Oil Market Outlook: Energy Majors Report; Production Cut Talks, Round 3
Matthew Weller | Apr 19, 2020 12:22AM ET
As the lockdown in the U.S. continues to inflict damage not only to businesses, the job market, but also the sanity of all involved, the blueprint for reopening of the country provided by the White House this past week provides a proverbial “light at the end of the tunnel” for U.S. citizens on lockdown. The blueprint allows for a reopening in stages that will depend on clear signs that the pandemic is being contained and as dates are not carved in stone, it will be down to each individual governor to decide if their state has met the criteria.
The pressure to reopen sooner rather than later will be enormous given that more than 20 million jobs have been lost over the last four weeks. The coming week is likely to see some governors making use of the blueprint to allow a gradual return to work and a tentative restart of businesses.
The oil industry’s corporate reporting season got under way this week with Schlumberger (NYSE:SLB). As an oil services provider, Schlumberger is active in projects operated by most oil majors across the globe and can be used as a good proxy for where the oil industry is at in terms of extraction, projects that are still coming on line, and comparison of how different regions are reacting to the coronavirus. The company reported a 9% quarterly decline in revenue and a 5% decline on the year, which under the circumstances can be read as a good result given the worldwide grip of the virus.
Oil services firms Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BKR) will release their results on Monday and Wednesday, respectively, and their assessment of global drilling activity will show by how much drilling and extraction of oil has shrunk and which regions have been the worst hit.
The results from oil majors will be all crammed into the last week of April with earnings from Total (NYSE:TOT), Royal Dutch Shell (NYSE:RDSa), BP (NYSE:BP), ConocoPhillips (NYSE:COP), Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and China’s CNOOC (NYSE:CEO) and Sinopec (NYSE:SHI) all pouring in within days of one another.
While we know what kind of production cuts are planned by OPEC and Russia, at least in theory, there is no unified information on what U.S. and Canadian producers are planning. Earnings reports will be an opportunity to see by how much majors have cut their output and how much demand damage they expect over the coming months, particularly from badly hit industries such as airlines.
h3 Russia + OPEC Cuts: Round 3/h3
Get The News You Want
Although Russia and OPEC have agreed to significantly scale back oil output in the face of overwhelming oversupply in the market, there is still a large gap between what has been written on paper and what is happening in real life. Russian producers are squabbling over who should be the one to cut output, with all taking the “not me” attitude. Given the high price tag associated with a production shutdown, not only Russian producers but all others will try and delay for as long as possible.
Look out for updates from both Russia and Saudi Arabia on actual production and export levels.
|
When |
What |
Why is it important |
|
Mon 20 April |
Halliburton results |
Insight into decreasing production activity across the industry |
|
Tue 21 April 21.30 |
API crude oil stocks |
Likely to show further buildup in stock levels |
|
Wed 22 April |
{{0|Baker Hughes}} results |
Insight into decreasing production activity across the industry |
|
Wed 22 April 15.30 |
EIA crude oil stocks |
Last at 19.48m |
|
Thu 23 April 08.30 |
German April manufacturing PMI |
German manufacturing has been in heavy shrinkage mode in March, April data unlikely to show much improvement |
|
Thu 23 April 13.30 |
US initial jobless claims |
Job destruction could show signs of a slowdown |
|
Thu 23 April 14.45 |
US manufacturing PMI |
Expected to show a further decline from last month’s 48.5 |
|
Fri 24 April 18.00 |
{{0|Baker Hughes}} US oil rig count |
58 rigs closed to April 9 |
|
Fri 24 April 20.30 |
CFTC oil net positions |
Changes in money managers’ oil positions |
Original Post
/h2
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.