Tuesday, July 7, 2020

ENERGY: Oil report for July 7, 2020

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Oil Prices Range Bound As Pipelines Come Under Pressure

By OilPrice.com

- Exports of natural gas from the U.S. to Mexico account for 40 percent of total U.S. gas exports.

- A recent pipeline came online in Mexico, connecting Guadalajara to a long-distance pipeline system running from the U.S. border deep into Southern Mexico.

- Exports were expected to grow substantially this year, but the pandemic has lowered those forecasts.

Market Movers

- Energy Transfer’s (NYSE: ET) Dakota Access LLC filed a motion to stay the court decision to vacate a permit and shut the pipeline down (more below). “We will be immediately pursuing all available legal and administrative processes and are confident that once the law and full record are fully considered Dakota Access Pipeline will not be shut down and that oil will continue to flow,” Energy Transfer said.

- U.S. Department of Energy authorized Pembina’s (NYSE: PBA) Jordan Cove LNG project, which has ridden a regulatory roller coaster for 15 years. But the pipeline and export terminal still needs to obtain state permits in Oregon.

- Hi-Crush (NYSE: HCR) says its lenders agreed to extend the term of a forbearance through July 12. The company has been in default due to its failure to be in compliance with the springing fixed charge coverage ratio financial covenant.







Chart of the Week



A wild 24 hours brought a tidal wave of pipeline news to start the week. Meanwhile, oil prices continue to be range bound, with WTI trading right around $40 per barrel and Brent just a little bit higher. For now, crude appears stuck between worrying Covid-19 news and a weak economy on the one hand, and tightening oil market fundamentals on the other. Analysts are generally more optimistic for next year, with some predicting prices would rise to $66 per barrel.

Dominion scraps Atlantic Coast pipeline. Dominion Energy (NYSE: D) and Duke Energy (NYSE: DUK) canceled the Atlantic Coast pipeline, citing regulatory uncertainty and ballooning costs. The pipeline would have offered a key interconnection from the Marcellus shale to the southeast. The cancellation is a major hit to Marcellus shale drillers and highlights growing investor risk to long-distance pipelines. Dominion was downgraded to Neutral from Outperform by Credit Suisse. Dominion also agreed to sell gas transmission and storage assets to Berkshire Hathaway in a $10 billion deal.

Dakota Access ordered to shut down. A federal judge vacated a permit for the Dakota Access pipeline and ordered it to shut down within 30 days. The decision found that the Army Corps of Engineers violated federal law when approving the project. The 570,000-bpd pipeline has been operational for three years. The pipeline needs to undergo a full environmental review, which could last until next year, at which point it is vulnerable to a potential new president in the White House.

Midwest product prices could rise after DAPL decision. The halting of Dakota Access’ operations could increase the cost of shipping oil to the Midwest. Marathon Petroleum (NYSE: MPC) is the most exposed to the shutdown, according to Tudor Pickering. “There could be a big problem in the Chicago market,” Sandy Fielden, director of oil and products research at Morningstar, told Reuters.

Bakken could suffer. The price of oil at Clearbrook, Minnesota – a marker for Bakken crude – fell on Monday, opening up the widest discount to WTI since May. If Dakota Access shuts down, the Bakken will struggle to rebound.

Saudi Arabia raises oil price to Asia. Saudi Arabia hiked the price of Arab Light to buyers from Asia by $1.20 per barrel, the third consecutive month of price increases, adding further evidence of a tightening market.

Keystone XL can’t continue construction. A third major court decision ruled that TC Energy’s (NYSE: TRP) cannot continue construction on Keystone XL, another decisive setback for pipeline builders. However, the Supreme Court offered a consolation – reinstating the Nationwide Permit 12 permitting program, a fast-tracked authorization by the Army Corps of Engineers. The decision allows dozens of other pipelines around the country to continue to move forward. Keystone XL was the only exception, the Supreme Court said, blocking its construction for now.

IEA: Oil demand unlikely to have peaked. The debate about peak oil demand having already arrived due to the pandemic continues, but the IEA’s Fatih Birol has expressed skepticism.

Eni announces 3.5-billion-euro write down. Italian oil company Eni (NYSE: E) said that it would write down between 3.2 billion and 4.2 billion euros, and it would also assess how it can accelerate its transition to low-carbon energy.

Canadian rig count plunges to record-low. Only 18 rigs were active in Canada as of last week, down more than 100 from the same week a year ago. Some fleets may be permanently idled, according to Reuters.

Shale industry got $2.4 billion in government assistance. The U.S. shale industry received at least $2.4 billion in loans from the Paycheck Protection Program.

Sunrun acquires Vivint in major solar deal. Sunrun (NASDAQ: RUN) announced a $3.2 billion acquisition of Vivint Solar (NYSE: VSLR), which will form a major solar PV provider. The companies are the U.S.’ number one and two largest installers. The combined company would have 500,000 customers. The share prices of both companies surged on the news.

