer Partners' Mariner East pipeline project faces possible prison time after being charged with falsifying safety information.

Mariner East pipeline worker charged with felony for falsifying weld records - A pipeline worker from Westmoreland County is expected to plead guilty to a felony for forging documents that said a weld on the Mariner East pipeline was properly X-rayed when, in reality, it was not. Joshua Springer, of Scottdale, worked on Texas-based Energy Transfer’s Mariner East 2 pipeline project between May 2017 and June 2018, according to court documents. For the most part, he was assigned to work on a 20-mile segment between Houston and Delmont. His job involved taking X-rays of welds, interpreting that data to ensure the weld was good and recording his findings in records that would go to Energy Transfer. It is not clear from the court records which company Mr. Springer worked for. Documents filed in the U.S. District Court for the Western District of Pennsylvania indicate Mr. Springer is scheduled to plead guilty to the charge during an April 1 hearing. He faces up to five years in prison and a fine up to $250,000. But that’s unlikely to be the end of the story. A notification about Mr. Springer’s felony charge posted on the state Department of Transportation’s Office of Inspector General’s website indicates the investigation is ongoing and is being conducted with the FBI. Energy Transfer spokeswoman Lisa Coleman said on Thursday that the company’s outside auditors discovered the falsified records at some point in 2018, before the pipeline was put into service. The company X-rays all of its welds, which it credited with being able to detect the forged report. “Immediately upon learning of the situation, we reported it to the appropriate regulatory agencies and the individual was terminated by his employer,” Ms. Coleman said. “We subsequently reinspected all welds in the section of pipeline where this individual worked and confirmed that the welds were in compliance with our welding specifications and Title 195 Code requirements.” She said Energy Transfer cooperated with regulatory agencies, which “determined that we were not in violation of any regulations.” The Mariner East pipelines — there are three that run mostly parallel to each other — carry natural gas liquids between the Marcellus and Utica Shales in Ohio, West Virginia and southwestern Pennsylvania to processing facilities near Philadelphia. The $3 billion construction project has been plagued by a number of problems, including sinkholes, landslides, water contamination and other environmental permit violations.

Wolf’s coronavirus shutdown order appears to include Mariner East pipeline construction  Construction on the Mariner East pipeline appears to be halted by Gov. Wolf’s new order that shuts down all “non-life-sustaining” operations and businesses. The new shut-down list released by Wolf Thursday evening indicates all construction projects, including “sub-utility” construction, cannot continue physical operations. Neither Wolf’s office nor pipeline builder Sunoco responded immediately to requests to confirm that Mariner East construction must stop. Earlier on Thursday, the company, as well as the Pennsylvania Public Utility Commission, had said construction would continue during the coronavirus outbreak despite criticism from pipeline opponents in suburban Philadelphia. A statement from the PUC issued before Wolf’s latest order explained that since the commission had designated the natural gas liquid pipeline a public utility, and construction sites had not been included as part of Wolf’s list of “non-essential” businesses, construction on the line could continue. “As they are essential services, utilities are expected to continue operations, including construction projects,” the statement reads. The PUC said staff is coordinating with federal pipeline safety regulators, who have not directed pipeline builders to halt construction. State Sen. Andrew Dinniman, a Democrat from Chester County who is a vocal opponent of the Mariner East project, had written to the PUC asking it to shut down construction in lieu of the coronavirus outbreak. “What we see here is that the PUC is trapped in its initial decision,” Dinniman said. “The PUC defined this pipeline as a public utility based on a 1930s gasoline line. The truth is the pipeline does not provide any essential public utility service in the Commonwealth.”

Atlantic Coast Pipeline faces doubts | Charlotte Observer -The Atlantic Coast Pipeline is a long way from being constructed, but it’s already proving a leaky conduit for cash. The cost keeps rising for the proposed 600-mile natural gas pipeline from West Virginia, through Virginia and down to the southern border of North Carolina in Robeson County. Estimated in November 2018 to cost $5.1 billion, the project jointly owned by Dominion Energy and Duke Energy, is now expected to cost approximately $8 billion, a 60 percent jump in a year and a half.That estimate is bound to go up as the pipeline is stalled by multiple legal challenges. The Supreme Court is weighing one concerning permits for the pipeline crossing under the Appalachian Trail. Even if the pipeline gets past its legal issues, the construction delay and the inevitable unexpected construction issues will add to its price. The question now is: How much financial pressure can the pipeline stand? Southern Company, once a small partner in the project, sold its 5 percent share to Dominion last month, and Morgan Stanley analysts recently predicted that Dominion will abandon the Atlantic Coast Pipeline in favor of renewable energy. “We believe this project will not move forward due to legal risks, and as a result [Dominion] will pursue additional renewables investments,” the analysts wrote. That prediction fits with reports that show that power from renewables surged in 2019 as low-cost renewable electricity is becoming cheaper than power from fossil fuels. Despite the legal and cost issues, Dominion Energy and Duke Energy are not wavering. Aaron Ruby, a Dominion spokesman, said, “The ACP remains vitally important to North Carolina’s economy and our shift to clean energy, and we’re totally committed to its completion.” Sasha Weintraub, senior vice president of Duke Energy’s natural gas business unit, said Duke has set ambitious targets for cutting its carbon emissions and “natural gas is a big part of that.”While the utilities point to the pipeline as providing a fuel that’s cleaner than coal, natural gas isn’t necessarily friendlier to the atmosphere. Obtaining it through fracking has led to extensive leakage of methane, a potent greenhouse gas. Meanwhile, renewable energy would certainly be a stronger option if Dominion and Duke spent $8 billion on solar, wind and other renewable sources instead of on a natural gas pipeline.

Q&A: NRDC attorney on the legal issues behind Atlantic Coast Pipeline challenge - Energy News Network interview - A self-described “FERC nerd,” Gillian Giannetti explains what Supreme Court justices are now considering. Sometime before the end of June, the U.S. Supreme Court is expected to issue a decision that — one way or another — will be hugely consequential for the future of the polemical Atlantic Coast Pipeline. During oral arguments in late February, justices tangled with whether the natural gas pipeline can lawfully cross a section of the Appalachian Trail in Virginia on federal land. At the crux of this case is a permit the U.S. Forest Service granted in 2017 to tunnel under the trail within the George Washington National Forest. In 2018, the Richmond-based 4th U.S. Circuit Court of Appeals ruled that the permit shouldn’t have been issued, thus halting construction. Costs for the Dominion Energy infrastructure project now stand at an estimated $8 billion. If built, the pipeline would bisect Virginia for roughly 300 of its 600 miles to move hydraulically fractured natural gas from West Virginia to North Carolina. The Natural Resources Defense Council has joined coalitions of conservation and social justice advocacy organizations to back the Southern Environmental Law Center in its legal clash with pipeline developers. NRDC attorney Gillian Giannetti, a self-described “FERC nerd,” has paid special attention to the high court case. She is part of the Sustainable Federal Energy Regulatory Commission Project at the environmental nonprofit. Her area of expertise since joining NRDC two years ago is gas pipelines and liquefied natural gas terminals. Giannetti, a University of Virginia Law School graduate, has lived in communities across the state for a decade. In an interview with the Energy News Network, she delved into some of the nuances of what the Supreme Court justices are now considering. The oral argument centered on two consolidated cases, U.S. Forest Service v. Cowpasture River Preservation Association and Atlantic Coast Pipeline LLC v. Cowpasture River Preservation Association.i

Pipelines, utilities guard against coronavirus but keep gas flowing | S&P Global Market Intelligence - North American natural gas transportation and distribution companies are taking measures to reduce the spread of COVID-19 and limit their employees' exposure to the coronavirus that causes the disease, but companies said they do not expect it to affect the operation of their pipelines and utilities. "There have been no impacts to our operations," Enbridge Inc. spokesperson Michael Barnes said in a March 16 email. "Early on, Enbridge took proactive steps to deal with COVID-19. We have enacted our robust continuity plans that cover a number of situations. The resilience, planning and preparation of many people across our organization means we can manage through this health crisis." The gas pipeline trade group, the Interstate Natural Gas Association of America, said its members put a priority on safety. "Pipelines have business continuity plans in place that address a wide range of emergency scenarios and ensure core operations and business functions," INGAA interim President and CEO Alex Oehler said in a statement. "To respond to the COVID-19 outbreak, INGAA members are actively coordinating with government agencies, including the Department of Transportation, Department of Homeland Security, and Department of Energy, as well as the private-sector segments of the natural gas value chain," said Oehler, who is also the head of TC Energy Corp.'s U.S. government relations team. "This coordination will help ensure safe and reliable natural gas delivery throughout this public health emergency." The COVID-19 pandemic has spread throughout the world with serious health and economic effects. According to the U.S. Centers for Disease Control and Prevention, the total number of diagnosed cases in the U.S. was 4,226 on March 17, and total deaths were at 75. The health agency's website called it a "rapidly evolving situation." Enbridge said in a statement that it is protecting employees by strictly limiting business travel and enacting a work-from-home plan across the gas pipeline company. Enbridge, Energy Transfer LP and other pipelines said they are at a heightened level of emergency response preparedness but should still be able to maintain pipeline flows as usual. "[Kinder Morgan Inc.] remains open for business — we are not reducing, limiting or shutting down any of our operations," the company said in a statement delivered by spokesperson Melissa Ruiz. "However, in response to guidance from local public health authorities, we have asked office employees and contractors to telecommute for the week of March 16, with plans to re-evaluate on a week-by-week basis. We are also restricting travel to only required domestic, business-essential travel, requesting employees cancel travel around conferences, training and non-essential customer and vendor meetings. International travel is also prohibited unless there is approval from a president."

U.S. natgas futures fall 3% with oil despite forecasts for more heating demand - (Reuters) - U.S. natural gas futures fell about 3% on Monday along with a 10% drop in oil prices on worries that global crude demand will decline as the coronavirus slows economic growth. That move lower in gas prices came despite forecasts for cooler weather and more heating demand in the United States over the next two weeks than previously expected. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.4 cents, or 2.9%, to $1.815 per million British thermal units (mmBtu) at 11:29 a.m. EDT (1529 GMT). Speculators cut their net short positions on the NYMEX and Intercontinental Exchange last week by the most since November to their lowest since November after sharp price declines in oil and gas due to coronavirus concerns caused hedge funds to exit short positions faster than long positions. Overall, speculators exited both short and long positions, causing speculative open interest in NYMEX futures and options to drop to its lowest since early January. Even before the coronavirus started to spread, gas prices were already near their lowest in four years because near-record production and mild weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes this winter unlikely. Gas futures were trading about 38% below an eight-month high of $2.905 per mmBtu hit in early November.

U.S. natgas futures fall near 5% with oil, mild weather forecasts - (Reuters) - U.S. natural gas futures fell almost 5% on Tuesday with oil prices declining as the coronavirus slows economic growth and forecasts for milder weather and less heating demand next week than previously expected. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 8.6 cents, or 4.7%, to settle at $1.729 per million British thermal units (mmBtu). That puts the contract within a nickel of its lowest close in four years. Even before the coronavirus started to spread, gas prices were trading near their lowest in years. Near-record production and mild weather has enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely this winter. Gas futures were trading about 40% below the eight-month high of $2.905 per mmBtu hit in early November. But prices from December 2020 on were all trading positive, on expectations gas demand will start to rise. Calendar 2021 traded above 2022 for a third session in a row for the first time since May 2019. With cooler weather expected, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would rise from an average of 104.7 billion cubic feet per day (bcfd) this week to 106.8 bcfd next week. That compares with Refinitiv's forecasts on Monday of 103.2 bcfd for this week and 108.7 bcfd for next week. The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants was on track to rise to 8.6 bcfd on Tuesday from 8.5 bcfd on Monday due mostly to increases at Cheniere Energy Inc's Sabine Pass export terminal in Louisiana, according to Refinitiv. That increase in overall LNG flows came despite a decline at Cheniere's Corpus Christi plant in Texas and compares with an average of 8.0 bcfd last week and an all-time daily high of 9.5 bcfd on Jan. 31.

U.S. natgas tumbles to 24-year low as coronavirus cuts global demand outlook -(Reuters) - U.S. natural gas futures plunged 7% to their lowest since 1995 on Wednesday, alongside a 24% collapse in oil prices, as travel bans sparked by the coronavirus slashed the global outlook for energy demand. "The natural gas market's capitulation has reached a new stage with today's final spiral ... to its lowest mark in decades," Front-month gas futures for April delivery on the New York Mercantile Exchange fell 12.5 cents, or 7.2%, to settle at $1.604 per million British thermal units (mmBtu), its lowest since September 1995. The all-time low for gas futures was $1.04 in January 1992. Oil prices plunged, with U.S. crude futures hitting an 18-year low, as governments worldwide accelerated lockdowns to counter the coronavirus pandemic that is causing global fuel demand to collapse. Analysts noted most gas speculators were better prepared for the current price collapse than oil speculators since their bets on gas futures and options have been net short since May 2019 - reaching a record speculative net short position of 309,492 contracts in mid February. Oil speculators, meanwhile, were net long and have always been net long, according to Refinitiv data going back to 2009. Even before the coronavirus started to spread around the world, gas prices were already trading near their lowest in years as near-record production and months of mild weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely this winter. Gas futures were down about 45% below the eight-month high of $2.905 per mmBtu hit in early November. Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would rise from an average of 104.4 billion cubic feet per day (bcfd) this week to 105.3 bcfd next week. That is lower than Refinitiv's forecasts on Tuesday of 104.7 bcfd for this week and 106.8 bcfd for next week due to milder weather forecasts than earlier expected. The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants was on track to rise to 8.3 bcfd on Wednesday from 8.0 bcfd on Tuesday, according to Refinitiv. That compares with an average of 8.0 bcfd last week and an all-time daily high of 9.5 bcfd on Jan. 31.

US working natural gas in underground storage decreases by 9 Bcf: EIA — US working gas in storage fell by a mere 9 Bcf last week, or just 1 Bcf stronger than what was expected from a survey of analysts by S&P Global Platts, as the COVID-19 outbreak looks to lower US-level demand further during the upcoming shoulder season. Storage inventories fell by 9 Bcf to 2.034 Tcf for the week ended March 13, the US Energy Information Administration reported Thursday morning. The pull was slightly more than the survey calling for an 8 Bcf withdrawal. It was much less than the 91 Bcf pull reported during the corresponding week in 2019 as well as the five-year average draw of 63 Bcf, according to EIA data. Storage volumes now stand 878 Bcf, or 76%, more than the year-ago level of 1.145 Tcf and 281 Bcf, or 16%, more than the five-year average of 1.753 Tcf. The NYMEX Henry Hub April contract added 2.8 cents to $1.632/MMBtu in trading following the release of the weekly storage report. With prices cratering in the past week, the incentive to inject gas this summer and withdraw next winter is at its strongest level in months, according to S&P Global Platts Analytics. The summer-winter contract spread for NYMEX Henry Hub gas widened to 55 cents on Wednesday. Both the front and back of the gas curve was lower on oversupply concerns, but the front of the curve has taken the brunt of the decline, leaving open significant buy now, sell later opportunities. This will likely motivate strong storage injections through the summer, above the supply-and-demand balance implications that necessitate a large amount of gas be injected each day. However, the late-summer period may now look especially bearish should injections early on in the season limit inject-ability further out into the summer. Platts Analytics' supply and demand model currently expects a 21 Bcf draw for the week ending March 20, which would be about half the five-year average. US-level demand has edged higher by roughly 4.2 Bcf/d from the week prior, outpacing the roughly 1 Bcf/d increase in US supplies. Demand gains are coming from the Northeast and Midwest as colder temperatures are boosting residential and commercial demand. Down south, warmer weather in Texas and the Southeast is boosting power burn demand. Upstream, supplies have risen by about 0.9 Bcf/d, the majority of which is being driven by an increase in onshore production receipts, mainly in Texas, up 0.4 Bcf/d, and the Northeast, up 0.2 Bcf/d, week over week. The first net injection of the year typically occurs during the last week in March or first week in April, according to EIA data.

