In brokering the end to the global oil-price war last month, the Trump administration assured leaders that America’s shale patch would throttle back production.
But few expected that the cuts would run this deep – and happen so quickly.
Drillers are laying down rigs and shutting in wells at a frantic pace in response to the plunge in oil prices caused by the coronavirus pandemic. A week after West Texas Intermediate crude settled below zero for the first time ever, analysts at JP Morgan projected that the US would cut output by 1.5 million barrels per day by June. Two weeks into May, production is already down by at least that much and continues to decline.
As a result, oil storage tanks that were in danger of brimming over got a break last week when inventories shrank for the first time since January. WTI for June delivery rallied to near $30 per barrel on Friday, up from $10.01 when it became the prompt contract on April 21.
“We were already in the midst of a transition away from high growth into slower growth,” Raoul LeBlanc, a Houston-based oil expert at IHS Markit said. “We just got cut off at the knees.”
The declines include 758,000 bpd of announced reductions in the US by some of the country’s biggest producers including ConocoPhillips, Continental Resources and Chevron, according to data compiled by BloombergNEF.
More than 500,000 bpd of production in the Bakken region of North Dakota and Montana has been shut in. Daily output from Alaska’s North Slope is down by about 100,000 barrels from early March.
In April, US Energy Secretary Dan Brouillette told world leaders that the US will cut production by about 2 million bpd this year.
Rystad Energy said that US production shut-ins will reach at least 2m bpd in June, including natural gas liquids, with Permian-focused producers in West Texas and New Mexico driving 42 per cent of the curtailments expected.
Some producers expect that currently projected June cuts may eventually increase depending on the prevailing oil price, but curtailed oil volumes should mostly return to pre-cut levels in the third quarter of 2020, Rystad said in a research note.
Plains All American Pipeline said in its first quarter earnings call that shut-ins in the US and Canada combined are somewhere between 3.5m and 4.5m bpd.
“We assumed June, July time period for trough and then some activity resumption in the August time period,” Plains' executive vice president Jeremy Goebel said in the May 5 call.
Things in the shale patch began to change quickly this spring when disagreement on supply cuts between Saudi Arabia and Russia led to a sharp decline in prices just as the global coronavirus pandemic began to smash demand.
Pioneer Natural Resources, an independent producer, which has operated in the Permian Basin for decades, asked the state of Texas to impose mandatory production cuts to save the industry from what it claimed would be irreparable damage over the coming months.
The proposal came less than a week after Texas Railroad Commissioner Ryan Sitton proposed a 10 per cent production cut in the state. Although a cut was never agreed upon, producers were already forced to shut in output.
Not to be discounted, Canada, America’s largest source of foreign crude imports, slashed investment and production from the oil sands beyond expectations.
A month ago, IHS Markit estimated capital expenditure cuts in Western Canada’s oil and gas sector would total over $6 billion (Dh22bn), but as the grim reality of record low oil prices set in, producers cut spending by more than $8.4bn.
By May 8, more than 700,000 bpd of output reductions had been announced, according to IHS Markit. Canada’s biggest companies including Canadian Natural Resources, Suncor Energy and Husky Energy have all reduced heavy oil output.
The consultancy now predicts that western Canada’s output my decline by more than 1m bpd in the second quarter compared to the fourth quarter of last year.
“From a big picture point of view, the worst is behind us and the market is moving toward re-balancing,” Daniel Ghali, a TD Securities commodity strategist, said. “The supply cuts have been fairly massive.”
To be sure, even after last week’s decline, US crude stockpiles are still close to record highs and a fleet of 30 Saudi oil tankers with more than 50 million barrels of crude are just now starting to arrive on the US Gulf and Pacific coasts.
Oil prices are not expected to rise fast and when they do start to climb, expect shale producers to open production as soon as they can.
The second half of the year will not be met with pre-crisis oil prices again as the gigantic oil stock overhang must first be worked down, according to Rystad Energy’s head of oil markets Bjornar Tonhaugen.
“We believe stocks will be reduced gradually over the next 12 months or so,” Mr Tonhaugen said in a note Friday. “All bets though hinge upon avoiding a second wave of the coronavirus, which is yet to be seen as countries remove lockdowns around the world.”