Nearly half of LNG projects face delays. Of the 45 major LNG export projects in pre-construction development, at least 20 are facing delays, according to a new report from Global Energy Monitor.

Battery metals see rising demand. After a downturn, the future looks more bullish for metals used in batteries – nickel, aluminum, copper – as governments accelerate efforts to switch to EVs. The European Union and China in particular are aiming to boost EV demand.

Shell considers moving HQ. Royal Dutch Shell (NYSE: RDS.A) is considering a move from the Netherlands to the UK in order to simplify its governance structure.

Angola resisting OPEC+ pressure. Angola is resisting pressure from OPEC+ to cut deeper, according to Reuters. “Angola is saying they would not compensate for its overproduction in July-September like the rest of the countries but would be able to compensate only in October-December,” said one OPEC source. “We are still trying to convince them.”

Brazilian President Jair Bolsonaro Tests Positive for COVID-19

Brazil's President Jair Bolsonaro adjusts his protective face mask during the inauguration ceremony of the new Communications Minister Fabio Faria (not pictured) at the Planalto Palace, in Brasilia, Brazil June 17, 2020
Reuters - Adriano Machado
By SPUTNIK

On Monday, reports emerged that Brazilian president Jair Bolsonaro had been experiencing COVID-19 symptoms and was awaiting his corona-test results, which were due the next day.

The President of Brazil, Jair Bolsonaro, said that he has tested positive for coronavirus, Globo reported.

The news follows reports that the Brazilian president had been experiencing coronavirus symptoms, including a temperature of 38 degrees Celsius and a blood oxygen level of 96 percent. According to the Globo's earlier report, the 65-year-old politician has informed his supporters that he decided to take the test after he experienced body aches and a fever. Bolsonaro also reportedly claimed that his lungs were "clean" following an x-ray test.

Bolsonaro tested for coronavirus and was awaiting the results on Tuesday, which are now said to have come back positive.

Bolsonaro has been an outspoken critic of lockdown measures, urging state businesses to re-open. At the end of March he reportedly dubbed COVID-19, the disease caused by the coronavirus, a “little flu”.

DETAILS TO FOLLOW

KENYA: Education ministry declares 2020 a dead year

Education Cabinet Secretary George Magoha addresses the media at the Kenya Institute of Curriculum Education (KICD) in Nairobi on May 29, 2020. PHOTO | JEFF ANGOTE | NATION MEDIA GROUP
By DAILY NATION

CS Magoha cancels KCPE, KCSE exams as Covid-19 bites

Education Cabinet Secretary (CS) George Magoha announced Tuesday that national examinations will not take place this year as the Covid-19 pandemic has rendered the school calendar lost.

As such, CS Magoha said, Standard Eight and Form Four students who were to sit the exams this year will do so in 2021.

“Stakeholders have shelved the initial proposal to reopen schools in September for Standard Eight and Form Four candidates,” he said.

The minister also announced that all basic learning institutions will re-open in January next year, as that is when the virus curve is expected to have flattened.

“The Ministry of Education will issue a comprehensive circular on the reopening dates while the Kenya National Examinations Council (Knec) will issue revised examination timetables,” said the CS.

REPEATING CLASSES
Prof Magoha said all students will therefore repeat their classes.

“To ensure learners are engaged, the Ministry of Education will enhance remote learning (online, distance and e-learning) and explore innovative approaches to promote equity,” he said.

The ministry further announced that technical and vocational education and training (Tvet) institutions as well as colleges will re-open in September but only with strict adherence to the Ministry of Health's guidelines for containing the virus.

"Universities will be allowed to re-open if they meet all the requirements set by MoH, and they must be inspected. Members of staff must agree on how they will do a phased reopening,” he said, adding institutions that flout the rules risk closure.

POSSIBLE REVIEW
The CS noted that the decisions apply to all learners, including those in schools offering International curricula.

He added, however, that they will be reviewed if the daily count of Covid-19 cases reduces within 14 days.

“All the decisions that we have made here with stakeholders regarding reopening of learning institutions may change as informed by reports from the Ministry of Health, prevailing circumstances and increasing knowledge on Covid-19,” he said.

Prof Magoha added that face-to-face learning in universities will take place on a case by case basis and in line with compliance with Covid-19 protocols.

“Universities should continue holding virtual learning and graduations for students who have successfully completed their programmes and met graduation requirements set by their respective senates,” he said.

“They should consider phased re-opening to achieve physical and social distancing, especially in halls of residence, lecture rooms and dining halls.”

HUGE RISK
CS Magoha explained that since the infection curve has been rising, parents have expressed strong reservations about sending their children back to school.

Kenya Union of Post Primary Education Teachers (Kuppet) Secretary-General Akelo Misori, Kenya National Union of Teachers (Knut) Secretary-General Wilson Sossion and National Parents Association Chairman Nicholas Maiyo support the decision for learners to remain at home until the virus is contained.

