Oil fell this week amid growing concerns that another wave of the coronavirus pandemic will spark tighter lockdown measures and further stifle crude demand.
New York futures edged lower Friday and fell 2.1% on the week. The number of US coronavirus cases rose above 7 million, according to data from Johns Hopkins University. Meanwhile, a second governor tested positive for Covid-19 as cases surge around the country.
At the same time, the market is contending with returning supply. Oil traders have reported a sharp increase in Iraqi exports for next month, while output from Libya has shown signs of rising this week.
US crude's gradual climb since May has come to a halt in September, with futures on track to drop about 5.5% this month. Still, Goldman Sachs Group Inc said oil consumption is currently just above 93 million barrels a day and may rise 1.8 million a day to the end of the year. Yet, any meaningful recovery in consumption has so far been held back by the lingering pandemic.
West Texas Intermediate for November delivery edged 6 cents lower to settle at $40.25 a barrel.
Brent for November dipped 2 cents to end the session at $41.92 a barrel. The contract lost 2.9% this week.
In a sign of just how damaging the virus has been to oil demand, the industry's largest tankers next year will earn 8% less than they were anticipating back in May, according to a survey of shipping analysts by Bloomberg. That comes as nations including Saudi Arabia and Russia have drastically scaled back output, draining the hoard at sea and diminishing the flow of cargoes.
The spread between Nymex gasoline futures and WTI rallied over 9% on Friday toward $10 a barrel. Still, the so-called crack remains at its lowest seasonally since 2013. At the same time, Gulf Coast gasoline climbed to a one-month high as refiners snapped up winter-grade fuel and on dwindling fall stockpiles.
Meanwhile, the physical market for actual barrels of crude is not providing much optimism either. Bakken crude for delivery at Clearbrook, Minnesota, this week hit the largest discount to Nymex WTI futures in two weeks.
Other oil-market drivers:
Oil executives are rushing to build a war chest of federal permits to drill in New Mexico as they brace for a fracking ban proposed by US Democratic presidential candidate Joe Biden.
Russia will ship slightly more flagship Urals crude from its key western ports next month, though the volume will remain well below its usual level, a sign that nation continues to adhere to its OPEC+ alliance commitment to keep output constrained.
Exxon Mobil Corp. has narrowed the list of bidders for its oil-producing offshore assets in Malaysia that could potentially raise $2 billion to $3 billion in a sale, according to people with knowledge of the matter.
Companies: FO PRP 88E DGOC EME TRIN UOG
Falcon has announced the resumption of activities at Kyalla 117 with the fracture stimulation of the well, and extended production test to follow. Initial results from the production test are expected in Q4/20, with final results expected by the end of Q1/21. Following the farm-down of a 7.5% participating interest to JV partner Origin Energy in April, Falcon is fully funded through the upcoming drilling campaign. We believe success at the Kyalla well will result in the JV further evaluating the potential of the Kyalla liquids rich gas play, thereby fast-tracking the potential commercialisation and monetisation of Falcon's 22.5% working interest. We reiterate our 39p price target (a 406% premium to the current share price) and our BUY recommendation.
Companies: Falcon Oil & Gas Ltd.
Saudi Arabia's warning to OPEC+ cheaters and short-sellers alike helped oil prices stage their biggest weekly rally since June, despite a grim start to the week as industry heavyweights painted a troubling demand picture for the petroleum complex.
Futures in New York rose 10% this week following a show of determination by Saudi Arabia, the most influential nation in the Organisation of Petroleum Exporting Countries, to defend the market on Thursday. The Saudis hinted they are prepared for new production cuts, and lambasted OPEC+ members that have cheated on production quotas.
Prices briefly fell as much as 1.6% on Friday following an announcement from Libyan military commander Khalifa Haftar that he will allow crude production and exports to resume. But while Haftar reached the agreement with the country's deputy premier, it was unclear whether the deal that excluded the National Oil Co would actually restart exports.
Haftar controls most of eastern Libya and has halted operations and shipments from his territory as part of a campaign against the internationally recognised Tripoli government. The OPEC member is pumping just 80,000 barrels a day, but produced 1.2 million a day last year.