U.S. natgas futures fall 3%, tie 24-year low with drop in oil prices - (Reuters) - U.S. natural gas futures fell 3% on Friday, led lower by a big drop in U.S. crude oil prices, and gas tied the 24-year low hit earlier this week, as steps taken to slow the spread of coronavirus cut into global economic growth and energy demand. Traders noted that gas futures fell less than oil because gas demand is expected to rise next week as pipeline flows to liquefied natural gas (LNG) export terminals increase. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.0 cents, or 3%, to settle at $1.604 per million British thermal units, tying the September 1995 low hit on Wednesday. The all-time low for gas futures is $1.04 in January 1992. That put the front-month down over 14% this week, its biggest weekly decline since November. Crude oil prices, meanwhile, fell by the most in a week since 1991 as global demand dried up due to the coronavirus and as Washington scrambled to respond. Looking ahead, the premium of futures for May over April NGJ20-K20 rose to its highest on record and the premium of calendar 2021 over 2022 rose for a sixth session in a row, the most since February 2017, on expectations low energy prices will start to boost energy demand. Even before the coronavirus started to spread, gas prices were already trading near their lowest in years as record production and months of mild weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely this winter. Now with the coming of milder spring-like weather, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would rise from an average of 104.3 billion cubic feet per day (bcfd) this week to 104.7 bcfd next week before falling to 103.4 bcfd in two weeks. That compares with Refinitiv's forecast on Thursday of 104.2 bcfd this week and 103.0 bcfd next week. The projected demand increase next week is almost entirely due to an expected increase in gas flows to LNG export plants. The amount of gas expected to flow to those plants was on track to rise to 9.1 bcfd on Friday from a five-month low of 6.4 bcfd on Wednesday after fog slowed tanker traffic into Cheniere Energy Inc's Sabine Pass plant in Louisiana.

Can't Get There From Here? - Developing Bottlenecks In The Louisiana Gas Market --The natural gas market dynamics that were expected to turn gas flow patterns and price relationships in the Eastern U.S. on their heads and, in turn, transform supply-demand dynamics in Louisiana — including around the U.S. price benchmark Henry Hub — have come to fruition. LNG exports have surged as new liquefaction and export terminals have come online, injecting a new demand source along the Louisiana coastline. Producers have lined up to serve that demand. And midstreamers have worked to get the gas there, reversing and expanding existing northbound pipelines to move gas south into and through the Bayou State. Now, Louisiana’s gas market is nearing a critical juncture: the pipelines that connect the supply gateways in northern Louisiana to the demand centers along the Gulf Coast are nearing saturation. Today, we begin a series providing an update on Louisiana’s gas pipeline constraints and the projects lining up to alleviate them.

Louisiana's Chemical Corridor Is Expanding. So Are Efforts To Stop It   - Cheap natural gas and access to international ports are fueling a new industrial boom in Louisiana, along the stretch of land locals have long dubbed "cancer alley." The expansion is prompting new efforts to stop the factories, by residents concerned about the impact on their health. Sharon Lavigne grew up in rural Welcome, Louisiana, in St. James Parish, about 60 miles northwest of New Orleans, but doesn't find it a welcoming place to live anymore. The region is already home to more than 140 chemical factories and oil refineries. Now, companies from Taiwan and China are building new plastic, chemical and fertilizer plants.That includes one less than a mile from Lavigne's house, which she has made it her mission to stop."I feel like if the pollution doesn't stop, we will slowly die," she says.  Lavigne doesn't leave her house much anymore, and worries about the quality of the water she drinks and the air she breathes. She says the air often smells bad. Her husband died of heart problems. Many of her neighbors have died of cancer.  It's hard to link specific illnesses to certain pollutants, even though St. James Parish has an above-average rate of cancer for Louisiana, which has one of the highest rates of cancer in the country. According to reporting by ProPublica andThe Advocate, the complex going up near Lavigne's house could more than double toxic air emissions here. The project near her is a $9.4 billion megacomplex by Formosa Petrochemical, one of the biggest plastic manufacturers in the world. The state gave the company a $12 million grant to offset some of the costs. Lavigne points to a metal fence. That's where state archaeologists recently investigated and discovered graves, likely of enslaved people. The site where the giant factory was approved used to be a plantation. "I'm pretty sure a lot of us here have ancestors that are buried in one of those grave sites," Lavigne says. Lavigne founded RISE Saint James, which is using the graves and other arguments to try and stop the Formosa complex. The group is suing the U.S. Army Corps of Engineers, alleging it failed to consider the harm to cultural resources, and failed to disclose environmental damage and public health risks under the National Environmental Policy Act. The group has also appealed to the state to revoke the company's permit.

Oil and gas lease bidding in Gulf of Mexico drops anew (AP) — Bidding on federal oil and gas leases in the Gulf of Mexico on Wednesday was the lowest since gulf-wide sales began in August 2017 — and lower than any sale since 1993 for the productive central Gulf.Twenty-two companies made $93 million in high bids on 71 tracts, according to the Bureau of Ocean Energy Management, which conducts the sales. “Wow. That’s horrible, isn’t it?” said Rene Santos, an analyst for S&P Global Platts.“If the prices stay low for a long time, the next sale is going to be potentially worse,” he said, noting that prices plummeted again Wednesday from less than $27 a barrel to $20.37 a barrel.  Also Wednesday, environmental groups filed a federal court complaint in Washington, saying federal authorities approved the sale without fully analyzing the risks expanded drilling poses to the environment. Among the remedies sought by Healthy Gulf, the Sierra Club and the Center for Biological Diversity are a declaration that the government’s decision to hold Wednesday’s sale and two other ones violated the law, and to block the resulting leases. The center filed similar suits in 2018 and 2019.A price war between Russia and Saudi Arabia and worldwide drops in travel because of the new coronavirus have cut oil prices to their lowest since 2002. The central Gulf sale that March $363.2 million in high bids on 506 tracts.“With the recent drop in oil price, it came as no surprise that bidding dollar amount was significantly lower __ this is the first time the total high bid amount came in at below US $100 million since the region-wide lease sales began in 2017,”

Judge warned that Gulf oil leases ignore spill risks— Environmentalists on Wednesday updated their court battle to stop the sale of what they call “fatally flawed” oil and gas drilling leases at risk of causing a blowout or catastrophic oil spill. The supplemental complaint filed in U.S. District Court accuses the Bureau of Ocean Energy Management of failing to properly assess safety regulations and royalty rates on new leases. “It is critical that BOEM accurately assess the effects of oil and gas exploration, development, and production likely to result from a lease sale at the lease sale stage,” the complaint states, “because that is the last opportunity the agency has to adjust the number or locations of blocks it offers for lease to avoid unacceptable environmental impacts.” President Donald Trump ordered federal agencies in 2017 to overhaul all policies and regulations that could slow the development of domestic fossil fuels. The directive triggered the Interior Department to repeal many critical safety provisions for offshore development. “Against this backdrop, Interior has begun to execute an unprecedented oil and gas leasing program in the Gulf of Mexico,” the complaint states. The rollback on safety and environmental protection — including the Obama-era Well Control Rule and the Clean Power Plan — comes amid increased drilling in recent years in deeper waters where pressure and temperatures are higher, escalating the risk of explosions. Among other changes, regulators have eliminated required improvements to blowout preventers, the key piece of equipment on the Deepwater Horizon drilling rig, whose failure in April 2010 caused an explosion that killed 11 and contaminated the Gulf with more than 100 million gallons of oil. “This lease sale is coming just a month shy of the 10-year memorial of the BP Deepwater Horizon disaster and at a time of global crisis,” Brettny Hardy, an attorney with Earthjustice, said in a statement Wednesday. “It is yet another example of the Trump administration putting profits before the health and safety of people and the planet.” Nearly 2,000 platforms pumping oil and gas already spot the Gulf of Mexico, with 2,500 total active leases. Any given year, the region sees at least 2,100 oil and chemical spills. The Gulf is home to 23 marine species and two coastal bird species listed as endangered or threatened, and produces one-third of the nation’s seafood supply. Fisheries and tourism generate more than $40 billion annually in economic activity in the five Gulf Coast states.

Listen: US crude exports in the crosshairs of plunging oil demand, global supply glut –podcast -The fallout from the coronavirus and the collapse of the OPEC+ supply cut agreement have dealt US shale producers a massive blow. How the sector ultimately fares might depend on where US oil exports are headed.US crude exports climbed above 4 million b/d in the last week of February, but will that represent a peak for this year and beyond?Port of Corpus Christi CEO Sean Strawbridge joined Platts senior editor Jordan Blum in Houston to talk about how US exporters are weathering this storm.

Houston economy shakier than thought as oil and gas shed jobs in January - The Houston economy created jobs at a slower pace than initially estimated last year, as weakness in local energy and manufacturing sectors weighed on growth, employment data released Friday show. The Texas Workforce Commission uses samples of employment data to provide a timely estimate of job growth across the state. The data is revised each March when more data is available.The revised figures show Houston added about 63,000 jobs in 2019, down from initial estimates of about 90,000. The revisions the energy sector were more dramatic; oil and gas extraction added just 400 jobs last year, compared to initial estimates of 3,300.The revisions show an economy and energy sector that were far less robust that first thought — and perhaps far less able to weather a rapidly slowing national economy gripped by the coronavirus outbreak and a crash in oil prices. Crude prices suffered their biggest one-day loss in 30 years on Monday as Saudi Arabia and Russia promised to flood an already over-supplied market and ended the week at $31.73 a barrel — similar to levels seen near the bottom of the last oil bust in early 2016.The oil and gas extraction sector was already losing jobs in January, data showed, shedding 100 from a year earlier — the first year-over-year loss since the end of 2018. If oil prices stay in the $30 a barrel range this year, as many as 20,000 energy jobs could be lost in the Houston area, according to Bill Gilmer, an economist with the University of Houston. The revisions showed manufacturing, which is closely tied to energy in Houston, struggling in 2019. Manufacturing lost about 800 jobs in 2019, according to the revised data, down sharply from initial estimates that showed gains of 6,700 jobs.In January, the squeeze on manufacturing employment accelerated, with local manufacturers shedding 4,300 jobs in the first month of 2020 compared with January 2019.

Enterprise Products Partners seeks to cut budget as oil war continues - Houston pipeline operator Enterprise Products Partners is looking at ways to trim its multi-billion dollar capital expenditure budget cuts as the ongoing oil war takes its toll on the company's customers.In a Wednesday afternoon statement, Enterprise reported that the company is reviewing its 2020 capital expenditure budget due to the potential impacts of record low crude oil prices and expected lower demand from its customers. "While substantially all of our major growth capital projects are supported by long-term, bilateral agreements, we are in discussions with our customers and evaluating opportunities to reduce or defer capital expenditures, as well as continuing to explore joint venture opportunities with strategic partners," Enterprise Co-CEO Jim Teague said in a statement. Specializing in moving crude oil from shale plays to export terminals it owns along the Gulf Coast, Enterprise also owns pipelines, processing plants, storage facilities and export terminals for natural gas liquids such as ethane, propane and butane.  The company set a $3 billion to $4 billion capital expenditure budget for expansion projects in 2020, as well as a $400 million budget for operations and maintenance. Enterprise's announcement comes at a time when many exploration and production companies are cutting their drilling budgets in response to rapidly falling oil prices. A showdown between Russia and Saudi Arabia has created a global supply glut while the coronavirus outbreak has lowered global demand. West Texas Intermediate crude oil closed trading at $20.37 per barrel on Wednesday afternoon, a price not seen since Feb. 2002.

Noble Energy Eases Spending by 30 Percent - Noble Energy Inc. has updated its operational and spending plans in response to the current global macroeconomic and commodity outlook. The company is reducing 2020 capital expenditures by $500 million, or nearly 30%, to now range between $1.1 and $1.3 billion for the year. Noble has also identified more than $50 million in reductions through operating and other cash costs. About 80% of the capital reduction will be in the U.S. onshore business. More than half of these reductions will occur in the Delaware Basin, according to the company. Internationally, Noble has identified $100 million in capital reductions coming from major project execution, deferral of non-critical spend into future years and the exploration program. The company will move the Alen gas monetization project in Equatorial Guinea forward for first production in early 2021 and will complete pipeline expansion work in Israel. At the end of February 2020, the company had $4.4 billion in financial liquidity. In addition, Noble Energy has no significant debt maturities before late 2024. David L. Stover, Noble Energy’s Chairman and CEO, commented, “In light of the recent commodity price downturn, we are sharply reducing capital expenditures. Deferring activity until commodity prices recover protects our investment returns, maintains free cash flow and strengthens the balance sheet."

Apache Responds to Low Oil Prices - Apache Corporation has announced multiple actions in response to the current oil price environment.The company revealed that it will reduce its Permian rig count to zero “over the coming weeks” and outlined that “activity reductions” are planned in Egypt and the North Sea.Apache has also reduced its 2020 capital investment plan to a range of $1-1.2 billion, from a range of $1.6-1.9 billion, and its board of directors has approved a reduction in the company’s quarterly dividend per share from $0.25 to $0.025.The company said it will use the $340 million of cash retained annually from the dividend reduction to “further strengthen its financial position”. “We are significantly reducing our planned rig count and well completions for the remainder of the year, and our capital spending plan will remain flexible based on market conditions,”  Apache operated an average of eight rigs in the Permian during the fourth quarter (4Q) of last year, according to its latest results statement. The company’s Permian production was said to have averaged 288,000 barrels of oil equivalent per day (boepd) during 4Q, including oil production of 103,000 barrels per day.Internationally, Apache operated an average of 13 rigs in 4Q, its latest results statement shows. Egypt averaged nine rigs and the North Sea averaged three rigs. Apache reported production of 189,000 boepd internationally in 4Q. The company registered a loss of $3 billion, or $7.89 per diluted common share, during 4Q. For the full-year 2019, Apache reported a loss of $3.6 billion, or $9.43 per diluted common share. Apache reduced capital investment in 2019 by 23 percent over 2018.

Kinder Morgan orders employees to work from home - -Houston pipeline operator Kinder Morgan, one of the city's largest employers, has ordered its employees to work from home amid growing concerns about the coronavirus update.Kinder Morgan is not cutting back on its operations but ordered employees across the United States to telecommute to work this week, company officials confirmed. The work from home order will be reevaluated on a week-by-week basis. On top of the work from home order, Kinder Morgan is restricting travel to essential meetings within the United States. The company is asking employees to cancel travel to conferences as well as training and non-essential customer and vendor meetings.  International business travel is prohibited unless approved by a company division president.

Coronavirus is Exposing the Weaknesses of the Texas Fracking Boom - For the past few years, Texas has reaped the rewards of a huge oil boom centered on the shale formations in the Permian Basin. Companies gobbled up acreage across the region and expanded fracking operations at an unprecedented rate. West Texas became an extraction colony that single-handedly shifted global energy politics.  But what was seen as an economic miracle and a beacon of American energy dominance is now at risk of implosion. The twin threats of a global pandemic and a global supply glut threaten to topple the financial house of cards that the Texas oil boom sits atop. The country’s energy sector had been on the ropes for several weeks amid a downturn in demand caused by the coronavirus outbreak in China. The Saudi Arabia-Russia price war pushed it over the edge as stock prices fell off a cliff. Now, as coronavirus continues to spread across Europe and the United States—stoking fear and uncertainty along the way—no one knows just how bad things could get.“It’s been a terrible month capped by a terrible few days,” says Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis, calling it a potential “worst-case scenario” for the oil and gas sector. The rapid rate of expansion in the Permian Basin—and other drilling hotspots in the country—was built on a mountain of debt. While companies successfully fracked oil at an impressive clip, it’s such an expensive endeavor that few have ever been able to make a profit. So they turned to Wall Street banks, taking out tens of billions of dollars in loans to cover the costs of their massive production boom. Most frack-happy companies couldn’t turn a profit when oil prices were above $50 per barrel, so if the cost of crude stays low, experts warn that there may be a scourge of bankruptcies and layoffs of oil and gas companies in the coming weeks and months. Making matters even worse, much of that debt is coming due in the near term. “A lot of these companies are already on shaky financial footing, so what’s happened could push them over the edge,” Williams-Derry says.

