Sellers beware: Price collapse triggers bartering over oil and gas deals

LONDON (Reuters) – The collapse in oil prices to 21-year lows has led potential buyers of oil and gas fields to try and renegotiate deals already agreed at higher prices, with the first examples emerging of sellers having their hand forced.

At a time when most oil companies are slashing budgets, dividends and headcounts to preserve cash, sellers are facing a difficult choice between sweetening the deal or risking losing it altogether.

Premier Oil’s (PMO.L) CEO said he is seeking a cheaper price for North Sea assets it agreed to buy from BP (BP.L) for $625 million and Energean (ENOG.L) is doing the same with a $700 million purchase from Edison (EDNn.MI).

“The oil industry is revisiting its ‘before coronavirus’ (BC) bids, and we envisage announcements from other firms as they re-price or repackage previously announced deals,” said Royal Bank of Canada oil and gas equity analyst Al Stanton.

Total (TOTF.PA) this month decided to walk away from its purchase of Occidental Petroleum’s (OXY.N) assets in Ghana, which hit a glitch over part of the French firm’s wider deal with U.S. Occidental.

“Given the extraordinary market environment and the lack of visibility that the group faces… Total has decided not to pursue the completion of the purchase of the Ghana assets,” Total said in a statement.

Among deals currently on the table, private equity group Blackstone (BX.N) with its North Sea vehicle Siccar Point, was already disagreeing with another private equity firm, Chrysaor, over price even before the slump in March, sources said.

However, privately held Hilcorp Energy and private-equity firm HitecVision have successfully renegotiated deals with energy majors BP (BP.L) and Total (TOTF.PA), respectively, during the current oil price meltdown.

“Sellers, especially the majors, have certainly been very constructive,” said one industry banker.

Hilcorp’s new agreement retains the original sale price but provides for vendor financing, smaller payments in 2020 and for cash-flow sharing in the near term, BP said. The terms may lead to BP receiving less cash at the end of the day.

Total on Wednesday said it agreed to restructure a deal, initially set at $635 million, to sell North Sea oilfields to HitecVision’s NEO unit to reflect “current market conditions while retaining the majority of the value of the transaction.” This included lending money to the buyer.

“It is my view that all deals… in general will be a mixture of initial payments that are suitable for the current market and earn out or commodity price payments that allow sellers to get good deals as the volatility subsides,” HitecVision Senior Partner John Knight said.

“Vendor finance with junior (debt) facilities, working capital and marketing and hedging arrangements and in some cases tax transfers and allocations and decommissioning security arrangements will all be tools all sellers and buyers will use in markets like this.”

Earn-out or upside sharing means the seller will only be paid once the oil price exceeds a certain limit.

HitecVision said it is on the prowl for more acquisitions in the British North Sea. In Norway, Aker BP (AKERBP.OL) and Lundin LUNE.ST may be on the lookout for cheap assets, while OKEA (OKEA.OL) and DNO (DNO.OL), which took control of UK’s Faroe Petroleum last year, are also looking to grow.

For some producers, like North Africa and gas-focused SDX (SDX.L), current oil prices do represent a “catalyst for opportunities”, but Chief Executive Mark Reid said vendor financing, such as becoming the sellers’ debtor, is a double-edged sword.

“It’s clearly something that helps to sell the asset and put it into the hands of a smaller company… It is an interesting dynamic that the majors are able to use their balance sheet to facilitate (mergers and acquisitions),” he said.

“We continue to talk to our contacts at BP, and other majors. (But) most importantly, (we plan) so that the company doesn’t find itself drowned in debt.”

Source: Read Full Article

Brokerages restrict clients on positions they can take in oil

(Reuters) – Several brokerages, including discount giant TD Ameritrade Corp (AMTD.O) are restricting customers from buying new positions in certain crude oil contracts after an unprecedented sell-off that sent prices below negative-$40 on Monday.

The U.S. oil futures market was rocked at the start of this week as a growing glut of supply and weak demand put fund managers and retail investors in the position of potentially having to take possession of thousands of barrels of crude that they would not be able to store anywhere.

That caused a panic that sent U.S. May futures CLc1, which expired on Tuesday, from $18 a barrel to a close of minus-$37.63, meaning sellers would have to pay buyers to take their barrels away.