Dr Loice Ombajo, who has been working with the Ministry of Education, said the move will ensure they are safe.

Prof Magoha's announcements came a day after President Uhuru Kenyatta lifted the cessation of movement order that affected counties considered coronavirus hotspots.

The move is considered risky as the daily Covid-19 statistics for the last few days have been alarming. The highest single day count so far is 389 cases,, the figure recorded on July 4.

As at July 6, Kenya had recorded a total of 8,067 confirmed cases of the virus, 164 deaths and 2,414 recoveries.

President Kenyatta also allowed the phased re-opening of places of worship but said only 100 people will attend services that will last only one hour.

The strict rules for the re-opening of places of worship have faced opposition, with some saying the freedom of worship will be stifled.

Local air travel will resume on July 15 under the guidelines of the Health and Transport ministries while international travel will resume on August 1.

Spain’s Coronavirus Antibody Study Suggests Herd Immunity Infeasible

via @PerilofAfrica The results of a study carried out in Spain suggest that so-called herd immunity is not a feasible way of tackling the coronavirus pandemic. Researchers discovered that only 5 percent of the Spanish population had developed antibodies, which is nowhere near the levels needed to develop herd immunity.
http://dlvr.it/Rb78NC

CORONAVIRUS: If you have a job & your company is still operating, be very grateful

Fact Check: Jack Ma never said 2020 is the year of just staying ...

By UNKNOWN AUTHOR

If you have a job & your company is still operating, be very grateful
WHY?
1. Victoria's Secret declared bankruptcy.
2. Zara closed 1,200 stores.
3. La Chapelle withdrew 4391 stores.
4. Chanel is discontinued.
5. Hermes is discontinued.
6. Patek Philippe discontinued production.
7. Rolex discontinued production.
8. The world's luxury industry has crumpled.
9. Nike has a total of $23 billion US dollars preparing for the second stage of layoffs.
10. Gold's gym filed for bankruptcy
11. The founder of AirBnb said that because of pandemic, 12 years of efforts were destroyed in 6 weeks.
12. Even Starbucks also announced to permanently close their 400 stores.
13. WeWork isn't in a great spot either
The list goes on & on
See the US economy landscape :
Nissan Motor Co. may close down in USA
1. Biggest Car Rental company (Hertz) filed for bankruptcy - they also own Thrifty and Dollar
2. Biggest Trucking company (Comcar) filed for bankruptcy - they have 4000 trucks
3. Oldest retail company (JC Penny) filed for bankruptcy - to be acquired by Amazon for pennies
4. Biggest investor in the world (Warren Buffet) lost $50B in the last 2 months
5. Biggest investment company in the world (BlackRock) is signalling disaster in the world economy - they manage over $7 Trillion
6. Biggest mall in America (Mall of America) stopped paying mortgage payments
7. Most reputable airline in the world (Emirates) laying off 30% of its employees
8. US Treasury printing trillions to try to keep the economy on life support
9. Estimated no. of retail stores closing in 2020 - 12,000 to 15,000. The following are big retailers that have announced closing:
- J. Crew
- Gap
- Victoria's Secret
- Bath & Body Works
- Forever 21
- Sears
- Walgreens
- GameStop
- Pier 1 Imports
- Nordstrom
- Papyrus
- Chico's
- Destination Maternity
- Modell's
- A.C. Moore
- Macy's
- Bose
- Art Van Furniture
- Olympia Sports
- K Mart
- Specialty Cafe & Bakery
and many many more

Unemployment claims reached an all-time high of 38+ million - unemployment is over 25% (out of 160 million of work force, close to 40 million are jobless). With no income, consumer demand is falling drastically and the economy will go into a free fall. This is just USA...

Under the weight of the new crown pandemic, many giants are facing the crisis of failure. 5 months of pandemic created a LOT of debt, and tens of thousands of companies went bankrupt. If you have business & your company is still there, and there are no pay cuts or layoffs, pl treat your company & customer well. Humans are facing the pandemic that cannot be controlled. The second half of 2020, is the challenge of corporate strength & relationship

2020 is about survival. Take care of yourself & your loved ones. Be happy with what you have!

Thatcher-Era Tory Ministers Warn of Return to 1980s-Style Mass Unemployment in Wake of Pandemic

via @PerilofAfrica Britain’s economy shrank by a record 20.4 percent in April - the first full month of COVID-19 lockdown, with the country forecast to be heading for the worst recession in more than three centuries amid bleak figures cited by the Office for National Statistics (ONS) regarding the state of the labour market.
http://dlvr.it/Rb75sF

Colleges Brace for Sharp Drop in Chinese Students

via @PerilOfAfrica U.S. colleges are bracing for a devastating drop in international students this fall, especially ones from China, where many U.S.-bound students are now postponing plans—and even rethinking the value of an American degree.
http://dlvr.it/Rb71Mh