Permian oil producers continue to slash budgets 25% or more on recession fears | S&P Global Platts — Concho Resources and other Permian Basin crude producers have continued to slash their capital budgets by 25% or more as fears of a pandemic-triggered global recession have taken hold. With oil prices hovering near $30/b, Midland, Texas-based Concho said it will cut its 2020 capital budget by more than 25% from about $2.7 billion down to $2 billion, although the Permian pure-play producer did not provide any updates on its drilling rig count or production guidance. "Concho is well positioned to weather the turmoil in the oil markets due to our high-quality asset base, low cost structure, strong balance sheet and large, uncomplicated hedge book," Concho CEO Tim Leach said in a statement Tuesday. "Additionally, we will monitor and be responsive to market conditions and have flexibility to lower our spending further." Related coverage: Hess lowers 2020 capex more than 25%, defers most exploration, but Guyana is intact The Permian's most active driller and the US' largest energy company, ExxonMobil, said Tuesday that it is preparing to "significantly" decrease its 2020 spending. "Based on this unprecedented environment, we are evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term," said ExxonMobil CEO Darren Woods in a statement. "We will outline plans when they are finalized." S&P Global Ratings downgraded ExxonMobil this week from an "AA+" rating to "AA" because of its cash flow deficit and the weaker 2020 outlook, although Exxon still maintained an investment-grade rating. Rival and major Permian producer Chevron is also weighing sizable cuts. With the Permian accounting for more than one-third of the United States' record-high oil production, that means many of the biggest spending cuts also are coming out of West Texas and southeastern New Mexico. Many companies have announced cutbacks of 30% or more since early March. The new coronavirus is spreading around the world and Saudi Arabia and Russia have engaged in an oil pricing war that is expected to send gluts of new volumes into the market starting in April. Late Monday, for instance, major Permian producer Pioneer Natural Resources went even further, slashing its budget by 45% and cutting its drilling rig count in half. S&P Global Chief Economist Paul Gruenwald said Tuesday that the economic impact of the coronavirus is worse than initially anticipated and that a global recession is coming in the second quarter, although the recovery could still begin before the end of the year.

The Future of Exxon and the Permian’s Flaring Crisis -The surge of fracking in the Permian has resulted in a massive increase in oil production, but also a spike in flaring, or the burning of gas from oil wells, as drilling has outpaced the construction of natural gas pipelines. The Permian Basin saw flaring and venting, the release of unburned gas, largely methane, directly into the atmosphere, jump to 810 million cubic feet per day in 2019. That means that the volume of gas burned each day exceeded the amount of gas consumed in all of Texas’ households. Even the industry admits that rampant flaring has become a major problem for its reputation (a “black eye” for the Permian), and a number of reports in the past year have raised alarm about the role that gas plays in exacerbating climate change.But the Texas Railroad Commission, which regulates the oil and gas industry in the state, has done almost nothing to rein in the practice of flaring. In 2019, the commission granted 6,972 flaring permits, and rejected none. In fact, by all accounts, the commission has not denied any of the 27,000 or so flaring permits over the past seven years.The permissive attitude reached absurd proportions last year when the Railroad Commissiongranted a permit to Exco Resources, a shale driller that wanted to flare its gas even though it had access to a pipeline, simply because the company didn’t want to pay the fees to ship the gas. It was cheaper to burn the gas, and the Texas regulator gave the go-ahead.The pressure on Texas has grown tremendously over the past year, as rampant flaring becomes increasingly indefensible. Under mounting pressure, Texas Railroad Commissioner Ryan Sitton released a report on flaring in February. While he is supposed to regulate the industry, he has consistently been one of fracking’s most powerful champions in the state.Publicly available flaring data is scarce in Texas, so Sitton’s flaring report offered some useful information, even as he praised the benefits of fracking. For instance, the number one source of flaring over a 12-month period through October 2019 was XTO Energy, which flared 23,350 million cubic feet of gas per day.XTO is a subsidiary of ExxonMobil. In August 2019, a pipeline in Midland, Texas, owned by a company called ETC had to shut down for repairs. XTO Energy sends gas from some of its Permian wells to that pipeline, so the shutdown presented the company with a problem. With nowhere to put the gas coming out of the ground, XTO decided to burn it. Because of the pipeline outage, XTO flared gas for 91 hours, according to an event report filed with the Texas Commission on Environmental Quality (TCEQ). Not only did XTO release an unknown volume of CO2 and methane into the atmosphere — the company is not required to report those volumes — but the flaring event also resulted in the release of more than 15,000 pounds of nitrogen oxides, 30,000 pounds of carbon monoxide, and 100 pounds of sulfur dioxide, among other contaminants.

Exxon Now Wants to Write the Rules for Regulating Methane Emissions - ExxonMobil is a company capable of contradictions. It has been lobbying against government efforts to address climate change while running adstouting its own efforts to do so.And while the oil giant has been responsible for massive methane releases, Exxon has now proposed a new regulatory framework for cutting emissions of this powerful greenhouse gas that it hopes regulators and industry will adopt. As Exxon put it, the goal is to achieve “cost-effective and reasonable methane-emission regulations.”So, why is Exxon asking to be regulated?The answer may be simply that Exxon is very good at public relations. As industry publication Natural Gas Intelligence reported, this announcement “comes as energy operators face increasing pressure from lenders and shareholders to engage in decarbonization by following environmental, social, and governance standards.” Exxon's proposed regulations have three main objectives: finding and detecting leaks, minimizing the direct venting of methane as part of oil and gas operations, and record keeping and reporting.  This isn’t Exxon’s first foray into voluntary regulations of methane. The corporation's natural gas subsidiary XTO started avoluntary methane emissions program in 2017. In June 2018, XTO noted that the voluntary program, which was mostly about replacing leaking valves, had reduced methane emissions by 7,200 metric tons since 2016. However, leaking valves are not the biggest source of methane emissions. In February 2018, four months before XTO was touting the success of its methane reduction program, the company experienced the second largest methane leak in U.S.history. A gas well it operated in Ohio suffered a blowout, releasing huge amounts of the heat-trapping gas. Did XTO’s voluntary program accurately report this? As The New York Times reported, “XTO Energy said it could not immediately determine how much gas had leaked.”

EOG Resources, Whiting cutting capex budgets at least 30%— EOG Resources and Whiting Petroleum said Monday they were slashing their capital spending budgets by at least 30% amid the ongoing collapse in crude prices and the anticipated global glut of supplies. Since Saudi Arabia and Russia initiated a pricing war this month to flood the market with more oil starting in April, crude prices have plunged to about $30/b and triggered a wave of spending cuts from North American producers. Many are cutting close to 30%-40% of their 2020 capital dollars, laying down drilling rigs and reducing their daily production guidance. Houston-based EOG said it would slice its spending by 31% and take its capital budget down to a range of $4.3 billion to $4.7 billion -- well down from the previous budget of up to $6.7 billion. And, after previously projecting crude production volumes would rise by up to 14%, EOG now says it expects its crude volumes to be roughly flat from last year in the range of 446,000 b/d to 466,000 b/d. EOG said it will keep its drilling focus in South Texas' Eagle Ford shale and in the Permian Basin's western Delaware Basin. "Our first priority is to generate high returns with every dollar we spend even at low oil prices," said CEO Bill Thomas in a statement. "With oil around $30, our 2020 premium drilling program is expected to generate more than 30% direct after-tax rate of return." Houston energy investment banking firm Simmons Energy said Monday that publicly traded producers are cutting by close to 30% on average but that anecdotal evidence suggests the private players are slashing their spending by even larger swaths. Likewise, Bakken shale-focused Whiting Petroleum said it will reduce its capital spending by more than 30% down to a range of $400 million to $435 million. By comparison, Whiting spent $778 million in 2019 and had planned on about $600 million in 2020. Now, it's down to nearly half its total from last year. "In light of the volatility in commodity prices, we have immediately reduced our development activity and plan to maintain a lower level until we see a sustained commodity price recovery," said CEO Bradley Holly in a statement. The company will remove one drilling rig and completions crew from its Williston Basin operations, he added. To a lesser extent, even the natural gas producers are scaling back more amid the oil price drop. Goodrich Petroleum said Monday it will cut its modest capital budget 25% from $60 million down to about $45 million and focus on its core Haynesville shale acreage in Louisiana. Last year, Goodrich spent just less than $100 million. However, Marcellus and Utica shale producer EQT Corp. said it will only slice another 6.25% off of its budget, removing $75 million from its new capital budget of just more than $1.1 billion. This is EQT's second budget cut though, now having reduced its capital spending by $200 million since its first guidance back in October.

For The First Time Since The 1970s, Texas Is Considering Curtailing Oil Production - Following the 2014 Thanksgiving massacre, Saudi Arabia effectively broke up OPEC to try to kill the US shale sector by overproducing oil and sending its price plunging. It failed largely thanks to the extreme generosity of "yield-starved" junk bond buyers. Six years later, and another, far more harrowing price water later which dragged the price of oil to nearly two decade lows, Saudi Arabia appears to have finally won. Texas regulators are considering curtailing oil production in America’s largest oil-producing state, "something they haven’t done in decades", the WSJ reports citing sources. Additionally, the report goes on to note that several oil executives have reached out to members of the Texas Railroad Commission, which regulates the industry, requesting relief following an oil-price crash which soared the most on record on Tuesday and closed around $25, still 17% down on the week. In other words, oil is joining every other US industry (including movie theaters) in seeking a bailout. Texas, which along with New Mexico, hasn't limited oil production since the 1970s, and is the home of the Permian Basin, America's most productive oil field and the epicenter of the shale revolution which started 12 years ago and has made America into the world's top oil producer, with roughly 13mmb/d in output. It has also become Saudi Arabia's top global competitor. Texas was a model for the Organization of the Petroleum Exporting Countries, which has sought to control world-wide oil prices in recent decades. OPEC effectively disintegrated last weekend when Saudi Arabia announced it would maximize output, boosting production to as much as 13mmb/d, unleashing panic among higher-cost OPEC oil producers. It is unclear whether regulators will ultimately act to curtail production, but staffers are examining what would be required in such an event, the people said. 

Texas oil production reduction considered by Railroad Commission — The state agency that regulates Texas' behemoth energy industry is weighing a reduction in oil production — at the behest of some producers — as the public health and economic crises fueled by the new coronavirus continue deepening both nationally and here. The Texas Railroad Commission's potential inquiry into its options comes as demand for oil across the globe has dropped significantly, with people staying home and implementing social distancing practices in hopes of avoiding the spread of the virus that causes COVID-19.  “A couple of Texas producers have inquired into the feasibility of the Railroad Commission prorationing production," said Travis McCormick, chief of staff to commission Chairman Wayne Christian. "No formal change in policy has been proposed. Staff is looking into what that change in policy would entail from a practical standpoint at the agency.”The Wall Street Journal first reported the producers' request and the commission's response Thursday.Jason Modglin, director of public affairs for Commissioner Christi Craddick, said the agency has not yet received a formal request to curtail production."We haven't really been able to look at it and see: 1) how we would do it and, 2) how it would benefit or help Texas producers," Modglin said.Ed Hirs, an energy economist at the University of Houston, said a reduction in oil production in Texas is not likely. "It's got to be some predators looking to just slam some people into bankruptcy in a heartbeat," Hirs said. "None of that would make a difference in the overall market."

Permian, Canadian crude firms make big budget reductions, modest production cuts - Permian Basin and Canadian oil producers continued their budget-slashing sprees on Thursday, cutting anywhere from 25%-50% of their capital dollars, although their projected production volumes are only falling by up to 10% or so. Stay up to date with the latest commodity content. Sign up for our free daily Commodities Bulletin. Sign Up Midland-based Diamondback Energy said Thursday it would slice its capital spending by more than 40% and pull more than half of its drilling rigs, while Canadian Natural Resources said it would cut its spending by 27% and delay a lot of new activity. Other smaller Canadian producers Paramount Resources and Tamarack Valley Energy announced capital budget cuts of more than 40% each. The rush to dramatically cut spending comes as crude oil prices have cratered with NYMEX WTI hovering at about $25/b on Thursday and the Western Canadian Select benchmark just above $10/b. The double whammy of a supply-and-demand hit comes as the new coronavirus pandemic is hitting global oil demand and as Saudi Arabia and Russia have initiated a pricing war to flood the market with new oil volumes starting in April. "We are in an unprecedented and uncertain market driven by fear and panic," said Diamondback CEO Travis Stice. "In this environment where we do not get paid adequately for the product we produce, we will reduce activity and focus on maintaining our financial strength." Diamondback will cut its capital budget from $2.9 billion down to $1.7 billion and, after suspending well completions for a month, pulling more than half of its 21 drilling rigs and operating just six-10 rigs in the back half of the year. Completions crews would decline from nine down to a range of three-to-five crews. . Diamondback will focus more than 70% of its activity in the more mature Midland Basin where there's a lower cost structure and the firm holds more mineral rights.

US oil, gas rig count falls 22 to 813 on week as activity cutbacks by E&Ps deepen — The US oil and gas rig count fell 22 to 813 on the week, rig data provider Enverus said Thursday, as domestic upstream operators deepened their 2020 budget and activity pullbacks in response to low crude prices and sharply reduced oil demand. The worst is far from over, observers say, as companies continue to trim their operations to the bone. In the two weeks since crude began free-falling from levels around $46/b, some companies have reduced capital spending not only once, but twice. "Just from what we've seen in capital spending announcements by some of the bigger operators in the past couple of weeks, I expect the rig count to drop by about 50 rigs in the next couple of weeks," said Bob Williams, Enverus' director of content. "It could easily be double that if this goes on for another month," Williams said. Oil prices were drifting down from above $50/b at the start of 2020 but took a sharp turn for the worse earlier this month when Russia refused to comply with further proposed production cuts by Saudis and other OPEC members. The result was market panic over a perceived future oil glut and a further steep price drop the last nine trading days. On Thursday afternoon, NYMEX crude futures were trading at $25.34/b, up $4.97. According to S&P Global Platts Analytics, WTI averaged $27.85/b, down $9.28 on the week; WTI Midland averaged $25.40/b, down $12.05; and Bakken Composite prices averaged $23.39/b, down $10.72. For natural gas, Henry Hub prices averaged $1.82/MMBtu, unchanged, while at Dominion South, prices averaged $1.40/MMBtu, down 6 cents. If the Saudis and Russia "make nice," that could prevent further hemorrhaging of budgets, but there is still the "little" problem of an overwhelming global oil glut, Williams said. "Cutting [hydraulic fracturing] crews will help some on expenses because completions account for about two-thirds of well costs nowadays," he said, "but at least completions add revenue in the form of production sold, which the market definitely doesn't need." A rise in bankruptcies is likely to follow in the coming months, Williams and other analysts say.

Historic slide in oil could cost energy industry thousands of jobs - This month’s historic swoon in oil prices has some on Wall Street worrying that crude will settle in a range under $40 a barrel. For the industry’s hundreds of thousands of workers, the bigger worry is their jobs. Though West Texas Intermediate crude has only plumbed its new lows for about a week, some are already warning that energy workers could see layoffs sometime soon if oil doesn’t rebound. “A sustained drop in oil prices would cost the sector 50,000-75,000 jobs if employment returned to its low from a few years ago,” Nathan Sheets, chief economist at PGIM Fixed Income, wrote in an email to CNBC. “During the downturn in 2015/16, U.S. employment in the oil sector fell by about one-third. In recent years, some of that has been clawed back, but a period of sustained low oil prices would no doubt push employment back toward previous troughs,” he added. U.S. West Texas Intermediate crude and international benchmark Brent crude both posted their worst day since 1991 last week. WTI plunged 24.59% to $31.13 a barrel on March 9 after OPEC failed to broker a deal with ally Russia on production cuts to support oil prices. That, in turn, led the Saudis to cut their own prices and fanned fears of a global price war. WTI was trading Tuesday at $27.89 a barrel. But trying to guess the size of future layoffs — or any lasting economic impact — is a trickier process, especially given the magnitude of the fall and lingering questions over Russia’s eventual cooperation with OPEC. Historically, big declines in the price of oil tend to have a mixed impact on Americans. Quick sell-offs followed by equally quick rebounds can keep the impact to a minimum, but more sustained swoons can have real economic consequences. On the upside, a fall in oil prices usually leads to cheaper gasoline at the pump and offers the vast majority of U.S. consumers the freedom to spend their cash elsewhere.