Oil reversed last week's losses, which pushed West Texas Intermediate futures toward $37 a barrel amid a slew of downbeat demand forecasts from the International Energy Agency to Trafigura Group and BP Plc. Helping support prices this week, US government data showed crude and gasoline stockpiles declining. American oil stockpiles are now at their lowest since April.
But crude may not be out of the woods just yet, with distillate supplies at record highs and refining margins for the fuel deteriorating in the US and Europe. Meanwhile, rising coronavirus infections in Europe raise the spectre of a return to tighter restrictions that have crippled consumption.
West Texas Intermediate for October delivery rose 14 cents to settle at $41.11 a barrel.
Brent for November settlement lost 15 cents to end the session at $43.15 a barrel. The contract rose 8.3% this week, its largest weekly gain since June.
Oil in New York closed below $40 a barrel for the first time in a month as a selloff in broader markets exacerbated concerns over weakening demand following a sluggish summer driving season.
US benchmark crude futures tumbled nearly 4% on Friday, leading oil to post its worst week since June. Stocks weakened and the S&P 500 Index dropped more than 3% before easing losses. Meanwhile, the upcoming US Labor Day holiday will mark an informal end to the summer driving months and a customary drop-off in demand is looming with refineries soon shutting for seasonal maintenance.
Crude is off to a weak start in September as coronavirus flare-ups in various parts of the world threaten a sustained rebound in oil consumption at a time when the Organisation of Petroleum Exporting Countries and its allies are returning oil to the market and easing historic output curbs. Russia's energy minister said demand has returned to 90% of pre-Covid levels, but limited travel and work from home arrangements are slowing down the recovery.
Meanwhile, key refineries are still recovering from storms that swept through the US Gulf Coast last week. Citgo Petroleum Corp and Phillips 66 Lake Charles refineries in Louisiana may be facing many more weeks of downtime as they wrestle with loss of power and damage related to Hurricane Laura.
West Texas Intermediate fell $1.60 to settle at $39.77 a barrel in New York, the lowest level since early July. Prices dropped 7.5% decline this week, the biggest weekly loss since June.
Brent for November settlement dropped $1.41 to end the session at $42.66 a barrel.
Despite six straight weeks of declines in crude stockpiles in the US, inventories are still at the highest seasonally in more than a decade, Energy Information Administration data show.
Physical markets are showing a mixed picture. Mars Blend, a high-sulphur crude, is trading at its highest premium to WTI futures in nearly two weeks. Meanwhile, Bakken crude for delivery at Clearbrook, Minnesota, fell this week to its largest discount to Nymex oil futures since early August, before recovering slightly in recent sessions.
Other oil-market news
Investors managing more than $2 trillion are calling on Texas regulators to ban the routine burning of natural gas from shale fields, arguing that the energy industry has not moved quickly enough to curb the controversial practice.
A tanker loaded with 2 million barrels of Kuwaiti crude sailing toward India's Paradip refinery caught fire Thursday morning off Sri Lanka's coast, raising concerns about an oil spill.
Known oil loadings from producers in the Atlantic Basin have got off to a strong start for October on the back of big increases in Norwegian and Nigerian flows.
Oil rose for a fourth week in a row as US Gulf Coast refineries began restarting though gains were capped as investors shifted their focus from the storm toward the fragile rebound in consumption amid the pandemic.
WTI was little changed on Friday and notched a 1.5% gain for the week. While Laura was one of the most powerful hurricanes to ever hit Louisiana, facilities in southeast Texas avoided the worst of the storm, allowing infrastructure there to start the recovery process.
Among those facing more extensive repairs, Citgo Petroleum Corp. said its refinery in Lake Charles, Louisiana, sustained damage from high winds and likely will not see an immediate restart. Despite the hiccup in production, US gasoline stockpiles remain at their highest seasonal level in decades.
Refining margins for combined gasoline and diesel jumped 12% on Friday due to refinery closures in Southeast Texas and Louisiana because of Hurricane Laura. But the hurricane-related surge in U.S. Gulf Coast gasoline cracks likely will not last, “given the ample unutilized capacity elsewhere and high product inventories,” according to a Jefferies report dated Thursday.
