Pandemic Weighs on Exxon
December 1, 2020
Crude oil prices and refined fuels products pulled back slightly in yesterday’s trading as OPEC+ postponed its meeting scheduled for today until Thursday. The news reports indicated there is disagreement among members and Russia whether to extend their current 7.7 million bpd oil cuts or relax the oil cuts to just 5.7 million bpd as scheduled January 1st.
Vaccine news has offered optimism that energy demand will return at some point but until the vaccine is made available the optimism is all you have. This news has offered support to prices but more so has the OPEC+ meeting that most thought would see OPEC+ extend their current cuts for a minimum of 3 months. With that outlook called in to question yesterday, it put some selling pressure on prices. Until we get an OPEC+ decision that supports keeping the cuts prices could feel selling pressure.
Goldman Sachs said a winter surge in COVID-19 cases would not prevent the oil markets from rebalancing as a result of vaccine progress.
Also helping on the bearish side for oil is Libya’s production at 1.25 million bpd, which is much more than the 100,000 bpd they were producing back in September. Currently an agreement is in place that have stopped military attacks on oil. According to a Reuters survey, OPEC oil output increased for a fifth month in November, as increased Libyan production offset full adherence by other producers to cuts agreed in an OPEC-led supply deal. OPEC’s oil output increased by 750,000 bpd on the month to 25.31 million bpd. The survey found that OPEC producers bound by the supply deal continue to cut more than agreed. Compliance with the cutbacks stood at 102% in November, steady from October.
The Transportation Security Administration said it screened 1.18 million airline passengers on Sunday, the highest number since mid-March but still 60% lower than the comparable day last year.
The EIA reported that US oil production in September increased by 286,000 bpd to 10.86 million bpd.
US officials recently raised doubts about the effectiveness of a vaccine candidate jointly created by AstraZeneca AZN and Oxford University. Chief of the White House’ s Operation “Warp Speed,” Moncef Slaoui, and other in the US expressed concerns about aspects of the late-stage study and the dosage changes within the trials.
The COVID-19 pandemic has had it impact on oil major Exxon as oil demand and prices have declined. Exxon Mobile Corp said they would write down the value of natural gas properties by $17 to $20 billion, it biggest ever impairment, and slash project spending next year to its lowest level in 15 years.