TD Ameritrade told customers it would only allow closing trades in June and July U.S. crude futures contracts as well as in all U.S. crude options contracts.

“We made this decision based on the volatility and liquidity in the crude markets over the last week. This allows those markets to continue to return to their prior liquidity and volatility levels,” said J.B. Mackenzie, managing director in futures and forex at TD Ameritrade.

Two other brokerages, London-based Marex Spectron and INTL FCStone, said they were limiting new positions being taken up after the high-volatility trading on Monday delivered big losses to holders of that contract.

Some retail investors lost substantial amounts of money. Interactive Brokers Group (IBKR.O), another U.S. brokerage, said on Tuesday that it had to take an $88 million loss to cover accounts that had to be liquidated.

Some market participants have criticized exchange operator CME Group (CME.O) for allowing the contract to trade in negative territory.

CME Group said its markets worked as designed, with crude oil futures reflecting the unprecedented series of impacts from the coronavirus pandemic, including decreased demand for crude, global oversupply and tightening storage space.

“CME Group accommodated negative futures prices … on April 20 so that clients could manage their risk amid dramatic price moves, while also ensuring the convergence of futures and cash prices,” a CME Group spokesman said, noting that the exchange had issued advisories in early April about such a possibility.

Crude markets have been under pressure all year. Saudi Arabia flooded markets with cheap oil in early March after it was unable to come to an agreement with Russia to curb output as the coronavirus pandemic worsened. The outbreak has killed more than 184,000 people worldwide and caused oil demand to collapse, dropping by an estimated 30% worldwide.

With storage tanks across the world filling fast, brokerages are imposing margin restrictions and limiting who can buy and sell the volatile front-month contracts.

Several sources at investment banks say they have not included such restrictions, but smaller companies have done so.

Marex restricted many of its customers from taking new positions in June WTI and Brent futures contracts and raised margin requirements, according to a spokesman. INTL FCStone also imposed restrictions, a spokesman confirmed.

“Given the extreme and unpredictable volatility in the markets, we are taking action to protect our smaller clients and make sure they are aware of the risks they are assuming,” an INTL FCStone spokesman said in a statement.

Marex and INTL FCStone’s moves were first reported by the Financial Times.

In addition, exchange-traded products such as the U.S. Oil Fund (USO.P), which primarily holds crude oil futures contracts, have diversified into later-dated contracts to also avoid a squeeze.

The U.S. West Texas Intermediate crude contract, when it expires, requires the holder to take delivery of crude in Cushing, Oklahoma.

As of last week, that facility, which has about 76 million barrels of working capacity, was about 76% full. However, most of the rest of the space has already been leased out by oil producers desperate for space, leaving funds without an avenue.

“I had dozens of emails and phone calls from hedge funds,” said Ernie Barsamian, chief executive of The Tank Tiger, a U.S. terminal storage clearinghouse. “They never really thought about the aspect of the physical delivery.”

Source: Read Full Article

Canada's export agency will backstop bank energy loans – document

TORONTO, April 22 (Reuters) – Canada’s export credit agency will backstop loans to hard hit oil and gas producers, a document seen by Reuters showed, in the latest move by Ottawa to free up credit for the struggling energy industry.

The relief comes as banks review borrowing limits in the sector and could head off bankruptcies of small and mid-sized energy firms pummeled by the collapse in oil prices.

Canadian banks have eased some lending standards but are expected to chop credit lines as they recalculate energy companies’ borrowing bases to account for a 75% drop in U.S. oil prices since the start of the year.

The “dramatic fall in prices will force borrowing base redeterminations downwards, in some cases, below the level where current facilities are drawn,” Export Development Canada (EDC) said in a slide presentation, dated April 17.

Under the program, called a reserve-based lending guarantee, the agency will backstop up to 75% of a bank loan, to a maximum of C$100 million, for at least one year, the document said.

“EDC will provide an incremental guarantee of over and above the (banks’) borrowing base to partially mitigate the current oil prices,” it said.

EDC did not immediately respond to questions.

The program is targeted at Canadian firms with production no greater than 100,000 barrels of oil equivalent per day, according to the presentation.

Canada on Friday said it would offer commercial loans worth between C$15 million to C$60 million to producers through the Business Development Bank of Canada, in addition to C$2.5 billion ($1.8 billion) in aid to help the industry weather fallout from the COVID-19 pandemic.