The pace of Covid-19 infections rose further in key European countries and German Chancellor Angela Merkel warned that more sacrifices lie ahead after the summer.
West Texas Intermediate for October dipped 7 cents to settle at $42.97 a barrel. Futures posted a 1.5% weekly gain.
Brent for the same month, which expires Friday, lost 4 cents to end the session at $45.05 a barrel. The contract rose 1.6% this week.
Gasoline futures rose 2.4% to $1.3155 a gallon.
In a sign that China's thirst for oil imports is waning, the number of supertankers hauling crude to the country slid to its lowest level since late March, according to ship-tracking data compiled by Bloomberg. The number of very large and extra-large crude carriers signalling China in the next three months dropped by two to 79 in the past week, compared with a seasonal average of about 88 tankers.
Companies: FO PRP 88E DGOC EME UOG
Following the successful drilling, casing and cementing of the Kyalla horizontal well in Q1/20, the Kyalla programme is set to recommence in Q3/Q4 2020 (subject to Covid-19 related conditions), with the fracture stimulation and extended production test of the Kyalla 117 well. Initial results from the production test are expected in Q4/20, with final results expected by the end of Q1/21. The result will inform the JV to either further evaluate the Kyalla liquids-rich gas play, thereby potentially fast tracking commercialisation or to commence activities in the Velkerri liquids-rich gas play. Following the farm-down of a 7.5% participating interest to partner Origin Energy in April in return for an A$150.5m increase in the gross cap carry, we believe Falcon is fully funded through to the eventual monetisation of its 22.5% participating interest in the Beetaloo. Further, with no debt, a fully funded drilling programme and cash at 30 June 2020 of US$11.8m, Falcon is fully funded through one of the greatest periods of uncertainty the industry has ever faced. We update our price target to 39p, a 388% premium to the current share price and reiterate our BUY recommendation.
Oil slipped as signs of stumbling recoveries in major economies from Europe to Asia threaten to delay a demand rebound.
Futures in New York fell 1.1% on Friday, narrowing a weekly gain to just under 1%. Europe's economy unexpectedly lost momentum this month, with the region battling to control a new spike in coronavirus cases. Meanwhile, a gauge of Japan's service sector fell and continues to signal contraction.
Meanwhile, Libya's National Oil Corp said Friday, that it welcomed the country's new cease-fire agreement and the nation should be able to resume exports when all of its facilities are freed from military occupation, threatening to unleash supply at a time when the OPEC+ alliance is easing output curbs.
US benchmark crude futures posted a third straight weekly advance with this week's inventory report showing shrinking domestic crude and gasoline supplies. Yet, virus cases continue to surge around the world and cautionary signals are emerging over the state of a global economic recovery. Italy on Friday reported new infections that were almost double the average for the past seven days, while South Korea may be heading toward a lockdown.
West Texas Intermediate for October settlement fell 48 cents to settle at $42.34 a barrel.
Brent for the same month declined 55 cents to end the session at $44.35 a barrel.
Still, China is signalling demand for US crude. American oil exports to the country are set to reach a record next month in a sign that Beijing is stepping up purchases to meet its commitments under a trade deal. About 19 tankers have signed provisional bookings to load American crude for China in September, according to shipping fixtures.
Meanwhile, operators are beginning to prepare for storms that are on course to reach the Gulf of Mexico next week. BP Plc has begun evacuating employees from its four operated platforms in the Gulf of Mexico ahead of Tropical Depression 14 and Tropical Storm Laura.
The spread between front-month US benchmark crude futures and Brent crude rallied on Friday to its narrowest discount since late July. Gulf Coast cash gasoline advanced to a 10-month high against Nymex futures on Friday, data compiled by Bloomberg show.
Other oil-market news:
Saudi Aramco has suspended a deal to build a $10 billion refining and petrochemicals complex in China, according to people familiar with the matter, as the company slashes spending to cope with low oil prices.
Explorers in the world's biggest shale patch are roaring back, putting an additional 10 rigs to work this week for the biggest jump in activity since a price crash triggered an unprecedented collapse in drilling.
