COVID Market Update
Lackluster short-term oil demand is still holding oil benchmarks back and creating a mountain of headaches for oil companies that require higher prices to break even. Despite cheap crude that would otherwise be attractive to major importers, major flooding in China this week (in an industrial-heavy area no less) is threatening to sap demand from the world’s largest oil importer.
The world’s third-largest oil importer, India, is also scaling back purchases of cheap crude, sinking to 10-year lows in June as its refineries shut down for maintenance–and July isn’t much better.
The recent upward curve in air passenger traffic is now flattening, and some major companies, including Google, have extended work-at-home offerings until at least next July–further hitting demand.
On top of that, China/U.S. tensions continue to unsettle an already jittery oil market.
While U.S. crude inventories were a draw this week, it came as small consolation after the previous week’s surprise build.
So bleak are the current demand signals that it would appear contango for oil is back, with front-month September Brent futures trading at a deep discount ($2) to March 2021 futures. This contango is the strongest sign that the global glut has returned.
Discovery & Development
The biggest–and only–story on the discovery scene is Apache Corp and Suriname.
Apache and its JV partner French Total SA announced…