Tag: covid-19

Driving Away Investors

E&P companies have driven away investors in the energy sector by not delivering returns amongst a global pursuit for decarbonization. While investor disenchantment within the United States oil industry isn’t new, it appears to have worsened with the COVID-19 market environment. From 2015 to 2016 at the start of the “lower-for-longer” downturn, the market seemed optimistic about the industry. By 2020, the double impact of the global pandemic and the Russia/Saudi price war seems to have led many investors to avoid oil stocks and as they start seeking new opportunities. Moving forward into 2021 and 2022, capital will be difficult to source until investors feel comfortable that the industry can develop resources without squandering their money again.

Post-COVID Global Oil Demand Update – EOY 2020 & the Impact of Second-Wave Shutdowns

Data shows world crude oil demand in the first quarter of 2020 declined by the largest volume in history – even exceeding declines during the 2009 financial crisis. As economic recovery resumes, the demand for hydrocarbons will begin to rise and will quickly surpass pre-pandemic levels. While the timeline has been delayed as a result of a second wave of lockdowns and sustained travel restrictions, people around the world will still need plastics for their daily activities, roads and vehicles to travel from place to place, goods and services created and shipped with hydrocarbons, and other consumables derived from crude oil. While initial recovery estimates by RARE PETRO, the IEA, and EIA have changed, hydrocarbon demand will still eventually recover to pre-pandemic levels for several reasons.

Opinion Piece: Fearing The Second Wave

covid-19

A second wave of the coronavirus pandemic is tearing its way through Europe and there is no question whether or not the rest of the world will eventually follow. The surge in coronavirus cases in many major developed oil-consuming economies has rekindled fears that oil demand recovery is again off track, and market balancing is still further away. Luckily, those fears are misplaced as a second wave of shutdowns may not take as large of a dent out of global demand as individuals have begun to resume their day to day lives. Therefore, global oil demand recovery will not be derailed as fear of the virus is likely not going to keep people locked up anymore.

Setbacks in Solar Energy from COVID-19

The extraordinary growth in solar energy has been stopped in its tracks as a result of the global pandemic. Many new projects that would have made 2020 the largest growth year for the sector to date have been put on hold for the foreseeable future. Luckily, the stalled growth of the solar sector is just that – projects have simply been put on hold. As the world transitions to a new post-pandemic society, growth in solar power generation will resume its upward trajectory. While two decades of growth in the solar energy sector has been stunted by the coronavirus pandemic, the outlook for the future remains positive.

Did the Federal Bailout Simply Delay The Inevitable for Oil and Gas Companies?

At the end of March during the peak of the pandemic, the Federal Reserve was authorized to buy tens of billions of dollars in corporate bonds from the energy industry. These actions, paired with those taken by the Federal Government to save the oil and gas industry, were met with harsh criticism because the industry was struggling long before the global pandemic and seemed to simply be delaying the inevitable.

Commodity Supply Balance: How Production Cuts have Caused Bullish Sentiment on Commodity Markets

The dual black swan events of the COVID-19 pandemic and oil price war have created a unique analytical opportunity within petroleum products. As oil prices crashed, natural gas prices have largely remained unchanged due to the markets in which the commodities are used. Transportation which is the main use of oil has almost entirely stopped, whereas electricity generation and heating, the destination for most natural gases has remained similar to pre-2020 levels. Such modifications to consumption caused markets to go haywire and commodity prices to crash. With crude production cuts now occurring at a faster pace than anticipated and states lifting restrictions, supply and demand dynamics for liquids compared to natural gas has changed since April. As the United States begins returning to normal, an update to these commodity market assumptions is in order.

Natural Gas Rebound Poised for Recovery Before Crude Oil: Why the Market has Priced Electricity and Liquid Fuel Demand into Commodity Prices

The dual black swan events of the COVID-19 pandemic and oil price war have created a unique analytical opportunity within petroleum products as the strip price for natural gas is showing larger percentage increases than crude or NGLs because the market is pricing in the assumption that continued electricity demand will not fall as quickly as the oversupply of natural gas.

Back to the Future

Action must be taken in order to bring supply and demand back into balance by imposing production quotas. The Texas Railroad Commission is the only domestic governing body that has the immediate power to prorate production, and thus the only entity that has the power to save this drowning industry.

BREAKING NEWS – End of the Price War?

Oil prices surged this morning as President Trump announced Saudi Arabia and Russia would be cutting back 10 million barrels of production with more potentially on the horizon. As the White House meets with at least seven U.S. energy CEOs on Friday and an emergency OPEC+ meeting in the coming weeks, the news comes as a brief sigh of relief in a time when our industry is struggling to keep its head above water.