A pipeline explosion and fire at one of the nation's busiest oil export hubs forced the shuttering of the inner harbour at the port of Corpus Christi, Texas.
Oil squeezed out a gain for the second straight week but uncertainty around the US-China trade deal and fears of a resurgent pandemic limited the price rally.
Crude futures in New York fell 0.5% Friday, but rose 1.9% for the week. The US and China postponed talks planned for over the weekend that had been aimed at reviewing progress at the six-month mark of their phase-one trade agreement, according to people familiar with the matter. Meanwhile, a rebound in US retail sales slowed sharply in July amid a surge in Covid-19 and still-high unemployment cooled the economic recovery.
Still, US benchmark crude futures extended their rally to over 4% in the past two weeks, with American crude stockpiles declining after imports from Saudi Arabia dropped and gasoline consumption rising. Adding to support, some data points show bright spots in the economic outlook, with US industrial production increasing for a third straight month in July.
But growing signs of a resurgence of the coronavirus has highlighted the patchy recovery in oil consumption. On Thursday, the International Energy Agency downgraded a majority of its demand forecasts for the next 18 months. Meanwhile, the pace of well reactivations in the US has increased since July, according to Rystad Energy, potentially casting a further pall amid a stubborn supply overhang.
West Texas Intermediate for September delivery edged 23 cents lower to settle at $42.01 a barrel.
Brent for October settlement dipped 16 cents to end the session at $44.80 a barrel. The contract gained 0.9% for the week.
The 3-2-1 refining margin for combined gasoline and diesel against WTI, which provides a rough gauge of profitability for processing a barrel of crude, is trading at its lowest seasonal level in almost a decade. As the pandemic devastates air travel and depresses gasoline demand during what is usually the summer driving season, weakness in the margin signals the decreasing appeal for refiners to buy up more crude.
Oil fell in tandem with equities as concerns over renewed tensions between the US and China, and a murky outlook for further relief from Washington cast an economic pall.
Futures dropped 1.7% in New York on Friday, the biggest decline in a week. US President Donald Trump's latest attack on Chinese tech companies and new sanctions on Chinese officials further stoked tensions between the countries. Meanwhile, another round of negotiations with Democrats on a virus relief plan ended without any agreement, indicating a long road ahead for a demand recovery. The Bloomberg Dollar Spot Index rose as much as 0.8% on Friday, reducing the appeal for commodities priced in the greenback.
Crude is testing the upper bound of its recent trading range after hitting a five-month high this week amid declines in US stockpiles. But the spotty recovery in oil consumption is restraining a potential breakthrough, with crude imports into China shrinking in July. Drillers cut exploration in US oil fields to a 15-year low as billions of barrels from old discoveries became worthless and explorers abandoned growth plans. The 3-2-1 refining margin for combined gasoline and diesel against US WTI -- a rough profit gauge for processing a barrel of crude -- slumped more than 5% to below $10 a barrel as the pandemic keeps Americans at home during what is typically the summer driving season.
In physical markets, Poseidon crude, a heavy sour oil, rose 5 cents to 45 cents above Nymex oil futures on Friday, the largest premium in over two months. Earlier this week, the discount on Bakken crude for delivery at Clearbrook, Minnesota, narrowed to 5 cents below Nymex WTI futures, its smallest discount since May.
A fresh round of stimulus in the US could boost sentiment over the demand outlook, but lawmakers have yet to reach an agreement. No progress was made at the end of the week and it is not clear whether there will be additional discussions. Treasury Secretary Steven Mnuchin said he will recommend Trump move ahead with executive actions to halt evictions and possibly restore some unemployment aid.
Meanwhile, OPEC+ is returning supply to the market this month as it tapers its record output curbs, but habitual quota cheat Iraq has promised to make deeper cuts following a call with Saudi Arabia on Thursday. Oil Minister Ihsan Abdul Jabbar pledged that Iraq will cut output by an extra 400,000 barrels a day in August and September, on top of a previous commitment to slash 850,000 barrels a day in each month.
Crude clung to losses amid a combination of weak economic data and signals that a recovery in consumption may be slowing.