Trump Steps In To Help Oil Industry Facing Its Own Coronavirus Crisis : NPR - Oil prices bounced back a bit after President Trump said the Department of Energy would buy crude for the nation's strategic petroleum reserve. "We're going to fill it right to the top," Trump said Friday in a wide-ranging news conference at the White House. He said it will save taxpayers "billions and billions of dollars" while helping an industry that's been reeling. While oil prices increased nearly 5% after Friday's announcement, that was just a fraction of the amount they lost earlier in the week. Oil prices had been falling out of fears the coronavirus epidemic threatened world economic growth. Demand was also down as large gatherings were canceled and people started staying home to avoid getting sick. Then prices plunged after Saudi Arabia and Russia failed to agree on production cuts and instead entered a price war last Sunday. In a stunning reversal, Saudi Arabia said it would actually boost oil production and offer a massive discount for its customers. U.S. oil companies, especially smaller ones, are now looking to make deep cuts. Industry analysts warn of possible bankruptcies, especially if oil remains where it's fallen to, in the $30 per barrel range. Companies operating in Texas's Eagle Ford Shale need prices between $40 to $60 a barrel to remain profitable.

Trump administration prepares to buy 30M barrels of oil amid industry slump - The U.S. government will buy 30 million barrels of oil from producers amid a financial downturn for the industry. The Department of Energy (DOE) announced Thursday it would conduct the sales to fill the Strategic Petroleum Reserve (SPR), fulfilling a pledge by President Trump to offer assistance to the oil industry as prices plummet with the twin threats of the coronavirus and a pricing war between Saudi Arabia and Russia. “It is a common sense move. Everyone who has done any version of investing knows you try to buy low and sell high. The same goes with filling the SPR over time,” Energy Secretary Dan Brouillette said in a call with reporters. This initial purchase comes as oil has fallen to about $25 per barrel, down from roughly $50 a month ago and a steep decline from the average $60 pricetag for oil already in the reserve. The 30 million barrel purchase announced Thursday is a far cry from Trump’s Friday pledge to fill America’s emergency fuel supply “right up to the top,” maxing out at 77 million barrels. But DOE said it plans to hold additional sales, perhaps as soon as in two to three months, and is preparing to ask Congress for $3 billion to fill its fuel reserves. The purchase comes as Treasury Secretary Steven Mnuchin floated spending as much as $20 billion to assist the oil industry, figures Brouillette said the two had not discussed. Stocking up on oil will no doubt anger some Democrats, who have repeatedly warned that coronavirus aid should include no lifelines for the fossil fuel industry. “Diverting public funds to bail out this industry will do nothing to stop the spread of this deadly virus or provide relief to those in need,” House lawmakers wrote in a Tuesday letter spearheaded by Rep. Nanette Diaz Barragán (D-Calif.). “A bailout tells the American public that fossil fuel investors can rely on U.S. taxpayers to cover their bills when the industry’s corporate executives’ risky investments don’t pan out.”

Spill plan for 67-year-old pipeline does not need to meet enviros’ 'perfection standard' – judge -- The U.S. Coast Guard did not wrongly approve a contingency plan to clean up an oil spill that could potentially result from the leak of an Enbridge Inc pipeline that runs in waters of the Great Lakes, a federal judge in Michigan has ruled. Judge Thomas Ludington with the U.S. District Court for the Eastern District of Michigan said on Monday that the Coast Guard had not violated the 1990 Oil Pollution Act (OPA) nor the Administrative Procedure Act (APA) when it certified in 2017 an oil-spill plan for the pipeline’s portion in the Straits of Mackinac, which two environmental groups challenged on grounds it was inadequate under ice-sheet or high-wave conditions. To read the full story on Westlaw Practitioner Insights, click here: bit.ly/2TVdkZE

Plains All American agrees to pay $60 million for 2015 spill -- The company responsible for an oil spill that occurred five years ago near Santa Barbara reached a civil settlement with the federal government that requires it to pay more than $60 million in penalties and damages. The U.S. Environmental Protection Agency announced a settlement with Plains All American Pipeline after the company's pipeline near Refugio State Beach spilled nearly 3,000 barrels of crude oil into the ocean, killing birds, fish, and other marine life, according to the agency's statement. According to the federal agency's statement, the oil spill was the result of the company's failure to address external corrosion on the pipeline. The agency states the spill was worsened by the company's failure to respond promptly to the release. This settlement comes almost a year after Santa Barbara County Superior Court Judge James Herman ordered the company to pay $3.3 million in fines for the same oil spill. The fines were imposed following a September 2018 trail where a jury found Plains All American guilty of one felony and eight misdemeanors. According to county District Attorney Joyce Dudley, the court found that Plains All American knew or should have known that the pipeline would rupture. Two years after the spill at Refugio State Beach, Plains All American announced its plans to replace the pipeline. The replacement pipeline would traverse 123 miles and three counties, including Santa Barbara. In an interview with the Sun in early 2019, a representative from Plains All American said this project would not result in any new oil production, but would only resume previous production that ceased after the spill.� Two public meetings about it were held in Santa Barbara and San Luis Obispo counties in February 2019 to discuss this replacement project. In March 2019, staff from both counties began working on a draft environmental impact report for the project, which would be presented for public circulation and comment once completed.

RuPaul Has A Fracking Empire On His Wyoming Ranch - RuPaul’s a big fan of getting that coin. In 30 years, they went from struggling artist to a household name. Now, as the host of the wildly popular TV drag competition RuPaul’s Drag Race, he’s a household name and has amassed a net worth of $US60 ($98) million. Fans know that RuPaul and his partner Georges LeBar have a massive ranch in Wyoming. And in an interview with Terry Gross on NPR’s Fresh Air, they let us know a little more about what goes on at that ranch.“Do you have, like, horses or cattle or a farm or...?” Gross asks.“A modern ranch, 21st century ranch, is really land management,” Charles explains. “You lease the mineral rights to oil companies. And you sell water to oil companies. And you then lease the grazing rights to different ranchers. So it’s land management. Yeah.” A little fucking vague, no? Rory Soloman, a PhD candidate at NYU, looked into it after hearing the interview. Soloman found Ru’s ranch was a fracking hot spot, according to the nonprofit groupFracTracker. Earther dug further, checking public records of the couple’s ranch. We found that Ru’s partner, Australian rancher Georges LeBar, owns seven parcels of land in Wyoming totaling some 66,000 acres. LeBar’s company, Le Bar Ranch, leases that land to at least three oil companies: Anadarko E&P Onshore, Chesapeake Operating, and Anschutz Oil Company. Using FracTracker, we looked at just 10,000 of those acres and found more than35 active oil and gas wells.

Continental Resources cuts capital budget by 55% given the recent collapse in oil prices - Continental Resources Inc. said Thursday it was cutting its capital budget for 2020 to $1.2 billion, which is down 55% from the original budget of $2.65 billion as a result of the "collapse" of crude oil prices. The oil producer said it was reducing its average rig count to 3 from 9 in the Bakken and to 4 from 10.5 in Oklahoma. The company expects 2020 production to be down less than 5% from a year ago. Continental Resources said it expects to be cash flow neutral with crude oil prices under $30 per barrel of West Texas Intermediate. Crude oil futures were up 11.2% to $22.66 in recent trading, but had tumbled 57.6% over the past month. The company said it has asked Congress for an "immediate investigation" under the Trade Expansion Act as it alleges Saudi Arabia and Russia have illegally dumped crude oil earlier this month at a time of low demand resulting from the coronavirus pandemic. The company's stock, which rose 2.8% in premarket trading, as plummeted 69.8% over the past month through Wednesday, while the S&P 500 has shed 29.2%.

North Dakota weighs plan to keep some Bakken crude off market — Faced with declining demand and potentially months of oil prices below most Bakken breakeven prices, the North Dakota Industrial Commission next week will consider new rules aimed at preventing operators from either bringing more unwanted crude onto the market or abandoning wells completely. In January, the number of inactive wells in North Dakota climbed to 2,607, a new record for the state and an increase of 687 wells, or nearly 36%, from December. In a year, North Dakota's inactive well count has climbed by 1,090 wells, an increase of nearly 72%. The surge in inactive wells has left operators with a choice: allow it to fall into abandoned status, making its transfer to a new operator difficult; or bring it on production, a path that has made less economic sense as prices have fallen in recent weeks. Currently, when a well has been inactive for a year it is moved by state officials into abandoned status. Once deemed abandoned, operators have six months to either put the well back on production, plug it, or post a bond to cover the costs of its ultimate reclamation. This process can take roughly three years and can delay production at the well and potential transfer of ownership. On Tuesday, the Industrial Commission is expected to approve a policy that would allow operators to remain in inactive status through a waiver process. "I think the commission needs to send a signal to the industry and to the markets that it doesn't make good business sense to force North Dakota Bakken crude oil into a market that's already priced well below breakevens and below really what long-term world demand says the market should be at," Lynn Helms, the state's top oil and gas regulator, said Tuesday. The state approved a similar waiver policy during the 2015 oil price crash out of concern that some marginal wells in inactive status would get prematurely plugged and abandoned, hurting the long-term prospects for a rebound in prices of enhanced oil recovery, Helms said. "What we don't want to have happen is for wells that have potential for refracturing or something like that, ending up prematurely abandoned," Helms said Tuesday. "We'll just take it a month or a year at a time."

U.S. Shale Goes Viral - International and domestic oil and gas markets and prices are under heavy pressure from COVID-19 impacts and the Russian-Saudi Arabia oil market battle.  Now, all eyes are on U.S. domestic producers, especially those occupying the shale patch.  Here is what one needs to consider: First, the U.S. has become world’s top oil and gas producer and no matter how one looks at it, meaningful growth in U.S. volumes has come from the “unconventional” plays.  U.S. production has enlarged the global pie with commensurate benefits to customers and consumers of all types.  From the advent of shale oil production in 2011, U.S. crude supply has grown 133 percent, with the Permian contributing almost 70 percent of that increase.  For 2017-2018 alone, the U.S. had the world’s largest-ever annual increase in production for both oil and natural gas.  From the 2016 bottom of about 8.8 MMBD through end of 2019, overall U.S. oil production increased 45 percent to roughly 13 MMBD.  Oil and liquids supply from the mighty Permian grew almost 80 percent, from the Denver-Julesburg basin (Niobrara) about 77 percent, from the Bakken more than 50 percent, and from the Oklahoma shale plays (SCOOP, STACK and others) about 38 percent.  The Federal OCS Gulf of Mexico (GOM), which had been edging toward a comeback, grew roughly 13 percent.Second, the vibrancy of the U.S. domestic producer population is unique in the world.  Over the years, the industry has recovered from many setbacks to rebuild, tackle new frontiers, survive and thrive. Third, for some time, investors have preferred the lure of shale development risk to that of conventional exploration risk. Fourth, any new investment – even drilling to maintain a company’s operations and workforce – hinges on external capital. Even before the COVID-19 and Russia-Saudi, much less has been available to the industry, given investor discontent with profitability and cash positions.  Unhappiness shows up in S&P industry weightings which, for oil and gas, declined from roughly 12 percent in 2009 post-recession to below 3 percent currently.

Can shale survive another bust? - - The shale oil and gas industry faced an uncertain future long before oil markets crashed this week as burgeoning supplies, lackluster prices, dwindling capital and increasing competition from renewable energy squeezed profits, cut employment and pushed some companies into bankruptcy. The dramatic plunge of crude to around $30 a barrel — half the price at the beginning of year — is likely to accelerate those trends, forcing more layoffs and bankruptcies and delivering another blow to the Houston economy. As with the last oil bust, which stretched from 2014 to 2016, only the strongest, best financed and most efficient companies will survive if prices remain depressed over a long period, analysts said, again reshaping the industry into one that is smaller, leaner and employing far fewer workers.“We will see a lot of defaults and Chapter 11 bankruptcies. That will be inevitable at $30 a barrel,” said Alexandre Ramos-Peon, a senior shale analyst with Norwegian research firm Rystad Energy. “It’s going to be tough times.” The cause of these tough times is a price war between Russia and Saudi Arabia that threatens to flood the global market with cheap crude, just as demand is weakening amid a economic slowdown caused by the novel coronavirus. Oil prices on Monday suffered their biggest one-day decline since the first Gulf War almost 30 years ago, plunging 25 percent to settle in New York at $31.13 per barrel, the lowest price since the last oil bust hit bottom in early 2016. Prices have remained in the low $30s since. Oil settled Friday at $31.73 a barrel. U.S. shale companies will likely bear the brunt of the fallout. While many shale companies can turn a profit with oil between $50 and $60 per barrel, few can survive at $30 without drastic cuts to production and staff. If oil prices stay in the $30 a barrel range this year, as many as 20,000 energy jobs could be lost in the Houston area alone, according to Bill Gilmer, an economist with the University of Houston. Energy companies have already begun to slash spending in response to the crash. Apache Corp., Devon Energy, Marathon Oil, Noble Energy and Occidental Petroleum this week reduced their capital budgets by about a third, each cutting at least $500 million from funds used for oil exploration and production across West Texas, New Mexico, Oklahoma and Wyoming. West Texas producers Diamondback Energy and Parsley Energy began idling oil rigs and laying off fracking crews.

The Energy Downgrade Avalanche Begins- Exxon Loses AA+ Rating - For the past 9 years ever since the downgrade of the US government by S&P from AAA to AA+, American energy giant Exxon, which back in 2007 had a market cap of over $500 billion only to see that cut by two thirds to $150BN today (half of where it was at the start of the year) , had the same Standard and Poor's credit rating as the US government. That period of perplexing parity ended just after 1pm on Monday, when S&P, confirming it would move quickly on rating downgrades this time following a near record plunge in the price of oil last week, downgraded Exxon from AA+ to AA as Exxon's "Lower Oil Price Assumption Weakens Cash Flow/Leverage Metrics"; and since the outlook is negative, it means more downgrades are coming. Highlights from the downgrade below:

• U.S.-based integrated oil company Exxon Mobil Corp.'s cash flow/leverage measures fell well below S&P's expectations for the rating in 2019, and with lower oil and natural gas prices, low refining margins and weak chemicals demand anticipated over the next two years, the rating agency expects measures to remain weak without a significant change in the company's financial plans.
• S&P revised its estimates to reflect the recent reduction in our crude oil and natural gas price deck assumptions.
• As a result, S&P is lowering its issuer credit rating and unsecured debt ratings on ExxonMobil to 'AA' from 'AA+'.
• The negative outlook reflects the potential for a further downgrade if the company does not take adequate steps to improve cash flows and leverage over the next 12 to 24 months, in order to bring funds from operations (FFO)/debt closer to 60% and debt to EBITDA to about 1.5x for a sustained period.

The full note is below:

Senator Calls On Trump To Embargo Russia, OPEC Crude  “We will not be bullied” is the message Senator Kevin Cramer would like President Donald Trump to send to Saudi Arabia and Russia about the unsettled oil markets that the two nations, along with the UAE are presently flooding.The Republican Senator from North Dakota issued a letter to the President on Wednesday, calling for an embargo for crude oil from Russia, Saudi Arabia, and other OPEC nations.The letter requests that an “immediate signal” be sent, saying that “The United States will not be bullied or taken for granted,” according to the Senator’s Twitter feed.“Foreign nations are now using the environment of the worldwide spread of COVID-19 to flood the market and cripple our domestic energy producers.” Senator Cramer takes an additional dig at Russia’s actions: “these bullying tactics by Russia have become the norm”, adding that Saudi Arabia, on the other hand, has been our partner, making its actions particularly concerning.Saudi Arabia, Russia, and the UAE have all vowed to ramp up oil production as of April 1 when the current OPEC agreement to curb oil production is set to expire, and Saudi Arabia has already prepared to unleash a flood of cheap crude on the market next month.Of the 284.3 million barrels of oil the United States imported in December last year, according to the Energy Information Administration (EIA), the United States imported an average of 43.7 million barrels of oil from OPEC nations (14.5 million of which came from Saudi Arabia), and 21.5 million barrels from Russia.