Alberta Premier Jason Kenney has estimated the need for liquidity in the sector at C$15 billion to C$30 billion.

Finance Minister Bill Morneau on Friday said more needed to be done to ensure large businesses had access to credit, and promised details soon. (Reporting by Jeff Lewis Editing by Marguerita Choy)

Source: Read Full Article

Oil falls on concern over storage and earnings

LONDON (Reuters) – Oil prices fell on Monday, with a U.S. crude futures contract hitting its lowest level since 1999, depressed by concern that U.S. crude storage will soon be full while companies prepare to report the worst quarterly earnings since the financial crisis.

Brent LCOc1 was down $1.12, or 4%, at $26.96 a barrel by 1008 GMT.

The front-month May WTI contract CLc1 fell $4.79, or 26.2%, to its lowest since March 1999 at $13.48, though the sell-off was exaggerated by the contract’s imminent expiry.

“The May contract is set to expire tomorrow and the bulk of the open interest and volume is already in the June contract,” said ING’s head of commodities strategy, Warren Patterson.

The June contract CLc2, which is more actively traded, fell $2.18, or 8.7%, to $22.85 a barrel.

The volume of oil held in U.S. storage, especially at the Cushing delivery point for the U.S. West Texas Intermediate (WTI) contract in Oklahoma, is rising as refiners throttle back activity in the face of weak demand. [EIA/S]

“As production continues relatively unscathed, storage is filling up by the day. The world is using less and less oil and producers now feel how this translates in prices,” said Rystad’s head of oil markets, Bjornar Tonhaugen.

Oil in floating tanker storage is also estimated at a record 160 million barrels.

The mood in other markets was also cautious as the first-quarter earnings season gets underway. Analysts expect STOXX 600 companies to post a 22% plunge in earnings, which would represent the steepest decline since the 2008 global financial meltdown, IBES data from Refinitiv showed.

The German economy is in severe recession and recovery is unlikely to be quick, given that many coronavirus-related restrictions could stay in place for an extended period, the Bundesbank said on Monday.

Japanese exports declined the most in nearly four years in March as U.S.-bound shipments, including cars, fell at their fastest rate since 2011.

Bearish sentiment was reinforced by lowered oil consumption forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).

The oil industry has been reducing output swiftly to counter an estimated 30% decline in fuel demand worldwide.

Production cuts from OPEC and allies including Russia will take effect from May. The OPEC+ group has agreed to reduce output by 9.7 million bpd.

Officials in Saudi Arabia have forecast global supply cuts from oil producers could total nearly 20 million bpd, but that includes voluntary cuts from the likes of the United States and Canada, which are unable to turn production on or off in the way that most OPEC nations can.

Source: Read Full Article

Russia fund says will continue to invest in Saudi Arabia: Al-Arabiya

DUBAI (Reuters) – Russia’s sovereign wealth fund will continue to invest in Saudi Arabia’s Vision 2030 development programme, the Saudi-owned Al-Arabiya channel on Monday cited the head of the fund as saying.

Kirill Dmitriev, who is also one of Moscow’s top oil negotiators, said a global agreement to cut oil production prevented oil prices from falling to $10 a barrel, it added.

The oil talks, which concluded on Sunday, proved Russia’s ability to work with the United States, which is backing the agreement to reduce global oil supply, Dmitriev was quoted as saying.

The fund plans joint agricultural projects with Saudi Arabia, and is also working on a vaccines factory in the kingdom, he was quoted as saying, describing the relations with Riyadh as “very, very positive,” according to al-Arabiya.

Source: Read Full Article

Oil futures little changed despite record output cut by OPEC+

NEW YORK (Reuters) – Oil futures were little changed on Sunday even after major oil producers reached a deal for a record 10 million bpd output cut, with analysts saying the agreement is insufficient to head off oversupply as the coronavirus hammers demand.

Total global oil supply cuts could come to 20 million barrels per day, around 20% of global supply, Kuwait’s oil minister said. After four days of wrangling, OPEC, Russia and other oil-producing nations, a group known as OPEC+, agreed on Sunday to cut output by a record amount of 9.7 million barrels per day, representing around 10% of global supply to support oil prices amid the pandemic, sources said.