Futures posted a 0.4% decline in New York on Friday. Although strength in US equities pushed oil up from the lows of the session, futures were unable to rally amid a flurry of disappointing data points. In the US, consumer sentiment posted a surprise drop and Covid-19 cases in the country passed the 3.6 million mark.
Meanwhile in India, road fuel sales fell in the first half of July as virus lockdowns occurred in several cities, and the Chinese city of Urumqi locked down some areas amid fears of another outbreak in the country. Brent futures posted their first weekly decline in a month, falling 10 cents over the week.
U.S. benchmark crude futures are having trouble breaking out of the tight trading range they've been in since early June. Major gasoline-guzzling states like Texas and California are facing a resurgence in Covid-19 cases, squashing demand, while the OPEC+ alliance is preparing to unleash crude oil back into the market next month.
West Texas Intermediate for August delivery declined 16 cents to settle at $40.59 a barrel in New York. Futures posted a 0.1% gain for the week.
Brent for September settlement fell 23 cents to end the session at $43.14 a barrel.
With prices treading water, there's been little to get excited about for traders. Volumes on the global Brent benchmark in July are heading for their lowest month since 2014, while those for WTI are set for their quietest month since 2015.
Russia's oil exports are expected to stay near July's historically low levels next month, a signal the country is serious about keeping extra crude it plans to pump domestically and draining key refining markets like northwest Europe.
Some oil from China's swelling storage tanks is finding its way back into the international market as traders jump at the opportunity to source cheap crude for resale to regional refiners.
Oil rebounded as a new virus treatment showed promising results, but rising Covid-19 cases continued to weigh on the market.
Oil gained 2.4% in New York on Friday but is still down for the week. The market followed stocks higher after Gilead Sciences Inc said its remdesivir treatment cut Covid-19 mortality risk by 62%. Still, the coronavirus pandemic is far from easing around the world and the International Energy Agency said a jump in cases could derail the market recovery.
Crude has struggled to extend a recent rally as traders weigh fresh outbreaks of the virus. California, Texas and Florida have recorded some of their biggest daily gains in cases and deaths this week. There is a growing risk that a resurgence will impede efforts to reopen the economy.
While the IEA said demand should rebound sharply over the next three months as economic activity resumes, the agency also warned a flare-up of the virus, which is raging across several US states and re-emerging in Asia, is “casting a shadow over the outlook”.
West Texas Intermediate for August delivery rose 93 cents to $40.55 a barrel in New York.
Brent for September settlement gained 89 cents to $43.24 a barrel.
Heavy Louisiana Sweet crude rose 30 cents to $2 a barrel above Nymex. That is the highest premium since May.
Supply could also become more abundant as Libya's National Oil Corp announced it would lift force majeure on all exports following months of near-zero shipments. The Kriti Bastion tanker has started loading 730,000 barrels of crude at Es Sider, with the cargo heading to Italy, according to port operator Waha Oil Co. Rigzone.
Oil posted its second weekly loss for the month, as a surge in US coronavirus cases clouds the demand outlook and casts doubts on the market's recovery.
Futures in New York slipped 3.2% this week. The price slump comes just days after oil closed above $40 for the first time since early March, and following a run of weekly gains that lifted oil from its historic plunge below zero in April. Texas -- the centre of the American oil industry -- halted its reopening as virus infections jumped, and Houston's intensive-care wards reached capacity. Bars in Texas and Florida were ordered to shut, and Arizona reported a surge in infections.
While massive OPEC+ output cuts and a pickup in demand have helped crude climb from its April low, price gains have slowed this month. Infections continue to soar in many parts of the world, consumption is still a long way off pre-virus levels and many refiners are struggling with low margins.
Crude stockpiles in the US are at record highs, and there's a risk that US shale producers could start bringing back output. The number of rigs drilling for oil fell by 1 to 188, the lowest since June of 2009.
West Texas Intermediate for August slid 23 cents to settle at $38.49 a barrel in New York.
Brent for August fell 3 cents to close at $41.02 a barrel.