Federal regulators approve Jordan Cove LNG project in Coos Bay and 230 mile feeder pipeline - Federal regulators on Thursday approved the Jordan Cove liquefied natural gas export terminal in Coos Bay and the 230-mile Pacific Connector Pipeline, presaging a battle with the state of Oregon, whose regulators have declined to issue the three most significant state permits for the facility. The project’s owner, Calgary-based Pembina Pipeline Corp., immediately informed the Oregon Department of Land Conservation and Development that it intends to file a federal appeal to that agency’s decision last month that the project is inconsistent with state land use laws. Statute allows the company to appeal the decision to U.S. Secretary of Commerce Wilbur Ross, and the Trump administration is a firm backer of energy exports in general, and the Jordan Cove project in particular. The notice of appeal the company sent to the agency Thursday may be a declaration of war with the state, however. Backers of the project have been promising locals for 15 years that they would comply with state and local permits, but Pembina is now signaling that it intends to preempt the state. FERC’s decision and the notice of appeal immediately drew fire from Gov. Kate Brown and Sen. Ron Wyden, and Brown vowed the project wouldn’t move forward without following state permitting processes. The Federal Energy Regulatory Commission voted 2-1 to approve the controversial project, effectively agreeing with a staff recommendation that most of the project’s impacts could be reduced to less than significant levels, and the public need for the facility outweighed any of those impacts. Oregon’s Department of Environmental Quality denied the project’s water quality certificate last year. It did so in part for procedural reasons and said Jordan Cove could reapply. But it also said at the time that it had “insufficient information to demonstrate compliance with water quality standards, and because the available information shows that some standards are more likely than not to be violated.”

TSX loses another 8% as Canadian oil price falls to lowest level on record | CBC News - The price of a barrel of Canadian oilsands crude oil fell to its lowest level ever on Wednesday, and the Toronto Stock Exchange sold off heavily as a result. Western Canadian Select (WCS) was changing hands at one point as low as $7.63 US per barrel, down $4.60 from Tuesday's level. The U.S. benchmark known as West Texas Intermediate (WTI) also fell to below $22 a barrel, a level it has not hit since 2003. That was bad news for shares in oil companies, many of which trade on the Toronto Stock Exchange. Selling on the TSX was so heavy that automatic circuit breakers designed to give markets a pause during times of turmoil kicked in. When the decline hit seven per cent, markets were automatically shut down for a breather. When they reopened the selling continued, with the TSX closing down 963 points or almost eight per cent. The Dow Jones Industrial Average fared almost as bad, closing below the 20,000-point level. The TSX was mostly dragged down by shares in oil companies, which were themselves responding to a plunge in the price of crude. Oil is being walloped by too much supply in a time of reduced demand because of the coronavirus pandemic. After more than a year of an uneasy collaboration to limit supply and try to keep prices up, Saudi Arabia and Russia started a price war earlier this month, flooding the market with their cheap oil that kicked off a race to the bottom in terms of oil prices. Canadian oilsands oil always trades at a discount to lighter blends, such as Brent and WTI, because it is more difficult to transport and process. So the oversupply has hit the price of WCS even more than other types of oil.

Coronavirus causes ConocoPhillips to temporarily cancel flights for workers to North Slope fields - ConocoPhillips has canceled flights for hundreds of workers to the North Slope for the next two weeks to prevent the spread of COVID-19. The company is asking critical personnel who produce oil from the company’s North Slope fields to stay on for an extra multiweek rotation, ConocoPhillips said in a statement sent Tuesday to contractors and employees. The statement said that effective immediately, “we are asking all business-critical North Slope personnel supporting ConocoPhillips operations (both contractor and ConocoPhillips employees) to extend their shift by two weeks.” “All flights north for regularly scheduled shift changes have been canceled for the next two weeks,” the statement said. "We will be working to arrange transportation off the Slope for those who cannot extend their stay. “Please note that there are no confirmed cases of COVID-19 on the North Slope at this time,” the statement said.

Majors look to store jet fuel at sea as air travel drastically curbed - (Reuters) - Major oil companies including BP and Shell are preparing to take the rare step of storing jet fuel at sea as the coronavirus outbreak disrupts airline activity globally, while refiners are shifting to diesel because of the poor margins associated with jet fuel production. Jet fuel demand has cratered as airlines suspend flights due to the coronavirus pandemic, which globally has infected more than 204,000 people and killed 8,700, prompting travel restrictions from governments around the world, including the United States. Market participants and refiners have had to scramble to adjust to incredibly low prices. Storing jet fuel at sea, however, is something of a last resort. The product is sensitive to contamination and degrades more quickly than other refined fuels and especially crude oil, so after a few months, it no longer can be used for aviation, according to analysts. “The industry generally expects products will be used within three months of being produced,” said George Hoekstra, an independent consultant specializing in hydroprocessing technology. Gulf Coast jet cash prices were at 26.50 cents per gallon below futures, the lowest seasonally since at least 2011, the earliest data available, Refinitiv Eikon data showed.

Volunteers join fight against Baltic Sea oil spills in Latvia --The World Wildlife Federation in Latvia is contacting potential volunteers to help in the event of oil spills in Latvian waters, according to a Latvian Radio broadcast on March 16.Until now accidents have been very small, but intense shipping traffic in the Baltic Sea presents future risks should an accidental spill occur. According to WWF specialist Magda Jentgen, one project would assist Naval Forces and state agency rapid response, and another would draft a contingency plan for aiding animals. Both would require the assistance of volunteers.“It's essential to engage volunteers in coastal oil cleanup. Moreover, cleaning the oil off of birds is a time-consuming process. Volunteers need to be instructed and need to be capable of assisting veterinarians in a crisis situation,” said Jentgen. Since March 50 volunteers have registered, but she said a larger accident would require several shifts of people.“At this time we’re compiling a list of volunteers, and then we plan to secure financing for training. These people will have the know-how to capture birds and how to clean wounded birds,” said Jentgen.One such accident occurred near Estonia in 2006, injuring ten to fifteen thousand birds. Only sixty were saved and returned to their natural habitat. Rotterdam has experienced an even bigger spill that required more than a year to clean up.Ilze Jēce is one of the volunteers with years of experience in the non governmental sector. “We don’t have the kind of civil society volunteering traditions that the US and other Western countries have. There people are accustomed to university programs with volunteering requirements and civil society work as a hobby in their free time. One-time help in a crisis is easier than planning for long-term involvement. That’s more difficult,” she explained.

European outright refined products sink to fresh multi-year lows on bearish cocktail | S&P Global Platts — European refined product markets on Monday fell to their lowest levels in three years, and for some considerably more, as the Russia-Saudi price war and coronavirus concerns weighed heavily on demand. Products took their lead from crude. S&P Global Platts assessed Dated Brent at $27.945/b Monday, down $3.90/b on the day. A price war between Russia and Saudi Arabia continues and OPEC+ canceled a meeting scheduled for Wednesday, signaling the likelihood that the global crude market will be flooded with crude come April. Saudi Arabia slashed its official selling prices last week; in response, others such as Abu Dhabi's ADNOC, Iraq's SOMO and Kuwait's KPC all reduced their OSPs and many market participants expect Nigerian OSPs to follow suit. The propane CIF NWE large cargo fell to $194.25/mt Monday, the lowest flat price since March 2002 when the market was assessed at $190.50/mt. Similarly, the butane CIF NWE large cargo was assessed at $185.00/mt, the lowest value since May 2003. In the Mediterranean, the situation is similar to Northwest Europe, with the FOB Lavera coasters assessed at $242/mt, the lowest level since August 2003, when the market was assessed at $240/mt. The spread of COVID-19 has bought a degree of uncertainty to the LPG market in Europe as petrochemical crackers consider production cuts and seasonal heating demand begins to subside moving into springtime. Platts Naphtha CIF NWE cargo was assessed at $209/mt Monday, down $47/mt since Friday and the lowest in 17 years, according to Platts data. European naphtha has lost about 30% in value in a week and 50% since the beginning of the month, on decreased demand for gasoline blending and the uncertainty related to the coronavirus pandemic and global economy, sources said. The physical Platts gasoline Eurobob FOB basis AR barge flat price also saw a record low Monday on an extreme pressure sell-off as nations continue to adopt measures that will curb driving demand. Platts Gasoline Eurobob barge was assessed at $185.50/mt, down from $231.75/mt Friday. FOB ARA barges of ultra-low sulphur diesel slumped $30/mt on the day to a four-year low of $306.75/mt Monday. This is the lowest price of ULSD barges since February 25, 2016, when they were assessed at $304.25/mt, Platts data shows. "There is less spot demand for diesel cargoes in Europe but I haven't seen any cargo getting cancelled; there is a contango so that helps" a trader said Tuesday, referring to storage demand that appeared last week amid the deepening contango in the paper market. "People will do everything they can to put as much jet into diesel as possible." The market is in a widening contango and the outlook is bearish as more countries recommend social distancing and an increasing numbers apply a lockdown on both sides of the Atlantic, which has started to dent demand for the road fuel.

Victoria bans fracking for good, but quietly lifts onshore gas exploration ban -Amid coronavirus chaos, the Victorian government announced its decision earlier this week to lift the ban on onshore gas exploration, but also to make the temporary state-wide ban on fracking permanent.This decision was made three years after aninvestigation foundgas reserves in the state could be extracted without any environmental impacts, and new laws will be introduced to parliament for drilling to start in July next year.The state government first introduced the moratorium(temporary ban) on onshore conventional and unconventional gas production in 2017, enshrined in theMineral Resources (Sustainable Development) Act 1990. It effectively made it an offence to either conduct coal seam gas exploration or hydraulic fracturing (fracking) until June 2020.The ban was originally imposed amid strong concerns about the environmental, climate and social impacts of onshore gas expansion. But lifting the ban to allow conventional gas exploration while banning fracking and unconventional gas (coal seam gas), doesn't remove these concerns.  The new laws seek to do two things: lift the ban on conventional onshore gas production, and to entrench a ban on fracking and coal seam gas exploration into the state constitution.The government has stated it wants to make it difficult for future governments to remove the fracking ban. But this is highly unlikely to be legally effective. Unlike the federal constitution, the Victorian constitution is an ordinary act, and so it can be amended by another legal act.The only way entrenching an amendment in the state constitution so that it is permanent and unchangeable is if it relates to the operation and procedure of parliament. And fracking does not do this. This raises the spectre of a future government removing the fracking ban in line with an accelerating onshore gas framework.

The effects of the oil spill on the Hangar eliminate the clock -in emergency Mode because of spilled diesel fuel on the Hangar in motiginsky district of withdrawn. “News. Krasnoyarsk” has received official comment from representatives of the company “Krasnoyarsknefteproduct”.we will Remind, earlier it was reported that due to leakage in the fuel base in the Fish to the surface of the river fell about a hundred tons of oil products. The cause of the accident was the rupture of the pipe. The spill occurred in the area of 8 thousand square meters. In this place the Hangar is still covered with ice. A large part (about 7,5 thousand sq. metres) of snow already cleaned. currently, the remains of diesel fuel collected from the ice of the river using sorbents. Work is being done around the clock. They involve about a hundred people.

Shell reports 41% rise in onshore Nigeria oil spills (Reuters) - Royal Dutch Shell’s onshore Nigeria subsidiary saw a 41% rise in the number of crude oil spills due to theft or pipeline sabotage in 2019, the group said in its annual report. Shell Petroleum Development Company of Nigeria (SPDC) also recorded a rise in the volume of oil spilt in the Niger Delta as a result of illegal activity to 2,000 tonnes in 2019 from 1,600 tonnes a year earlier.  Of a total 164 SPDC spills of more than 100 kilograms in the delta, 157 were due to theft and sabotage, Shell said. That compared with 111 spills due to sabotage in 2018.  SPDC is a joint venture of the Nigerian National Petroleum Corporation (NNPC), which holds a 55% stake, Shell, its operator, with 30%, France’s Total with 10% and Italy’s Eni with 5%. It produces around 1 million barrels of oil per day and operates more than 6,000 kilometres of pipelines in the delta.

Gas Explosion in Nigeria Leaves 15 Dead, More Than 50 Buildings Damaged - More than 50 buildings were damaged in the blast, National Emergency Management Agency (NEMA) acting coordinator in Lagos Ibrahim Farinloye told reporters, as The Vanguard reported. One of the buildings was the Bethlehem Girls College, and at least 60 injured students were taken to a hospital for treatment. "The fire started with smoke," one eyewitness told Reuters. "The smoke was coming up and later we heard a sound ... and some houses collapsed even the roofs."More than 50 buildings were damaged in the blast, National Emergency Management Agency (NEMA) acting coordinator in Lagos Ibrahim Farinloye told reporters, as The Vanguard reported. One of the buildings was the Bethlehem Girls College, and at least 60 injured students were taken to a hospital for treatment."The fire started with smoke," one eyewitness told Reuters. "The smoke was coming up and later we heard a sound ... and some houses collapsed even the roofs."The explosion occurred in Abule Ado area of Lagos, but the blast was so loud it could be heard almost all across Lagos state, Pulse TV reported.It occurred around 9 a.m., and one family of four was killed in the blast returning from church, according to The Vanguard.  The explosion was sparked when a truck hit some gas cylinders at a gas processing plant near a pipeline owned by the Nigerian National Petroleum Corporation (NNPC), the state-owned company told Reuters. "The resulting fire later spread to the Nigerian National Petroleum Corporation (NNPC) oil pipeline passing through the area even though the pipeline has been shut down as a precautionary measure.  "The fire was eventually extinguished at 3:30 p.m. through the combined efforts of officials of the Lagos State Fire Service, Federal Fire Service, and Nigerian Navy Fire Tender." The fire also damaged the pipeline, but NNPC said that the pipeline shutdown would not impact oil delivery to the rest of the state, according to Reuters. Pipeline explosions are a recurring danger in Nigeria, where they are usually caused by attempts to steal from the pipelines. One such fire killed 60 people in 2018. Nigeria is Africa's leading producer and exporter of oil, but it has paid a price for its fossil fuel extraction. In the Niger Delta, that extraction has led to oil spills of 40 million liters (approximately 10.6 million liquid gallons) every year, The Guardian reported. This has polluted air and water and harmed residents' health.

Oil supply surge and crumbling demand could overwhelm global storage – "An OPEC+ supply surge and crumbling oil demand are leading to concerns about a surplus that could overwhelm global storage,"  BofA Global Research said in a note this morning . The number of companies announcing spending and workforce cutbacks keeps growing.

• This morning, the huge U.S. producer ConocoPhillips said it would cut $700 million from its planned capital spending this year and scale back its share buy-back program.
• Oilfield services giant Halliburton is furloughing about 3,500 employees in Houston as oil producers slow operations, per Reuters.
• "The sudden crash in global oil prices has prompted Australian oil and gas producer Oil Search to cancel sale talks and slash spending by up to $675 million by shelving projects around the world," the Sydney Morning Herald reports.
• Argus Media's Ben Winkley, via Twitter, tallies several more announcements as they come "thick and fast."

Analysts are racing to update their estimates of how much global oil demand is cratering. Rystad Energy this morning sharply revised their projections from a week ago. They now see year-over-year demand dropping 2.8 million barrels per day, which would be a 2.8% decline. A week ago they were projecting only a 600,000 barrel per day full-year drop.  "At the moment we expect the month of April to take the biggest hit, with demand for oil falling by as much as 11 million bpd year on year," the consultancy notes.  ExxonMobil, citing an "unprecedented environment," said last night that it plans to "significantly" cut spending in light of the coronavirus and the collapse in oil prices. The oil giant's announcement is the latest sign of how deeply the upended market is affecting the sector.