“If G20 adds about another 10 mln bpd, then the world is meeting the total imbalance from May and this would be a massive relief,” Rystad Energy said. “Still storage will be filled to nearly the top in April, but the market will stabilize.”

In early trade Brent crude LCOc1 futures rose 6 cents to $31.54 a barrel by 2211 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 22 cents to $22.54 a barrel.

Morgan Stanley on Sunday raised its second-quarter oil price forecasts to $25 a barrel for Brent and $22.50 a barrel for WTI. However, the bank said the 9.7 mln bpd cut would not prevent sharp inventory build-ups in the coming months, keeping prices under pressure.

Leaders of the world’s top three oil producers,

Russian President Vladimir Putin, U.S. President Donald Trump and Saudi Arabia’s King Salman, all supported the OPEC+ deal to cut global crude output, the Kremlin said on Sunday.

Trump praised the deal, saying it would save jobs in the U.S. energy industry.

Saudi Arabia, Kuwait and the UAE volunteered to make cuts even deeper than those agreed, which would effectively bring the OPEC+ supply down by 12.5 million bpd from current supply levels, the Saudi energy minister said.

Worldwide fuel consumption is down roughly 30%, due to the COVID-19 pandemic caused by the novel coronavirus that has killed more than 100,000 people worldwide and kept businesses and governments on lockdown.

“What this deal does is enable the global oil industry and the national economies and other industries that depend upon it to avoid a very deep crisis,” said IHS Markit Vice Chairman Daniel Yergin. “This restrains the build-up of inventories, which will reduce the pressure on prices when normality returns – whenever that is.”

On Thursday, OPEC+ outlined plans to cut output by more than a fifth, or by 10 million barrels per day (bpd), but Mexico balked at the production cuts it was asked to make, delaying the signing of a final deal. The group met on Sunday to hammer out a deal.

OPEC+ has also said it wanted producers outside the group, such as the United States, Canada, Brazil and Norway, to cut a further 5% or 5 million bpd.

Canada and Norway signaled a willingness to cut. The United States, where antitrust legislation makes it hard to act in tandem with cartels such as OPEC, has said its output would fall by as much as 2 million bpd by itself this year because of low prices.

“We’re going to see a significant drop in production anyway from producers who can’t make money producing,” said Phil Flynn, an analyst at Price Futures group.

Speaking ahead of the OPEC+ meeting, Russian Energy Minister Alexander Novak said the United States was ready to cut its oil output by 2 million to 3 million barrels per day, Interfax news agency reported, although it was unclear if he was referring to market-based cuts.

More than 1.7 million people have been reported to be infected by the novel coronavirus globally and 109,519 have died, according to a Reuters tally. Governments have ordered residents to stay home to curb the spread, roiling markets and disrupting daily life.

Source: Read Full Article

OPEC, allies to confer on Sunday to try to end standoff over cuts plan: sources

DUBAI (Reuters) – OPEC and its allies will hold a virtual meeting on Sunday evening in a bid to end a standoff that has prevented the finalisation of a global oil supply cut pact, six OPEC+ sources said.

The conference will be held at 1600 GMT, the sources said.

OPEC, Russia and other allies, a group known as OPEC+, outlined plans on Thursday to cut output by more than a fifth in an effort to prop up prices hammered by the coronavirus crisis.

But Mexico balked at the production cuts it was asked to make, delaying signing a final deal.

Source: Read Full Article

Saudi, Russia agree record oil cut under U.S. pressure as demand crashes

DUBAI/MOSCOW/LONDON (Reuters) – OPEC and its allies led by Russia agreed on Thursday to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered by the coronavirus crisis.

The cuts by OPEC and its allies, a group known as OPEC+, amount to 10 million barrels per day (bpd) or 10% of global supplies, with another 5 million bpd expected to come from other nations to help deal with the deepest oil crisis in decades.

Global fuel demand has plunged by around 30 million bpd, or 30% of global supplies, as steps to fight the virus have grounded planes, cut vehicle usage and curbed economic activity.

An unprecedented 15 million bpd cut still won’t remove enough crude to stop the world’s storage facilities quickly filling up. And far from signalling any readiness to offer support, U.S. President Donald Trump has threatened OPEC if it did not fix the oil market’s problem of oversupply.