Still, the pessimism's being tempered by huge cuts to Russia's seaborne crude exports, a development that lifted oil earlier in the session. Shipments of the flagship Urals grade from its three main western ports are set to plunge by 40% next month, according to loading programmes seen by Bloomberg. The steep reductions underscore the OPEC+ alliance's commitment to eliminate the oil glut that built up earlier this year.
Other oil news:
Exxon Mobil Corp is preparing to cut jobs in the US as the oil giant focuses on a slimmed-down and more efficient organisational structure, according to people familiar with the matter.
Four automakers backing a California effort to curb tailpipe emissions will break with some big rivals in the legal battle over the Trump administration's relaxation of fuel efficiency standards.
Oil turned around last week's setback, extending a slow but relentless rise since falling into negative territory in April.
US benchmark crude futures rose 2.3% Friday to close at the highest level since 6 March. The 9.6% increase for the week marks the seventh gain in the last eight weeks. Oil traders Vitol Group and Trafigura Group and exporter Saudi Aramco all talked up the strength of the demand recovery in recent days, and prices for some of the world's major oil products have begun to roar higher. OPEC+ gave reassurance on output cuts on Thursday.
Inventories in Cushing, the delivery point for West Texas Intermediate futures, have contracted every week since early May.
WTI traded above the $40 a barrel for much of the session on Friday before fresh evidence of a rise in US. coronavirus cases dampened sentiment. California, Florida and Arizona posted their biggest jumps in cases since the pandemic began, further signs the outbreak is worsening in some Sun Belt states.
A potential resurgence of the virus in China, the world's biggest crude importer, is clouding the long-term outlook. Traffic in Beijing has plunged as authorities battle a fresh outbreak.
Data from the Energy Information Administration this week showed output declined for an eleventh straight week to just above 10 million barrels a day last week. That comes as the number of rigs drilling for oil has fallen 72% over the past 14 weeks to a level not seen since before the shale-oil revolution kicked off at the beginning of the last decade.
Timespreads also showed signs of strength. WTI's front-month spread rose Friday to strongest level in a month. The July-dated contract expires Monday, which could add extra volatility early next week. Meanwhile, Brent crude's prompt spread settled in backwardation -- a bullish indicator that points to tighter supply conditions -- on Thursday for the first time since early March.
West Texas Intermediate for July delivery rose 91 cents to settle at $39.75 a barrel on the New York Mercantile Exchange.
Brent for August settlement gained 68 cents to settle at $42.19 a barrel.
After six straight periods of gains, US benchmark crude futures dropped 8.3% this week. Market sentiment soured after the Federal Reserve warned of the coronavirus pandemic's prolonged damage to the economy. Plus, fears over a second wave of virus infections threaten to disrupt any demand recovery.
While crude has pushed higher from a historic crash below zero in April -- buoyed by OPEC+ production curbs that began in May -- the market largely shrugged off the alliance's recent move to extend those cuts.
Any recovery in crude will be largely dependent on a consumption comeback. Barclays Plc predicts the market has already seen the fastest improvement in demand and steepest drop in supply. Meanwhile, Mercuria Energy Group Ltd, Chief Executive Officer Marco Dunand said this week that global crude consumption will return to about 95 million barrels a day by December, unless there is a significant second wave of coronavirus infections.
Likely adding to the pressure on crude was the record withdrawal Thursday from one of the largest exchange-traded funds in the oil market. WisdomTree's WTI Crude Oil ETF had a little over $128 million worth of outflows, according to filings.
West Texas Intermediate crude for July settlement fell 8 cents to settle at $36.26 a barrel on the New York Mercantile Exchange.
Brent for August delivery rose 18 cents to end the session at $38.73 a barrel. Prices tumbled 8.4% this week.
Optimism at the start of the week over the agreement by the Organisation of Petroleum Exporting Countries and its allies to extend curbs by a month quickly diminished after Saudi Arabia said it would cease extra voluntary cuts at the end of June. The deal even secured commitments from laggards such as Iraq and Nigeria after they were called out for their non-compliance.
Oil posted its sixth weekly advance, closing at the highest level since 6 March after a US jobs report beat analysts' forecasts, adding to a rally fuelled by a tentative OPEC+ deal to extend output cuts.