Asian appetite for petroleum storage, reserves will not save global oil prices — China's insatiable appetite for hoarding oil reserves or the expansive independent petroleum storage capacity from Singapore to South Korea will not be enough to absorb the coming flood of crude and refined products, which threatens to push oil prices even lower. For decades, Asia's petroleum storage has expanded in the form of underground salt caverns, independent tank farms, operational storage for mega refineries and even oil in pipelines by key oil companies, national oil companies and commodity trading houses alike. This expansion had a big role in absorbing global oil shocks in the past, such as the 2015-2016 oil downturn when global inventories hit a peak of 5.3 billion barrels in late 2016, according to industry estimates, forcing OPEC to make production cuts to help ease the glut. But the current market is seeing a rare simultaneous instance of a global supply shock, due to the oil price war between Saudi Arabia and Russia, and a demand shock, due to the coronavirus pandemic, creating an unprecedented oil surplus that stretches storage capability to its limits. The initial surplus will be seen in refined products as refineries maximize margins on low crude prices. But there is not much room left after oil companies and traders hoarded compliant fuels in anticipation of the International Maritime Organization's global low sulfur marine fuel requirements, that took effect January 1. As 2020 rolled in, global shipping was hit by the coronavirus outbreak and demand never materialized, leaving tanks full. "We saw a big movement of storage towards the end of last year getting ready for January 1st. That storage is still in play,"

Oil’s big storage problem - Back in 2008 the economy suffered from massive oil demand destruction. The result was an epic contango structure in the futures curve which encouraged traders to charter tanks to store oil. A contango (the opposite of backwardation) manifests whenever the price of commodities in futures contracts is higher than the cash price of commodities available today. This allows traders to profit from buying cheap oil today and selling it on the futures market at a premium tomorrow. As long as the cost of storage is lower than the profit generated by the trade, the market structure encourages hoarding. In 2008 the contango got so big (it was known as the super-contango) the economy ran out of spare capacity in on-the-ground facilities to store it in. But the profitability of the contango trade was so huge it actually paid to charter tankers explicitly just for the purpose of storing oil. While it’s tempting to say the same thing will happen this time round, it might well not. The problem the sector is now facing is that there will probably not be enough physical storage capacity to park all the unneeded global oil supply for the duration of this crisis. If that’s true, some fields may have to be shut down irrespective of what Opec targets dictate. Not doing so would pose an environmental disaster, otherwise. But again it’s not as easy as just turning off the tap. Some fields are much less capable of adjusting their pump rates than others. This is especially true of Russian fields, where temporary shutdowns pose the risk of them never being able to be revived at the same rates again. People are now talking about a $10 target for WTI. We’d argue that in a scenario where there’s literally nowhere to put oil, it’s not inconceivable prices could go negative. Such rates would indicate that permanent supply destruction -- which might never be brought back again -- was now going on. Which would be a big problem for the world if the same rate of economic activity as before was returned to post Covid-19.

The Countries Hit Hardest By The Oil Price War -- The recent plunge in oil prices has put the financially ravaged U.S. shale industry in the spotlight over the past week, but the market downturn will blow a hole in the budgets of oil-producing countries as well. Credit ratings agency Fitch said that a wave of sovereign downgrades could be forthcoming if oil prices remain at low levels. “Countries that are in a somewhat vulnerable external position and have a fixed exchange rate are of course particularly vulnerable,” Jan Friederich, a Middle East and Africa sovereign analyst with Fitch, told Reuters. Russia has stated that it can withstand oil prices in the range of $25 to $30 per barrel for six to ten years. Russia’s Energy Minister Alexander Novak went further,declaring that Russian oil companies will remain competitive “at any forecast price level.” Russia has a few things working in its favor, such as a flexible exchange rate that allows oil firms to earn dollars but pay expenses in rubles. A declining oil price tends to be offset somewhat by a weaker local currency.In that context, Saudi Arabia is less flexible, needing to shell out foreign exchange to prop up its fixed exchange rate. The Saudi government can do that for a long time, but not forever. In addition, while Saudi Arabia has some of the lowest oil production costs on the planet, the budget requires oil prices in the mid-$80s per barrel to break even. Riyadh apparently believes it can force out high-cost producers before the pressure on its own finances becomes too great to bear.But smaller oil-producing countries with fixed exchange rates could be in more trouble. Nigeria, for instance, does not have the deep pockets of Saudi Arabia. It too has to defend a fixed exchange rate, and during the last market downturn (2014-2016), the government imposed currency controls to stop the outflow of dollars. Today, only a week after the OPEC+ collapse, there are already signs of ashortage of dollars in Nigeria.There are other countries at risk, including Iraq, Oman, Angola, Suriname and Gabon, according to Fitch. None of the Gulf Arab states can balance their budgets with oil at $40 per barrel or lower, according to S&P and Reuters.Mexico’s Pemex may have shielded itself somewhat from a rather large hedging program, but the state-owned oil firm has been at the precipice of having its credit rating downgraded further for quite some time. Last year, Fitch put Pemex into junk territory, but additional downgrades would trigger even more capital flight. Mexico also has the unfortunate reality of having its economy depend on the U.S., which is about to go into a deep freeze of mass coronavirus quarantines.

Saudi Arabia floods markets with $25 oil as Russia fight escalates -  (Reuters) - Saudi Arabia is flooding markets with oil at prices as low as $25 per barrel, specifically targeting big refiners of Russian oil in Europe and Asia, in an escalation of its fight with Moscow for market share, five trading sources said on Friday. The sources, from oil majors and refiners which process crude in Europe, said Saudi state oil company Aramco told them it would supply all requested additional volumes in April. Sources previously told Reuters Saudi Arabia is also seeking to replace Russian oil with Chinese and Indian buyers, although not all refiners received volumes they had asked for. Tanker rates soared as Saudi Arabia provisionally chartered around 31 supertankers to take extra oil, including to the United States, where Russian oil is usually less in demand. Oil prices have halved since the start of the year because demand has been hit by the coronavirus outbreak and after Russia and OPEC failed to reach a new deal on supply cuts. Moscow refused to support new deeper cuts, saying the impact from the virus could be much worse than thought, and Riyadh retaliated by opening its taps and pledging to pump record volumes on to the market. Russia has so far said it is not planning to come back to the negotiating table despite feeling the pressure from the extraordinary Saudi moves.

US crude falls below $30 as Fed move fails to calm markets - U.S. crude fell below $30 on Monday as emergency rate cuts by the U.S. Federal Reserve and its global counterparts failed to tame markets and China’s factory output plunged at the sharpest pace in 30 years amid the spread of coronavirus. Brent crude was down $2.89, or 8.5%, to $30.96 a barrel by 1012 GMT. The front-month price had risen $1 earlier in the session. U.S. West Texas Intermediate (WTI) crude was at $29.94, down $1.79 or 5.6%. To combat the economic fallout of the pandemic, the Fed on Sunday cut its key rate to near zero, triggering an unscheduled easing by the Reserve Bank of New Zealand to a record low as markets in Asia opened for trading this week. The Bank of Japan later stepped in by easing monetary policy further in an emergency meeting. However, the measures failed to calm the investors, and stock markets weakened again. “It’s becoming evident that the major central banks across the globe are using all their available tools to prevent a crisis, but it seems the fear of the pandemic is taking control of investors,” said Hussein Sayed, chief market strategist at FXTM. Meanwhile, China’s industrial output fell by a much larger than expected 13.5% in January-February from the same period a year earlier, the weakest reading since January 1990 when Reuters records began. Brent’s premium to WTI is close to its narrowest since 2016, making U.S. crude oil uncompetitive in international markets. “The relative weakness in Brent shouldn’t come as too much of a surprise, given the severity of the breakout across Europe,”

Oil Collapse Deepens on Widening Virus Measures - -- Oil’s spectacular collapse deepened as widening global efforts to fight the spread of the coronavirus looked set to trigger the most severe contraction in annual oil demand in history. Futures tumbled by more than 6% after losing a quarter of their value last week -- the largest drop since 2008. Even a massive emergency move by the U.S. Federal Reserve to cushion the world’s biggest economy just added to the fear gripping markets, with New York crude at one point dropping below $30 a barrel. Gasoline prices collapsed in the U.S. The market is being pushed deeper into turmoil by unprecedented simultaneous demand and supply shocks. Forecasts for global oil use are being cut dramatically as government measures to contain the spread of the pandemic restrict the movement of people and throw supply chains into chaos. At the same time, giant producers are embarking on a destructive price war after the disintegration of the OPEC+ alliance that’s unleashing a flood of supply. “Global financial markets are being rattled by the growing severity of the coronavirus and at the same time spooked by the enormity of the stimulus measures to combat it,” said Vandana Hari, founder of Vanda Insights in Singapore. “If the pandemic continues to worsen across the globe, oil will head lower. If it worsens in the U.S., belt up for an apocalypse.” Oil traders, executives, hedge fund managers and consultants are revising down their estimates for global oil demand. The growing fear is that consumption, which averaged just over 100 million barrels a day in 2019, may contract by the most ever this year. That would easily outstrip the loss of almost 1 million barrels a day in 2009 and even surpass the 2.65 million barrels registered in 1980, when the world economy crashed after the second oil crisis. Brent crude tumbled as much as 6.6% to $31.63 a barrel before trading 5.9% lower at $31.87 as of 6:58 a.m. in London. Futures fell 25% last week, the most since December 2008. West Texas Intermediate slid 4.2% to $30.40 on the New York Mercantile Exchange, after earlier dropping as low as $29.75. Travel restrictions across the globe tightened further over the weekend, with the U.S. extending its travel ban to include Britain and Ireland. Australia said anyone entering the country must self-isolate for two weeks, Spain imposed a lockdown and France closed cafes and restaurants. New York City limited restaurants and bars to takeout and delivery service, and shut nightclubs, movie theaters and concert venues.

Oil drops 10% at the low, breaking below $29 as demand evaporates - Oil prices slid more than 10% at the low on Monday as the acceleration in coronavirus cases worldwide, which is bringing travel and business to a standstill, further dents global demand for crude. U.S. West Texas Intermediate crude dropped $1.66, or 5.2%, to trade at $30.07 per barrel. Earlier in the session WTI dropped more than 10% to hit a session low of $28.03 per barrel. International benchmark Brent crude fell 9.4%, or $3.22, to $30.66. Earlier Brent dropped more than 12% to $29.74 per barrel, its lowest level since at least Feb. 2016. “The demand drop unfolding is like nothing anyone has ever witnessed,” Simmons Energy analyst Pearce Hammond said in a note to clients Sunday. Oil is coming off what Hammond called a “horrific week” for the energy market. Both contracts posted their worst week since the financial crisis after dropping more than 23%, although prices did get a temporary boost Friday evening following President Donald Trump’s call to fill the U.S. strategic petroleum reserve. “Oil prices have reacted extremely negatively and we believe ... that we have not seen the bottom of the oil price just yet,” Rystad Energy’s head of oil markets Bjoernar Tonhaugen said. “The potential loss of demand in March-April may dwarf anything the World has ever seen, just when OPEC+ producers open the floodgates of new supply to the market,” he added. Oil continues to be hit on both the demand and supply side. The coronavirus outbreak has led to softer demand for crude as people cut back on travel, for example, while a breakdown in OPEC talks means there could soon be a supply glut as Saudi Arabia gets set to ramp up production to a record 13 million barrels per day. The move lower comes even after President Trump said Friday that the Department of Energy would purchase crude oil for the SPR in a bid to prop up prices.

As oil prices tank, BP CFO warns demand could be negative in 2020 - Demand for oil will likely be negative in 2020, adding further downward pressure to plummeting prices, according to BP CFO Brian Gilvary. Around the time of its earnings report in early February, the energy giant anticipated that demand would weaken by around 300,000 to 500,000 barrels a day. But on Monday, Gilvary told CNBC’s “Squawk Box Europe”: “If you ask me that question today, it is more like flat demand year-on-year, maybe even negative demand - we will probably likely see negative demand this year.” This would mean that demand for oil actually contracts this year — a very rare occurrence — rather than just growing at a slower rate than previously expected. The combination of an unfolding price war between oil production giants Russia and Saudi Arabia and concern over a potential demand shock from the global coronavirus pandemic have hammered oil prices in recent weeks. International benchmark Brent crude was trading down 9.3% at around $30.70 per barrel on Monday afternoon while U.S. West Texas Intermediate (WTI) dipped below $30 a barrel to $29.50, down 6.8%. So far this year, Brent and WTI are down 53.8% and 52% respectively. Gilvary suggested that activity beyond this year would depend on what “the new normal” becomes for businesses. “We have got a demand side shock and then you also have the combined issue of a significant amount of oil now coming on the market in April, so the direction of the oil price can only go in one direction, and that is down,” he said.

Oil prices could hit teens in coming weeks as markets crater over coronavirus and price war - An end to the oil price plunge is nowhere in sight, energy experts say, as futures of international benchmark Brent crude fell below $30 a barrel Monday for the first time since 2016. That’s a stunning 54% drop year-to-date. “Oil could easily be in the teens at the bottom. Could even be low teens at the lowest,” Abhi Rajendran, director of research at Energy Intelligence, told CNBC on Monday. “The main driver is for, a week or two, we could have global market oversupply of over 10 million barrels per day (bpd). Which is insane and unprecedented.” Energy stocks have been hammered as demand plummets amid the escalating coronavirus crisis, but moves by state actors to unleash a flood of supply are driving them decisively into the ground. Saudi Arabia has slashed its oil prices to buyers and will be maxing out its production, as will Russia, as the two major producers throw themselves into an all-out price war to fight for greater market share. “The last time there was a global surplus of this magnitude was never,” Jim Burkhard, vice president and head of oil markets at IHS Markit, wrote in a note Monday, predicting an oil demand contraction of up to 10 million bpd for March and April. “Prior to this, the largest six-month global surplus this century was 360 million barrels. What is coming will be twice that or more.”

Goldman slashes oil forecast, sees US crude at $22 per barrel - Goldman Sachs slashed its oil forecast on Tuesday as the COVID-19 outbreak continues to pressure demand. “Demand losses across the complex are now unprecedented,” Goldman’s global head of commodities research Jeffrey Currie wrote in a note to clients Tuesday. The firm said that oil use has fallen by eight million barrels per day as the coronavirus has led to a near standstill in travel, among other things. Goldman now sees U.S. West Texas Intermediate crude and international benchmark Brent crude both averaging $20 per barrel in the second quarter. Earlier on Tuesday the firm said WTI would average $22, before revising the forecast to $20 just a few hours later. Goldman has cut estimates multiple times in the last few weeks. The firm previously lowered its target for WTI to $29 and Brent to $30 after the breakdown in OPEC talks earlier in March. WTI settled at $28.70 on Monday, so the new target implies an additional 30% downside ahead. This would be on top of WTI’s 53% drop this year. Goldman’s Brent target is 33% below the contract’s Monday settle of $30.05. The drop in demand comes as powerhouse producers Saudi Arabia and Russia get set to ramp up production beginning April 1, which is when the OPEC+ production cuts currently in place expire. The firm said that the sudden drop-off in demand, which began in January when the virus started hitting Chinese fuel demand, aided the price war that’s broken out between OPEC and its allies, which includes Russia.   Goldman said that the virus will likely lead to far worse outcomes than previously thought — even below estimates from just a month ago — for both the commodities and equity market from just last month. On Sunday, Jan Hatzius, Goldman’s chief economist, lowered his first-quarter GDP growth forecast to zero from 0.7%.. The economist also sees a 5% contraction in the second quarter, followed by a sharp snapback for the remainder of the year. But unlike equities, which the firm believes will swiftly rebound, oil will likely stay lower for longer.

