Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Oil Prices Lower On Market Turmoil

By Phil FlynnCommoditiesSep 21, 2020 09:34AM ET
www.investing.com/analysis/energy-report-turmoil-200538301
Oil Prices Lower On Market Turmoil
By Phil Flynn   |  Sep 21, 2020 09:34AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Oil prices are lower on turmoil, whether it be from mother nature or politics. Fears of more COVID 19 shutdowns weigh on prices and fears that increasing political divides after the death of Supreme Court Justice Ruth Bader Ginsburg reduces the odds that the US will get much-needed coronavirus relief.

The UK and France are imposing more COVID restrictions and that is offsetting news about improving European traffic. Bloomberg News reports that road traffic in Europe and China is still rising but stagnating in the U.S..

Even mother nature is creating problems for oil. Fox News reports:

“Tropical Storm Beta, in an incredibly busy 2020 Atlantic hurricane season, is crawling off the coast of Texas and Louisiana and threatens to bring flash flooding to areas still impacted by Hurricane Laura. Beta could bring up to 20 inches of rain to some states over the next several days. It’s to make landfall along Texas’ central or upper Gulf Coast late Monday night.”

There also is the return of Libyan oil weighing on crude oil prices. It appears a deal made will allow the state oil production that at first will be about 90,000 barrel a day, and rise quickly to 220,000 barrel a day. Reports say that a tanker is heading to Libya’s Marsa el Hariga terminal as NOC announces partial force majeure lifting – ship tracking. Of course, one must keep in mind that previous deals to restart Libyan oil production and exports have fallen apart.

The short-term demand hit is causing many companies in energy to make rash decisions. A growing belief in “peak demand” is driving energy companies to reduce cap X. Both BP (NYSE:BP) and Royal Dutch Shell (NYSE:RDSa) are predicting “Peak Demand.”

Reuters reports that:

”Royal Dutch Shell is looking to slash up to 40% off the cost of producing oil and gas in a primary drive to save cash to overhaul its business and focus more on renewable energy and power markets, sources told Reuters. Shell’s new cost-cutting review, known internally as Project Reshape and expected to be completed this year, will affect its three main divisions. Any savings will come on top of a $4 billion target set in the wake of the COVID-19 crisis. Reducing costs is vital for Shell’s plans to move into the power sector and renewables, where margins are relatively low. Competition is also likely to intensify with utilities, and rival oil firms, including BP and Total, all battling market share as economies worldwide go green. “We had a great model but is it right for the future? There will be differences, this is not just about structure but culture and about the type of company we want to be,” said a senior Shell source, who declined to be named. Last year, Shell’s overall operating costs came to $38 billion, and capital spending totaled $24 billion. Shell explores ways to reduce spending on oil and gas production, its largest division known as upstream, by 30% to 40% through cuts in operating costs and capital spending on new projects. Two sources involved with the review told Reuters.”

BP predicts that global oil demand will peak in the next ten years in its 2020 Energy Outlook. A new report looks at possible developments in global energy to 2050: As the world moves towards a lower carbon, the global energy system fundamentally ‎restructures, becoming more diverse, driven by customer needs, with increased ‎competition between fuels.‎ Energy consumption shifts away from fossil fuels, and renewables increase as the ‎world continues to electrify. ‎Decisive policy measures, such as significant increases in carbon prices, are needed to ‎deliver a lasting reduction in emissions from energy use.‎

Natural gas is taking a demand hit. Andy Weisman at EBW analytics says natural gas posted gains early last week, then came under intense downward pressure due to: (i) a steep decline in cash demand, with Henry Hub falling to $1.565 Friday, (ii) uncertainty regarding the restart of Cameron, and (iii) a much higher-than-expected EIA-reported 89-Bcf weekly injection. With weather-driven demand near its lowest point this fall and concerns regarding a storage availability squeeze growing, the October natural gas contract is likely to retest support near $2.00. With power about to be restored at Cameron, though, the market could bottom out soon.

Oil Prices Lower On Market Turmoil
 

Related Articles

Anna Coulling
Bullish Momentum For Oil Continues By Anna Coulling - Oct 18, 2021 4

As expected, oil has continued its longer-term bullish sentiment and is now moving firmly towards the $85-per-barrel price target, which I highlighted some time ago as the initial...

Oil Prices Lower On Market Turmoil

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email