Trump, who has said U.S. output was already falling due to low prices, warned Riyadh it could face sanctions and tariffs on its oil if it did not cut enough to help the U.S. oil industry, whose higher costs have left it struggling with low prices.

A White House aide said Trump held a call with Russian President Vladimir Putin and King Salman of Saudi Arabia, after a U.S. official said the move by OPEC+ sent an “important signal” to the market.

Both OPEC and Russian officials have said the scale of the crisis required involvement of all producers.

“We are expecting other producers outside the OPEC+ club to join the measures, which might happen tomorrow during G20,” the head of Russia’s wealth fund and one of Moscow’s top oil negotiators, Kirill Dmitriev, told Reuters.

Thursday’s OPEC+ talks will be followed by a call on Friday between energy ministers from the Group of 20 (G20) major economies, hosted by Saudi Arabia. OPEC and Russian sources said they expected other producers to add 5 million bpd to cuts.

Brent oil prices, which hit an 18-year low last month, were trading around $32 a barrel on Thursday, half their level at the end of 2019.

OPEC+, which groups the Organization of the Petroleum Exporting Countries, Russia and others, would cutting output by 10 million bpd in May to June, OPEC+ documents showed.

All members will reduce their output by 23%, with Saudi Arabia and Russia each cutting 2.5 million bpd and Iraq cutting over 1 million bpd.


OPEC+ would then ease cuts to 8 million bpd from July to December and relax them further to 6 million bpd from January 2021 to April 2022, the documents showed.

OPEC+ sources said they expected cuts from the United States and others to amount to about 5 million bpd but the OPEC+ plus statement made no mention of such condition.

The sources said cuts would be gradual, as the group seeks to overcome resistance from the United States whose involvement they see as vital to a deal. U.S. officials have already said output would fall naturally over two years.

The United States, whose output has surged to surpass Said and Russian production, was invited to Thursday’s OPEC+ talks but it was not clear if it had joined the video conference. Brazil, Norway and Canada were also invited.

In a sign OPEC+ was struggling to win broader support, Canada’s main oil province of Alberta said output had already dropped and had not been asked by OPEC for more cuts. The province said it backed a U.S. idea for tariffs on imported crude.

Before the talks, Moscow and Riyadh had been at odds over what level of production to use to calculate reductions, after Saudi Arabia hiked its supply in April to a record 12.3 million bpd, up from below 10 million bpd in March. Russian output, meanwhile, has been running about 11.3 million bpd.

The two nations fell out during an acrimonious meeting in Vienna in March, when a previous production deal collapsed.

The two sides agreed on Thursday that cuts would be made from an 11 million bpd baseline for both countries, OPEC+ documents showed.

Related Coverage

  • Instant View: OPEC+ cuts will not be enough to halt oil collapse – analysts
  • Russia's Novak calls on all oil producers to join efforts

“We have managed to overcome differences. It will be a very important deal. It will allow the oil market to start on a path to recovery,” said Dmitriev, who last month was the first official to propose a deal involving members other than OPEC+.

Several U.S. states could order private companies to limit production under rarely used powers. The oil regulator in Texas, the largest producer among U.S. states with output of about 5 million bpd, meets on April 14 to discuss possible curbs.

If Saudi Arabia failed to rein in output, U.S. senators called on the White House to impose sanctions on Riyadh, pull out U.S. troops from the kingdom and impose import tariffs on Saudi oil.

Source: Read Full Article

Oil prices jump on hopes for OPEC, Russia meeting on output cuts

SEOUL (Reuters) – Oil bounced back on Wednesday, with U.S. crude jumping over $1, lifted by hopes that a meeting between OPEC members and allied producers on Thursday will trigger output cuts to shore up prices that have crumbled amid the coronavirus pandemic.

Brent crude LCOc1 was up by 75 cents, or 2.4%, at $32.62 per barrel by 0246 GMT after falling 3.6% on Tuesday. U.S. West Texas Intermediate (WTI) crude CLc1 rose $1.30, or 5.5%, to $24.93 a barrel after dropping 9.4% in the previous session.

Thursday’s videoconference meeting between members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, is widely expected to be more successful than their gathering in early March. That ended in failure to extend cuts, and a price war between Saudi Arabia and Russia amid slumping demand.

But doubts remain over the role of the United States in any production curbs.