Oil prices jump as recent sharp falls draw investors - Oil drops 6% breaking below $27 as recession fears, pump war weigh -Oil dropped more than 6% to multi-year lows on Tuesday, and analysts said more declines may follow as the coronavirus pandemic hits demand and Saudi Arabia and Russia battle for market share. Countries including the United States and Canada, along with nations in Europe and Asia, are taking unprecedented steps to contain the virus, curbing demand for crude and products such as gasoline and jet fuel. Brent crude fell 98 cents, or 3.2% to trade at $29.07 per barrel, having earlier touched $31.25. On Monday it sank to $29.45, the lowest since January 2016. U.S. West Texas Intermediate crude reversed all of an earlier 4.7% gain to shed $1.75, or 6.1%, and close at $26.95 per barrel, its lowest level since Feb. 2016. “Unfortunately for the bulls, we believe we have not seen the worst of the price rout yet,” said Bjornar Tonhaguen of Rystad Energy.” “The market will soon come to realize that the it may be facing one of the largest supply surpluses in modern oil market history in April.” U.S. President Donald Trump warned on Monday that the United States may be heading into recession as economic activity across the globe slowed and stock markets tumbled. The United States has said it will take advantage of low oil prices to fill its Strategic Petroleum Reserve (SPR). Other countries and companies are planning similar measures to fill storage tanks.

Oil mixed after slipping to lowest since early 2016 amid coronavirus chaos - Oil prices steadied early on Wednesday after sliding to their lowest in four years, sapped by fears for fuel demand and the global economy amid travel and social lockdowns triggered by the coronavirus epidemic in a number of countries around the world. Brent crude was up 8 cents, or 0.3%, at $28.81 a barrel by 0029 GMT, after falling earlier to $28.40, the lowest since early 2016. The international benchmark fell 4.3% on Tuesday. U.S. crude was down 2 cents at $26.93 a barrel, after falling to as low as $26.20, also the lowest in four years. West Texas Intermediate fell 6% on Tuesday. A fall in U.S. inventories of crude, gasoline and distillates, as reported by an industry group, provided some support to prices, but the demand outlook remains grim amid a price war among major producers. In efforts to support economies, the world’s richest nations prepared to unleash trillions of dollars of spending to lessen the fallout from the coronavirus outbreak, as well as imposing social restrictions not seen since World War Two. Meanwhile, Virgin Australia became the latest airline to shut down its international network with the suspension of all international flights, while Prime Minister Scott Morrison warned that the situation could last six months or more. Elsewhere, Iraq’s oil minister pleaded for an emergency meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to discuss immediate action to help balance the oil market.

Oil prices lowest since 2003 - U.S. oil prices reached their lowest point since 2003 on Wednesday as the coronavirus has reduced demand in countries around the world. The prices fell for a third session, with U.S. crude Clc1 reaching $25.06 per barrel, the lowest prices since late April 2003. As of 11:35 GMT, U.S. crude Clc1 hit $1.51 cents or 5.6 percent at $25.44 per barrel, Reuters reported. The last time the prices were that low, the U.S. had recently invaded Iraq and China was rising in the global economy, sparking an increase in global oil consumption to record levels, Reuters noted. Meanwhile, Brent crude LCOc1 traded down 95 cents at $27.78 a barrel after reaching $27.56, the lowest point since early 2016. “The oil demand collapse from the spreading coronavirus looks increasingly sharp,” Goldman Sachs said in a note obtained by Reuters. Goldman Sachs projected in the note that Brent crude would decrease to as much as $20 in the second quarter, which the prices have not seen since early 2002. The bank predicted that the global demand would decrease 8 million barrels per day by late March and 1.1 million per day annually, which would be a new record, according to Reuters. Consultant firm Rystad Energy anticipated a drop of 2.8 million barrels per day around the world in 2020. “To put the number into context, last week we projected a decrease of just 600,000 barrels,” Rystad said, according to Reuters. Iraq’s oil minister is requesting an emergency meeting between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers to take action to stabilize the market. Russia and Saudi Arabia’s battle for market shares has also put additional pressure on the market, Reuters noted. .

Oil Prices Crash, Settle At 18-year Low --- Crude oil prices crashed to their lowest level in about eighteen years on Wednesday as growing worries about an imminent recession due to the coronavirus outbreak raised concerns about global energy demand. A price war between Russia and Saudi Arabia following disagreement about production cuts in the recent concluded OPEC+ meeting is adding to the woes in the oil market. West Texas Intermediate Crude oil futures for April ended down $6.58, or 24%, at $20.37 a barrel, the lowest settlement price since February 2002. The contract fell to a low of $20.06 a barrel in the session. Today's fall is the second biggest single-day drop for crude oil futures, after the about 33% tumble recorded on January 17, 1991. Brent Crude futures were down by about $4.20, or over 14%, when the contract fell to a low of $24.53 in the session. On Tuesday, WTI Crude oil futures for April ended down $1.75, or about 6.1%, at $26.95 a barrel, the lowest settlement price since February 2016. Data released by the Energy Information Administration this morning showed oil inventories in the U.S. rose by 1.9 million barrels in the week ended March 13, compared with expectations for a build of about 3.3 million barrels. Gasoline inventories were down by 6.2 million barrels, while distillate stockpilesfell by 2.9 million barrels in the week. The American Petroleum Institute reported on Tueday that crude oil inventories in the U.S. saw a decrease of 421,000 barrels in the week ending March 13. With major economies going into the lockdown mode, concerns about the outlook for energy demand continue to rise by the day. "Demand losses across the complex are now unprecedented," said Jeffrey Currie, Goldman's global head of commodities research in a report. Goldman Sachs sees U.S. West Texas Intermediate crude averaging $20 per barrel in the second quarter with international benchmark Brent crude at $20 per barrel.

An oil price war is here to stay, analysts warn — even as prices tumble to nearly two-decade lows - An oil price war between Saudi Arabia and Russia will most likely accumulate over the course of the year, energy analysts have told CNBC, with no end in sight until 2021 at the earliest. International benchmark Brent crude traded at $26.01 Wednesday, down around 9%, while U.S. West Texas Intermediate (WTI) stood at $22.73, more than 15% lower. Brent fell to its lowest level since September 26, 2003 on Wednesday, while WTI slumped to lows not seen since March 6, 2002. It comes as the coronavirus continues to spread worldwide and amid an ongoing price war between OPEC kingpin Saudi Arabia and non-OPEC leader Russia. Analysts at Eurasia Group believe the price war between Riyadh and Moscow is likely to last throughout 2020. “The Gulf countries see Moscow as an important power that can play a broader security role in the region over the long term. The relationship between Mohammad bin Salman and President Vladimir Putin probably took a hit but the strategic imperatives have not changed,” analysts at the risk consultancy said in a research note. “Extensive pain from the oil price shock will accumulate over the course of 2020 and create the necessary conditions for negotiations, compromise, and probably a new production restraint agreement,” they added. “Saudi policy will now revolve around inflicting pain on other producers over the short term, but its long term objective is to be the predominant market manager and price setter,” analysts at Eurasia Group said.Aramco plans to increase its output to 12.3 million barrels per day (b/d) from April, with the United Arab Emirates also pledging to raise output from next month. “The Saudis have a potent weapon at their disposal, namely spare production capacity,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note. “As the long-time purveyor of global spare capacity, Saudi Arabia is reopening the oil spigots after having done most of the heavy lifting in curbing supply.” “Put simply, the Saudis are in for the long haul,” Brennock said.

Oil jumps 13%, rebounding from Wednesday’s steep losses - Oil prices rose more than 10% on Thursday after a three-day sell off drove them to their lowest levels in almost two decades as demand plummeted due to the coronavirus and supplies surged in a fight for market share between Russia and Saudi Arabia. Benchmark Brent, which has lost half its value in less than two weeks, was offered some respite as investors across financial markets assessed the impact of massive central bank stimulus. Brent crude jumped $1.29, or 5.1%, to $26.16 per barrel, after plunging to $24.52 on Wednesday, its lowest level since 2003. U.S. crude gained $2.63, or 12.9%, to trade at $23.00 per barrel, after dropping nearly 25% in the previous session to an 18-year low. But analysts said gains were likely to be temporary, as tumbling demand due to the coronavirus outbreak was compounded by the collapse this month of a deal on supply curbs between OPEC and other producers. Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, which kicked off a price war with Russia that sent prices into tailspin, is planning to keep pumping at a record rate of 12.3 million barrels per day (bpd) for months. “From April 1, about 4 million bpd could flood the markets, potentially pushing down crude oil prices into the teens,” Jefferies said in a note. “Unless somebody intervenes, no oil producer benefits from the current environment.” U.S. senators on Wednesday upped the pressure on Saudi Arabia and Russia to stop the price war and held talks with the kingdom’s envoy to Washington. They urged President Donald Trump to impose an embargo on oil from the two countries. But analysts have still been slashing growth forecasts for China, where the disease erupted, to the lowest levels in decades. Meanwhile, the spread of the virus elsewhere is showing no sign of abating, with governments resorting to lockdowns in a bid to contain the disease, hammering economies and raising prospects for a global recession.

Oil Soars 24% In Biggest One-Day Surge On Record - One day after oil crashed by a near record 25%, a move which made some sense in light of the historic dollar short squeeze and surge to all time highs in the Bloomberg dollar index, today oil has rebounded violently, and after rising as much as 26%, WTI settled up $4.85 at $25.22, or 23.81% higher...... its biggest one day move on record!There was no actual catalyst, although some oil traders cited a rogue rumor that emerged just before the big spike according to which "Putin has instructed Novak to engage the #Saudis to resume #OPEC+ supply cuts."#Oil prices are green again. Why?  Rumors #Putin has instructed Novak to engage the #Saudis to resume #OPEC+ supply cuts.  DoE announced tender for 30 million barrels #SPR stocks. All from small & mid sized #American producers.#OOTT pic.twitter.com/29N3oU0kF3
However, that was merely a regurgitation of a rumor that hit one day earlier.Remarkably, today's record surge took place even as the dollar index continued to soar, suggesting the move was most likely a counter-trend short squeeze. That said, putting the move in context, despite today's record surge, oil is still down 17% for the week.

Oil rallies, with U.S. prices scoring their biggest daily percentage climb on record - Oil prices bounced off their lowest levels in 20 years on Thursday, with U.S. prices scoring their largest one-day percentage climb on record,Investors absorbed news of a plethora of central bank and government support measures to combat the economic fallout from the coronavirus pandemic, Russia indicated it would like to see higher prices, and the Trump administration reportedly said it may intervene in oil-price war between Saudi Arabia and Russia.Thursday’s climb for oil is “more symbolic of the volatility that should continue to rattle global markets, rather than a clear signal that prices are ready for a sustained rebound of recent lows,” said Robbie Fraser, senior commodity analyst at Schneider Electric.  The front-month April West Texas Intermediate crude contract, the U.S. benchmark, rose $4.85, or 23.8%, to settle at $25.22 a barrel. That was the largest one-day, front-month percentage climb on record based on data going back to March 1983, according to Dow Jones Market Data.On Wednesday, the WTI contract plunged more than 24%, to settle at $20.37 a barrel on the New York Mercantile Exchange, for the lowest finish since Feb. 20, 2002. Adjusted for inflation, oil traded around the lowest level since March 1999, according to Dow Jones Market Data.Global benchmark May Brent crude rose $3.59, or 14.4%, to $28.47 a barrel. On Wednesday, the contract fell $3.85, or over 13%, to finish at $24.88 a barrel on ICE Futures Europe, for its lowest settlement since May 8, 2003.The move for oil “comes as central banks around the world continue to offer major supportive measures to global financial markets, albeit with sometimes limited initial market reaction,” said Fraser.The Federal Reserve late Wednesday announced more moves to stabilize U.S. financial markets rocked by the sudden pullback of economic activity stemming from the deadly coronavirus outbreak. The Fed widened support to include money market mutual funds.

Oil price scores largest one-day percentage increase in the traded oil price in NYMEX history - Oil futures rallied Thursday, with U.S. prices up nearly 24%, to score their largest one-day percentage climb on record. Some of the increase could be traced to remarks by President Donald Trump that he might intervene in the Russian-Saudi production dispute, if it continues unabated. April West Texas Intermediate oil rose $4.85, or 23.8%, to settle $25.22/bbl on the New York Mercantile Exchange. That was the largest daily front-month contract percentage climb on record, based on data going back to March 1983, according to Dow Jones Market Data. WTI prices had settled Wednesday at their lowest rate, in constant dollars, since the Asian Financial Crisis of the late 1990s.Other energy prices continued their Thursday surge, in tune with the rebound in domestic WTI oil prices. The global benchmark Brent crude contract advanced $3.99 to $28.87/bbl. Natural gas futures were 4 cents higher, at $1.60 per 1 million BTU.Meanwhile, HighPoint Resources (HPR) jumped out to a more than 16% gain after the oil and gas producer Thursday said it was shelving all new drilling and completion activities following the recent plunge in crude oil prices. Highpoint has completed all of its existing wells and said that the moratorium on new drilling will not affect production volumes for the first half of 2020.Regarding another factor bolstering prices, the U.S. Department of Energy said on Thursday that it will buy up to 30 MMbbl of crude o il for the Strategic Petroleum Reserve by the end of June. This will be a first step in fulfilling President Trump’s directive to fill the emergency stockpile, to help domestic crude producers.

Crude oil spikes in best day ever – here's what could come next - Crude oil just had its best day ever, only a day after its third-worst drop in history. West Texas Intermediate jumped more than 23% to $25.22 a barrel on Thursday. However, it remains on track for its worst monthly decline on record as a supply glut and demand concerns keep oil investors on edge. Jeff Currie, global head of commodities research at Goldman Sachs, says selling across commodities has been indiscriminate. “I think we have more downside. When we look at the demand losses, they’re unprecedented — not only in oil but the entire commodity complex, and particularly those commodities that are more leveraged to this whole idea of self-isolation. Not only is oil down because we’re not moving around, but also things like beef that are leveraged to restaurant demand, they’re down. ... There’s another dynamic at play here that’s really became more important in commodities in the last, I would say, two to three days, which are liquidity constraints. And if you look at gold, a lot of people ask why is gold going down right now. One of the key reasons why gold is going down is because people are selling assets to raise cash. Paul Sankey, oil analyst at Mizuho, sees more trouble ahead for oil prices unless excess output is reined in. “It’s simply a question of when you don’t have enough available inventory capacity to offtake and that then the physical reality of oil, and having to deal with the sort of black viscous liquid that you need to put somewhere could conceivably take prices negative, particularly at the extremes of the chain, for example in Canada or maybe in North Dakota where you’re further away from markets. ... In my role as an analyst we’ve been trying to put pressure on Saudi, to be honest, because I think that adding oil in this market isn’t really what’s needed, to say the least. And that may recover things so we’ve been doing some fairly doomsday-type scenarios of what Q2 looks like if Saudi keeps pumping and if we continue to have a rolling shutdown of the United States of America, which is the biggest oil market in the world. At that point, you get to very low prices.” Harold Hamm, founder of Continental Resources, says he has faith in the federal agencies tasked with stabilizing markets. “The good thing about this situation as we just talked about is that we have an agency that is charged with protecting American interests such as this. So, that’s a good thing we have a Secretary of Commerce that understands and can deal with this quickly. And we talk with him. Obviously, with the Armed Services Committee moving forward to take charge here, and also the Commerce Committee and the Senate, they can move very, very quickly and stop this situation has been imposed on us.”

Oil Prices Resume Plunge Amid Wall Street Meltdown - After steadying somewhat Thursday, world oil prices resumed their plunge Friday and dismissed the massive stimulus package announced by the European Union and President Donald Trump's hint he might intervene in the raging price war between Saudi Arabia and Russia.Oil prices plummeted 11% Friday, completely erasing early gains Thursday that saw the benchmark Brent crude oil climbing briefly above $30 a barrel. Now, Brent crude futures fell $1.49 or 5.2%, to settle at $26.98 per barrel. U.S. crude futures for April fell $2.79, or 11.06%, to settle at $22.43 per barrel.On Friday morning, WTI (U.S. crude) rose 2.97% to $26.62, while Brent Crude was up 3.40% on the day at $31.25. But by 11:00 a.m., WTI had sunk to $25.02, with Brent falling to $30.13. Thursday's price climb, however, was WTI's single best day on record but isn't receiving universal approval."The outsized gains by WTI reflect the hope and not the reality of the U.S. shale industry," said Jeffrey Halley, senior market analyst at OANDA. "Once this reality finally sets in, I expect the rally in oil to disappear as quickly as it began."WTI and Brent both collapsed about 40% over the past two weeks since the breakdown of talks between the Organization of the Petroleum Exporting Countries (OPEC) and its 10 allies, including Russia. Saudi Arabia boosted production, and has kept boosting production, leading to the ruinous price was that now has some analysts speculating about $5 oil. The immediate result of the Saudi's price was, which it launched to punish Russia, was $20 oil. Analysts affirm oil prices are set for a weekly drop of more than 10% for the fourth weekly decline in a row. Worse is to come. Amid this unprecedented oil demand destruction, Saudi Arabia, the United Arab Emirates (UAE), and Russia intend to flood the market with up to a combined 4 million bpd in April when demand will be at its weakest due to the fast spread of COVID-19 in the U.S.