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Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
Indoor cricket in a nutshell
Indoor Cricket World Cup - Sep 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
LA LIGA FIXTURES
Friday Valladolid v Osasuna (Kick-off midnight UAE)
Saturday Valencia v Athletic Bilbao (5pm), Getafe v Sevilla (7.15pm), Huesca v Alaves (9.30pm), Real Madrid v Atletico Madrid (midnight)
Sunday Real Sociedad v Eibar (5pm), Real Betis v Villarreal (7.15pm), Elche v Granada (9.30pm), Barcelona v Levante (midnight)
Monday Celta Vigo v Cadiz (midnight)
Mobile phone packages comparison
The specs: 2018 Mercedes-Benz E 300 Cabriolet
Price, base / as tested: Dh275,250 / Dh328,465
Engine: 2.0-litre four-cylinder
Power: 245hp @ 5,500rpm
Torque: 370Nm @ 1,300rpm
Transmission: Nine-speed automatic
Fuel consumption, combined: 7.0L / 100km
Terror attacks in Paris, November 13, 2015
- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany
- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people
- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed
- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest
- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
Fanney Khan
Producer: T-Series, Anil Kapoor Productions, ROMP, Prerna Arora
Director: Atul Manjrekar
Cast: Anil Kapoor, Aishwarya Rai, Rajkummar Rao, Pihu Sand
Rating: 2/5
ESSENTIALS
The flights
Etihad (etihad.com) flies from Abu Dhabi to Mykonos, with a flight change to its partner airline Olympic Air in Athens. Return flights cost from Dh4,105 per person, including taxes.
Where to stay
The modern-art-filled Ambassador hotel (myconianambassador.gr) is 15 minutes outside Mykonos Town on a hillside 500 metres from the Platis Gialos Beach, with a bus into town every 30 minutes (a taxi costs €15 [Dh66]). The Nammos and Scorpios beach clubs are a 10- to 20-minute walk (or water-taxi ride) away. All 70 rooms have a large balcony, many with a Jacuzzi, and of the 15 suites, five have a plunge pool. There’s also a private eight-bedroom villa. Double rooms cost from €240 (Dh1,063) including breakfast, out of season, and from €595 (Dh2,636) in July/August.
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
THE DRAFT
The final phase of player recruitment for the T10 League has taken place, with UAE and Indian players being drafted to each of the eight teams.
Bengal Tigers
UAE players: Chirag Suri, Mohammed Usman
Indian: Zaheer Khan
Karachians
UAE players: Ahmed Raza, Ghulam Shabber
Indian: Pravin Tambe
Kerala Kings
UAE players: Mohammed Naveed, Abdul Shakoor
Indian: RS Sodhi
Maratha Arabians
UAE players: Zahoor Khan, Amir Hayat
Indian: S Badrinath
Northern Warriors
UAE players: Imran Haider, Rahul Bhatia
Indian: Amitoze Singh
Pakhtoons
UAE players: Hafiz Kaleem, Sheer Walli
Indian: RP Singh
Punjabi Legends
UAE players: Shaiman Anwar, Sandy Singh
Indian: Praveen Kumar
Rajputs
UAE players: Rohan Mustafa, Ashfaq Ahmed
Indian: Munaf Patel
Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
Medicus AI
Started: 2016
Founder(s): Dr Baher Al Hakim, Dr Nadine Nehme and Makram Saleh
Based: Vienna, Austria; started in Dubai
Sector: Health Tech
Staff: 119
Funding: €7.7 million (Dh31m)
Results
4pm: Maiden; Dh165,000 (Dirt); 1,400m
Winner: Solar Shower; William Lee (jockey); Helal Al Alawi (trainer)
4.35pm: Handicap; Dh165,000 (D); 2,000m
Winner: Thaaqib; Antonio Fresu; Erwan Charpy.
5.10pm: Maiden; Dh165,000 (Turf); 1,800m
Winner: Bila Shak; Adrie de Vries; Fawzi Nass
5.45pm: Handicap; Dh175,000 (D); 1,200m
Winner: Beachcomber Bay; Richard Mullen; Satish Seemar
6.20pm: Handicap; Dh205,000 (T); 1,800m
Winner: Muzdawaj; Jim Crowley; Musabah Al Muhairi
6.55pm: Handicap; Dh185,000 (D); 1,600m
Winner: Mazeed; Tadhg O’Shea; Satish Seemar
7.30pm: Handicap; Dh205,000 (T); 1,200m
Winner: Riflescope; Tadhg O’Shea; Satish Seemar.
