Oil is set to close out the week with the largest weekly loss in months. Crude fell on news that Saudi Arabia has declared a partial cease-fire Yemen, raising hopes that several years of war could come to an end. It would also dial down tension with Iran.
Saudi Arabia insists on Abqaiq timeline, but analysts remain skeptical. Saudi Aramco has promised to restore production at the Abqaiq and Khurais facilities by Monday, but oil traders are not so sure. “I would like to see real evidence that they are going to resume [production] in the coming weeks,” a Middle East oil company official, told S&P Global Platts. Middle East-based petroleum engineer Einstein Millan Arcia added: “I seriously doubt Saudi Aramco’s capability to recommission such facilities [by September 30] considering the depth of the damage and all the associated testing protocol needed prior to restart.”
Aramco accelerates IPO preparations. After some reports suggested that Saudi officials were considering delaying the IPO of Aramco, it now appears that the government is pressing forward and even accelerating the effort. The offering could come as soon as November.
Saudi exports plunge. Despite assurances that there would be little interruption in exports, a report from Petro-Logistics, reported on by Reuters, estimates that Saudi oil exports averaged 5.875 mb/d in the 10 days after the Abqaiq attack, down 1.494 mb/d from prior.
Return on capital falling for oil majors. Low oil prices and a slow but unfolding energy transition is cutting into the returns for the oil industry. ExxonMobil’s (NYSE: XOM)return on invested capital (ROIC) was 25 percent in 2011, but was less than 10 percent last year, according to the Wall Street Journal. Meanwhile, the ROIC for Vestas Wind Systems (CPH: VWS) was negative 5 percent in 2011, but averaged 22 percent over the last five years.
U.S. and China make goodwill gestures. The atmosphere between the U.S. and China is thawing just a bit after a series of back-and-forth goodwill gestures. On Thursday, China said that it was willing to buy more U.S. products after Washington waived tariffs on some Chinese products. Talks are scheduled to restart in early October.
Halcon Resources restructures $750 million in debt. Halcon Resources (OTCMKTS: HKRSQ) shed $750 million from its balance sheet in a debt restructuring. That could allow the company to exit bankruptcy in the coming weeks, the company’s second time in bankruptcy. Halcon blamed unforeseen operational issues, according to the Wall Street Journal, including poor well performance and falling oil prices.
IEA may cut oil demand forecast on souring economy. The head of the IEA said that the agency may slash its oil demand growth forecast once again if the global economy continues to deteriorate. “It will depend on the global economy. If the global economy weakens, for which there are already some signs we may lower oil demand expectations,” Fatih Birol told Reuters. “But at the same time, we shouldn’t forget low oil prices also (put) upward pressure on the demand.” News Provided via Tom Kool, OilPrice.com