Oil falls 11%, on track for worst month on record - Oil dropped 11% on Friday, giving back early gains, even as the world’s richest nations poured unprecedented aid into the global economy to stop a coronavirus-driven recession and U.S. U.S. crude futures for April fell $2.79, or 11.06%, to settle at $22.43 per barrel. Brent crude futures fell $1.49 or 5.2%, to settle at $26.98 per barrel. Thursday was WTI’s single best day on record. “The outsized gains by WTI (U.S. crude) reflect the hope and not the reality of the U.S. shale industry,” said Jeffrey Halley, senior market analyst at OANDA. “Once this reality finally sets in, I expect the rally in oil to disappear as quickly as it began.” As the spread of the coronavirus brings much of the world to a halt, nations have poured increasing stimulus into their economies while central banks have flooded markets with cheap dollars to ease funding strains. “Positive risk sentiment and a weaker U.S. dollar are helping crude on Friday. Also, comments from U.S. president Trump that he might get involved in the oil (price) war at an appropriate time is supporting oil,” said UBS oil analyst Giovanni Staunovo. “My concern relates to the likelihood of more mobility restrictions around the globe, which is likely to weigh further on oil demand. Hence, the worst is probably not over for oil prices.” U.S. crude and Brent have both collapsed about 40% in the past two weeks since the breakdown of talks between the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, leading Saudi Arabia to ramp up supply. Trump said on Thursday that he would act on the price war at the appropriate time, saying low gasoline prices were good for U.S. consumers even though they are hurting the industry. Despite the rise of oil prices on Thursday and Friday, Brent was still on track for a weekly loss of more than 10%, its fourth consecutive weekly decline.

Oil Suffers Biggest Weekly Loss Since 1991 With Demand in Focus - Oil capped its biggest weekly decline in almost three decades as concern that the collapse of global fuel demand will deepen outweighed talks between OPEC and Texas’s energy regulator. Futures in New York tumbled 11% Friday, bringing the week’s plunge to 29%, the biggest since January 1991. Some traders see demand shrinking as much as 10 to 20 million barrels a day as drivers stay home and flights are grounded across the world. Two of the three commissioners at Texas’s oil agency are skeptical of a plan currently being weighed to curtail crude production in the state in an effort to balance global supply with demand and stabilize prices. “The uncertainty of what will happen is still an overhang and destabilizing markets,” said Ryan Fitzmaurice, commodities strategist at Rabobank. “A deal between Texas and OPEC would have been unthinkable a few weeks ago.” “With other governments manipulating oil markets, it’s fair to ask: Why shouldn’t our government step in to try to reinstate a more market-based approach?” Sitton said in a Bloomberg Opinion column. “It would stave off a total oil industry meltdown.” The plan comes as the nearest timespread for the U.S. benchmark indicated its deepest oversupply since 2016. The American shale industry has found itself caught in the middle of the fight between Saudi Arabia and Russia. The sector has so far scaled back operations and is also threatened with a wave of bankruptcies. West Texas Intermediate for April delivery, which expires Friday, fell $2.79 to settle at $22.43 a barrel in New York. The more active May contract slid $3.28 to $22.63 a barrel.Brent for May settlement fell $1.49 to settle at $26.98 a barrel on the ICE Futures Europe exchange.

OPEC and IEA warn developing countries could lose up to 85% of oil and gas income this year - Developing countries’ oil and gas income could fall to their lowest levels in more than two decades if current energy market conditions persist, the IEA and OPEC have warned in a rare joint statement. IEA Executive Director Fatih Birol and OPEC Secretary General Mohammed Barkindo expressed “deep concerns” about the coronavirus pandemic on Monday, warning it could have “potentially far-reaching economic and social consequences.” Birol and Barkindo said they expect developing countries to see their oil and gas income fall by 50% to 85% in 2020. They singled out public sector spending in vital areas such as health care and education as being especially vulnerable. International benchmark Brent crude traded at $29.91 Tuesday morning, down around 0.7%, while U.S. West Texas Intermediate (WTI) stood at $28.98, more than 1% higher. Oil prices slid 10% in the previous session, as the coronavirus continues to spread worldwide and amid an ongoing price war between OPEC kingpin Saudi Arabia and non-OPEC leader Russia. On Monday, Saudi Arabia’s state-owned oil giant Saudi Aramco said it would likely continue with a planned oil production hike from April into May, reportedly suggesting it was “very comfortable” with an oil price of $30 a barrel. Russia, which refused to sign up to OPEC’s proposal of deeper production cuts earlier this month, has claimed it can withstand lower oil prices for as long as a decade. OPEC’s Barkindo and the IEA’s Birol did not address Russia specifically in their joint statement, but both “underscored the importance of market stability, as the impacts of extreme volatility are felt by producers.” They agreed to “remain in close contact on the matter” and continue their regular consultations on oil market developments.

Why Saudi Arabia's Oil Price War Is Doomed To Fail - Oil price wars rarely achieve their objectives. Saudi Arabia and Russia racing to out-pump each other is unlikely to be any different.Instead of declaring a victory in seizing market share back from their common rivals in the form of US shale, the main protagonists in Moscow and Riyadh are more likely to cause long-lasting damage to petrodollar economies already under pressure from demand destruction caused by climate change action and the onslaught on the global financial system from the coronavirus pandemic. The effective collapse of the OPEC+ coalition when the group and its allies failed to agree on an additional 1.5 million b/d of cuts on March 6 has triggered a 30% collapse in prices, with no floor in sight. Brent crude is now below $30/b and test levels last seen back in 2004. Some industry veterans even fear prices could plummet further to historic lows.Abdullah bin Hamad al-Attiyah, Qatar’s former oil minister and OPEC president, fears markets are entering virtually uncharted territory.“I saw the first shock and the first collapse and this is worse,” said the former OPEC grandee in an interview from Doha with S&P Global Platts on March 9.“My expectation is for oil to fall below $20/b. We have seen it before.”  Al-Attiyah was referring to the time when former Saudi oil minister Zaki Yamani, under pressure from the kingdom’s late ruler King Fahd, launched the OPEC cartel into a price war with ascendant North Sea producers. The strategy saw crude fall to $10/b and Yamani losing his job. Within a year, Saudi Arabia was forced into an ignominious reversal in tactics in a desperate attempt to boost prices.Al-Attiyah sees echoes of the crisis playing out in today’s market between Russia and the kingdom.“I was there when OPEC had its emergency meeting in 1985 and Sheikh Yamani said open full production and the North Sea producer will come begging to Vienna,” said Al-Attiyah.“They never came and it took us 15 years to properly recover. We have to learn.” Despite the best efforts of Saudi Arabia, OPEC and fluctuating prices, North Sea producers have proved remarkably resilient. Better technology and efficiency means the offshore basin continues to play an important role in the market. Although the best days are over, its resilience was underscored recently by the start of the giant 450,000 b/d Johan Sverdrup field.

Trump eyes intervention in Saudi-Russia oil dispute -  President Trump said Thursday he's eyeing intervention in the oil price war between Russia and Saudi Arabia, a dispute that combined with COVID-19's economic toll is pushing prices sharply downward and creating financial jeopardy for U.S. producers.  The pledge came in Trump's first extensive comments on the upended oil market, but he also suggested that he has mixed feelings about the price collapse.   Trump, at a White House briefing on the COVID-19 response, said low gas prices were helpful to consumers. But he also said the decline "hurts a great industry and very powerful industry."   "We're trying to find some kind of medium ground," the president said.  Prices for West Texas Intermediate, the U.S. benchmark, rose into the $25-per-barrel range Thursday, since dropping Wednesday to about $20, an 18-year low. However, it's still far below the roughly $63 range where prices were at the beginning of the year. Early this month, the production-limiting agreement between OPEC and Russia collapsed, prompting Saudi Arabia to announce lower prices and plans to increase supplies. Trump did not say what form the U.S. involvement could take. But the Wall Street Journal reported Thursday that the U.S. could ask Saudi Arabia to revisit plans to hike output via communications through the State Department and National Security Council. The story, citing an unnamed administration official, said the U.S. is weighing potential sanctions against Russia. Separately, the Energy Department on Thursday announced a solicitation to buy an initial 30 million barrels of oil for the Strategic Petroleum Reserve, part of a wider plan to fill the stockpile. However, the plan requires congressional approval.

Saudi Arabia announces $32 billion in emergency funds to mitigate oil, coronavirus impact - Saudi Arabia’s government unveiled stimulus measures amounting to 120 Saudi billion riyals ($32 billion) on Friday to support an economy hit by the double blow of the coronavirus crisis and dramatically lower oil prices. The sum includes Riyadh’s 50 billion riyals package announced last week to support small and medium-sized businesses. Friday’s announcement introduces a further 70 billion riyals to aid businesses, including the postponement of tax payments and exemptions of various government levies and fees. Earlier this week, the kingdom cut its 2020 budget by almost 5%, a step that many economists predict will be the first of a series of cutbacks and potentially even austerity measures to keep its finances intact amid oil prices plunging by nearly 60% year-to-date. The relief measures in the new stimulus package include exemptions on expat levies, postponing some private sector fee payments to the government, and postponing the collection of customs duties on imports. It also allows employers to extend exit and re-entry visas free of charge for three months and enables businesses to postpone paying value-added tax, income tax and other levies for the next three months. “Some budget appropriations will be reviewed and reallocated to the sectors most in need in the current situation, including allocating additional funds to the health sector as needed,” the statement quoted Finance Minister Mohammed al-Jadaan as saying. “An emergency budget was also introduced to cover any costs that may arise during the developments of this global crisis.” Saudi Arabia has taken sweeping measures to stem the spread of the coronavirus, including suspending numerous flight routes and temporarily halting entries for religious pilgrims coming to the kingdom for Hajj, a journey taken by some two million Muslims annually.

US On Brink Of War In Iraq - "Self Defense" Strikes Against Iranian Proxies On Table: Pompeo  -What a time for war to be brewing in the Middle East yet again: Washington warned Iraq's government on Monday it is ready to act “self-defense” if American forces come under attack. This follows last week's rocket attacks on Taji base just north of Baghdad, which houses US troops. At least two Americans have been killed in the recent attacks, blamed on Iran-backed militias, especially Kataib Hezbollah.Pompeo told Iraqi PM Adil Abd al-Mahdi in a phone call that Baghdad “must defend Coalition personnel supporting the Iraqi government's efforts to defeat ISIS,” according to a Monday State Dept. press release.Those “responsible for the attacks must be held accountable,” the statement warned. The US “will not tolerate attacks and threats to American lives” and will take “military action as necessary in self-defense,” it added.  Defense Secretary Mark Esper said last week "all options" remain on the table, and that President Trump had authorized a military response. An initial Pentagon response did come last Thursday in the form of broad airstrikes across southern Iraq, targeting at least 5 Kataib Hezbollah military sites. Iraq was prompt to condemn the US strikes which left at least 6 dead, most Iraqi national military personnel, as well as one civilian. Meanwhile, Iraq’s Foreign Ministry says it will submit a formal complaint to the UN Security Council condemning the repeat US violations of Iraqi sovereignty.  "Iraq will complain to the United Nations and the Security Council about overnight U.S. air strikes, a spokesman for the foreign ministry said on Friday," Reuters reports. "The Iraqi military said earlier on Friday that the air strikes had killed six people and described them as a violation of sovereignty."

Yemen reiterates warning against possible catastrophic ‘Safer’ Explosion - The Yemeni government has reiterated its warnings against possible disastrous consequences of the explosion or spill at Safer offshore oil platform, which floats off Hodeidah’s northern Red Sea coast. Information Minister Muammar al-Eryani has listed in a series of tweets the most disastrous consequences. “We renew our warning against the threats posed by Iran's mercenaries (Houthi militias) who continue to prevent the United Nations panel of experts from inspecting and maintaining Safer oil tanker.” Any explosion at Safer will cause a catastrophic oil spill with irreversible environmental damage. Eryani explained that in case of a leak due to the corrosion of the oil tanker, technical reports indicate the estimation of 138 million liters of crude oil spill in the Red Sea. He pointed out that this would be four times worse than the 1989 Exxon Valdez oil spill disaster in Alaska, stressing that the region still did not fully recover after almost 30 years from the incident. He also noted that the tanker’s explosion would lead to closing Hodeidah port for several months, which would cause shortages in fuel and needs, as well as a rise in fuel prices by 800 percent and the doubling of the prices of goods and food. “Such an explosion will cost Yemeni economic fishing stocks $60 million a year or $1.5 billion over the next 25 years.” Eryani said the possibility of the oil tanker’s burning would affect three million people in Hodeidah. He added that 500,000 people who work in the fishing sector will need food aid, while fish stocks may take 25 years to recover.

Arab countries urge UN to inspect decaying oil tanker off Yemen - Several Arab countries have called on the UN to pressure Yemen's Houthi rebels into allowing the world body to inspect a decaying oil tanker moored off the country's coast, warning that it may explode and cause "widespread environmental damage" to the Red Sea region. The Safer oil tanker has been docked 60km (37 miles) north of Yemen's port city of Hodeidah since the late 1980s, but has not been in use since the Houthis seized the region in 2015. Amid a lack of maintenance and breakdown of crude inside the vessel, the UN has repeatedly warned that there is a risk of a chemical explosion. In August, when a UN team attempted to access the tanker, the rebels blocked them, demanding revenue from the sale of oil aboard the vessel as a precondition for the inspection. The Safer may hold as many as 1.1 million barrels of oil, which could be worth more than $60m. In a letter sent to the UN Security Council on Thursday, the UN ambassadors for Yemen's exiled government, Saudi Arabia, Djibouti, Egypt, Jordan and Sudan warned that a leak or explosion could be "four times worse" than the Exxon Valdez oil spill in 1989 in Alaska. The countries said that an explosion would not only bring more hardships to three million people in Yemen's Hodeidah, but 40 percent of nearby agricultural land would be "covered with black clouds, which would result in the elimination of grains, fruits, and vegetables". "It could increase fuel prices by 800 percent and double the price of food and goods, resulting in more economic challenges for the people of Yemen," the letter read. Yemen's internationally recognised government has been fighting the Houthi movement since 2015, when the rebels took over the country's capital Sanaa. The ongoing war has devastated Yemen, with about 80 percent of the population - 24 million people - requiring some form of humanitarian or protective assistance, according to UNOCHA. Saudi Arabia and its allies, including the United Arab Emirates, have been major backers of the ousted Yemeni government. The government's coalition has accused Iran of arming its Houthi rivals, a charge both Tehran and the rebels deny.

Abu Dhabi acts to cushion the blow of coronavirus on UAE companies - Abu Dhabi is putting its development plans “on steroids” despite low oil prices and the global coronavirus outbreak, according to the chairman of the city’s department of economic development. “One of the most important things is that Abu Dhabi as a government is continuing developing its capital investments ... which was planned for 2020,” Mohammed Ali al-Shorafa told CNBC’s “Capital Connection” on Thursday. “Abu Dhabi has the resources, even at these levels of crude oil prices, to continue with its planned progression,” he said. That may include fiscal reform, monetary policy initiatives and new projects. “We haven’t moved away from the plans, we’re actually putting these plans on steroids,” he added. His comments come as economies around the world grapple with the ongoing health crisis that has sickened more than 207,000 people and killed at least 8,600. The United Arab Emirates has close to 100 confirmed cases, and on Thursday implemented stringent restrictions that bar even residency visa holders who are abroad from entering the country for two weeks.