“Whether the United States will join output cuts is closely watched as the market’s focus remained on OPEC meeting,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul. “Oil prices have been volatile as the market is in wait-and-see mode.”

Saudi Arabia, OPEC member countries and Russia are likely to agree to cut output, but that accord could be dependent on whether the United States would go along with cuts. The U.S. Department of Energy said on Tuesday that U.S. output is already declining without government action.

“Saudi Arabia and Russia continue to hammer out a deal … What is clear is that the United States must be involved,” ANZ Research said in a note.

U.S. crude production, meanwhile, is expected to slump by 470,000 bpd and demand is set to drop by about 1.3 million bpd in 2020, the U.S. Energy Information Administration (EIA) said on Tuesday.

U.S. crude inventories jumped by 11.9 million barrels to 473.8 million barrels in the week to April 3, according to data from the American Petroleum Institute (API) released on Tuesday.

With a drop in fuel demand amid the virus outbreak, gasoline stocks also rose by 9.4 million barrels, marking the biggest one-week gain in the API figures since January 2017.

Official data from the EIA is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.

Source: Read Full Article

Oil edges down after Saudi Arabia, Russia delay meeting

SINGAPORE (Reuters) – Oil prices fell on Monday, after Saudi Arabia and Russia delayed a meeting to discuss output cuts that could help alleviate global oversupply as the coronavirus pandemic pummels demand.

Brent crude LCoc1 slipped close to $30 a barrel earlier but pared losses to trade down 24 cents, or 0.7%, to $33.87 a barrel by 0639 GMT. West Texas Intermediate crude CLc1 fell 41 cents, or 1.5%, to $27.93 a barrel, off a session low of $25.28.

Late last week, prices surged, with U.S. and Brent contracts posting their largest ever weekly percentage gains due to hopes that OPEC and its allies would strike a deal to cut crude supply worldwide by at least 10 million barrels per day (bpd).

Saudi Arabia and Russia were initially set to meet on Monday to discuss output cuts, but that has now been pushed to April 9, after they blamed each other for the collapse of talks in March.

The countries are “very, very close” to a deal on cuts, Russia’s sovereign wealth fund chief told CNBC.

U.S. President Donald Trump has said he will impose tariffs on crude imports if he needed to “protect” U.S. energy workers from the oil price crash that has been exacerbated by the war between Russia and Saudi Arabia over market share.

Prices on both sides of the Atlantic marked their worst month on record in March as the coronavirus pandemic crippled demand in a market flooded with supplies.

Production cuts could come “too little, too late” to support oil prices, ANZ and Citi analysts cautioned.

The head of the International Energy Agency has said oil inventories would still rise by 15 million bpd in the second quarter even with output cuts of 10 million bpd.

He urged the world’s richest economies to discuss broader ways to stabilise oil markets.

Still, a move by Saudi Arabia to delay the release of its crude official selling prices indicates it is not eager to flood the market with cheap supplies before a potential agreement, said Robert McNally, president of Rapidan Energy Group in Bethesda, Maryland.

“That’s a pretty clear sign that they are open to cutting production in May,” he said.

The kingdom delayed the release until Friday to wait for the outcome of the meeting between OPEC and its allies regarding possible output cuts, a Saudi source told Reuters.

Indicating the market too is expecting the supply glut to improve, prompt oil prices jumped last week and sharply narrowed their gap with future months LCOc1-LCOc6.

(GRAPHIC: Brent crude oil forward curve from Jan through April 2020 – here)

Decades-low prices have already forced producers to cut output, analysts said.

“In the short term the low prices are very painful, but if it does lead to a lot of those players leaving the industry, the supply side of the equation will balance out,” Michael McCarthy, chief strategist at CMC Global Markets in Sydney, said, referring to U.S. shale producers.

Rig counts in the United States fell by 62 last week, energy services firm Baker Hughes Co BRK.N said on Friday, marking the biggest weekly drop in five years, as U.S. energy companies slashed spending on new drilling due to a coronavirus-related slump in economic activity and fuel demand.

Citi analysts expects the drop in onshore U.S. rigs to accelerate, falling by 425 to 360 rigs by the fourth quarter.

Brazil’s Petrobras has also doubled its oil output cuts to 200,000 bpd, or 6% of its total production.

Source: Read Full Article