Futures in New York rose 11% this week, topping $39 a barrel for the first time since early March. Ahead of a Saturday OPEC+ meeting, the producer alliance agreed to extend output curbs by another month after members who have not complied with the quotas said they would compensate in the coming months. US stocks jumped after the employment report bolstered expectations for the economy to rebound quickly from coronavirus lockdowns.
The market has staged a rapid recovery from its mid-April plunge below zero, but the rebound remains fragile, with prices still down 35% this year. Sustaining the rally hinges on a combination of returning demand and ongoing output cuts at a time when higher prices are prompting some US producers to re-open wells.
Money managers are piling in, boosting bullish Nymex WTI crude oil bets to the highest in about 22 months.
Still, the demand recovery is uneven. US diesel demand fell to the lowest level in 21 years last week and, in Europe, profits from making the fuel are collapsing, threatening to limit demand for crude. On the other hand, China, the world's second-biggest oil user, is recovering quickly, with consumption back to pre-pandemic levels.
OPEC+'s historic agreement to trim 9.7 million barrels a day of production has supported prices. Now the group is set to extend those cuts after almost a week of wrangling and high-stakes negotiation.
West Texas Intermediate for July rose $2.14 to settle at $39.55 a barrel in New York.
Brent for August delivery added $2.31 to $42.30 a barrel.
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Jersey Oil & Gas has announced that it has selected a greenfield four-legged platform to develop the Greater Buchan Area which will utilise existing export pipeline infrastructure. We see near-term scope to increase materially our fair value estimate from 268p. We believe that today's news is price material and that it sets the scene for a near-term catalyst rich outlook for the company. It is an opportune time, in our opinion, to gain exposure to the Jersey Oil & Gas investment opportunity.
Companies: Jersey Oil & Gas Plc
In H1, 2020 and the period directly following (Q3, 2020), EQTEC has made substantial operational progress, significantly boosting its project pipeline and strengthening its balance sheet with an over-subscribed £10m fund raising in July 2020. Revenue generation in H1, 2020, however, was constrained due to the impacts of Covid-19 and severe fires in California. We now forecast revenue of €2.4m in 2020E, compared with our previous forecast of €7.0m. Importantly, no projects have been cancelled. Delayed revenue is expected to flow into 2021E. Select new projects, having been secured in 2020, are expected to reach financial close in 2021E and 2022E, in addition to those existing projects under development in those years. As a result, we are increasing our 2021E and 2022E forecasts.
Companies: EQTEC Plc
H1 2020 results; progress on concept selection
Central Asia Metals (CAML LN) reported robust interim results in the context of the H1 2020 backdrop; solid production and the company’s fundamentally low cost base meant that CAML remained profitable despite the sharp pullback in commodity prices during the period which led to a 17% YoY decline in revenue to US$70.8m. Consequently, EBITDA was down 25% YoY to US$42.5m despite a decline in unit costs of 6% YoY at Kounrad and 9% YoY at Sasa to US$0.48/lb and US$0.43/lb respectively which cushioned the impact of the weaker the top line. With no significant one offs in the period, EPS of US$0.10/sh. was 33% lower YoY.
Companies: Central Asia Metals Plc
Talitha Shelf Margin Deltaic LKA resource report
Companies: Pantheon Resources Plc
The stock was up 12% on Friday, 25/09, sparked by the positive outcome on Vodafone’s dispute with the Indian tax authorities. This is encouraging for Cairn, but note that both cases differ. While the tax authorities simply erased Vodafone’s tax bill, they owe up to $1.4bn to Cairn, and could offer more resistance.
Companies: Cairn Energy Plc
Another set of record results from Iofina, with H1 2020 benefiting from improved iodine pricing, solid cost controls and robust operational performance. Some of the shine will be taken off by the cautionary tone over the impact of COVID-19 on current iodine demand and pricing. Nevertheless, these results on top of the recent debt refinancing again demonstrate the continued improvements Iofina is delivering both operational and financially. It now has a solid platform of diversified low cost iodine production from five plants, a range of iodine and non-iodine specialty chemicals products, an improved balance sheet and a new lending partner with which to deliver its ‘prudent growth’ ambition.
Companies: Iofina Plc
H1/20 has been a highly successful period for United Oil & Gas, during which time it has successfully transformed into a full-cycle E&P company. Key to this success has been the Abu Sennan acquisition, with net production increasing to 2,700boepd at the end of June. The significant production and reserve additions delivered as part of the 2019-20 drilling campaign emphasises the considerable upside that still remains in the block. Post period, United were granted a 100% operated working interest and an 18-month extension to the Walton-Morant licence, offshore Jamaica. At 229mmbbls, the Walton-Morant licence has the potential to have a major impact on United, which we value at US$724.3m or 76.8p/share unrisked. We update our valuation, increasing our price target to 19.1p/share, a 549% premium to the current share price and reiterate our BUY recommendation.
Companies: United Oil & Gas Plc
Adriatic Metals* (ADT1 LN) – Annual results and review of exploration | AfriTin (ATM LN) –– H1 report highlights production ramp-up at the Uis mine | Ariana Resources* (AAU LN) – US$30m partial disposal of Turkish Assets | Anglo Asian Mining* (AAZ LN) – BUY – Gedabek continue unaffected by the Nagorno-Karabakh conflict | Cornish Lithium (Private) - Cornish Lithium looking to bring the EV supply chain closer to home | IronRidge Resources* (IRR LN) – FY20 results: well positioned to continue de-risking portfolio projects with A$7.3m in the bank | Kavango Resources (KAV LN) – Resuming field exploration of the Kalahari Copper Belt, Botswana | Power Metal Resources (POW LN) – Exploration gets underway on Botswana joint-venture | Rambler Metals and Mining* (RMM LN) – Interims and refinancing of debt and planned restoration of mine production at higher copper grade | Renascor Resources (RNU AU) – Offtake agreement with Chinese anode manufacturer highlights China’s dominance of supply chain | Trans-Siberian Gold (TSG LN) – 8c interim dividend declared reflecting robust FCF and strong outlook | Versarien* (VRS LN) – New Advisory Panel brings together global leaders in graphene within Versarien
Companies: ADT1 ATM AAU AAZ IRR KAV POW RMM RNU TSG VRS
EQTEC announced (last Friday afternoon) an extension of the exclusivity period of the Billingham MOU until 22 November 2020. The extension of the MOU exclusivity period is with the aim of finishing the preparation of a legally binding option agreement with Scot Bros. which, if agreed, will grant EQTEC and its partners the right, but not the obligation, to purchase the entire issued share capital of Billingham EFW Limited (the project SPV) from Scott Bros. subject to an agreement on consideration and other terms.
West Newton B-1 drilling update
Companies: Union Jack Oil Plc
Chariot’s interims represent something of a line in the sand for the new management team, with historic oil-focussed deepwater exploration spend written-off, demonstrating its recent corporate and strategic ‘reboot’, which has ushered in a more entrepreneurial approach. Strategy has shifted away from higher-risk frontier exploration in favour of opportunities that better fit the energy transition. With the annual cash burn cut 45% to US$2.5m, no remaining work commitments and period-end cash of US$5.8m, management has a clear path ahead to deliver on its ambitions.
Companies: Chariot Oil & Gas Ltd.
Hargreaves’ FY20 results are very solid indeed. As previously reported, the only noticeable impact from COVID was in the slippage of Blindwells’ land sales, which were due to conclude during the lockdown period. Site activity has resumed and sales remain on track to conclude in the current year. A final dividend of 4.5p has been declared and the outlook statement is measured but confident. We reintroduce forecasts today, effectively reinstating our pre-COVID expectations. Hargreaves is well positioned to deliver a period of significant, renewed growth with the prospect of a double digit dividend yield from FY22 as HRMS profits are distributed.
Companies: Hargreaves Services Plc
Ready to steppe it up – initiating coverage
Companies: Enwell Energy Plc
Despite a lack of update on the Indian tax dispute (with the panel expecting to give an award after the end of the summer), the results are decent. Production averaged 22.4kboed, at the higher end of the 19-23kbpd guidance and the full-year guidance is also raised to 21-23kbpd. The sale of Senegal to Woodside has been approved by shareholders and remains subject to government approval.