Earlier today it was still looking iffy:1-Oil Negotiators Race Against Clock to Clinch Historic Deal
(Bloomberg) -- Negotiators raced to clinch a historic deal to cut oil supply and stem a devastating price rout, with just hours to go before the market opens.As diplomatic wrangling between Mexico and Saudi Arabia entered a fourth day, a group of OPEC+ ministers were due to speak at 5 p.m. London time. Delegates said some progress had been made and a compromise solution proposed by President Donald Trump last week -- initially rejected by Saudi Arabia -- would be discussed again on the OPEC+ call.The stakes are high: Prices are already collapsing under the weight of an oil glut that amounts to about a third of the market’s usual size, after the coronavirus pandemic shut down the global economy. That’s threatening the U.S. shale industry, wrecking the budgets of oil-dependent nations and making it harder for central banks to respond to the virus shock.The Kremlin warned of “unmanageable chaos” if negotiations fail. “The whole world needs this deal,” Dmitry Peskov, spokesman of President Vladimir Putin, said in comments broadcast on Sunday. In an attempt to break the impasse, Trump offered a diplomatic solution that includes some creative accounting, with Mexico counting some of the U.S. market-driven supply decline as its own. According to delegates, most OPEC+ countries back the Trump compromise -- even if they acknowledge it’s a face-saving mechanism that doesn’t translate into actual cuts. But Saudi Arabia insisted that Mexico cut its production as much as everyone else.The OPEC+ alliance initially met on Thursday via video conference, followed on Friday by a virtual gathering of energy ministers of the Group of 20.
2- Too Low for Shale? Oil Price War Claims Another Victim? Maybe? Or not.
Whiting Petroleum Corp. (NYSE: WLL), once the largest oil and gas producer in North Dakota's Bakken Shale, has filed for Chapter 11 bankruptcy becoming the first major shale producer to do so in the current year. Whiting has cited the "severe downturn" in oil and gas prices courtesy of the Saudi Arabia-Russia oil price war and COVID-19-related impact on demand. But this shale producer has no plans to go into a state of suspended animation: Whiting has announced that it will go ahead with full production claiming it has ample liquidity with $585M of cash on its balance sheet and has reached an agreement in principle with certain noteholders for a comprehensive restructuring.In short, Whiting’s playbook is to buy more time hoping for a rebound in energy prices to bail it out. WLL shares have jumped 15.1 percent after the bankruptcy announcement--probably an indication that investors believe the company has healthy odds at a comeback. Still, the shares have crashed an appalling 95 percent YTD, making the sector’s 46.9 percent YTD plunge appear tame in comparison. Whiting has announced that existing shareholders holders will only receive 3 percent of the equity in the reorganized company.
- OPEC and allies led by Russia agreed on Sunday to cut oil output by a record amount - representing around 10% of global supply - to support oil prices amid the coronavirus pandemic, and sources said effective cuts could amount to as much as 20%. The group, known as OPEC+, said it had agreed to reduce output by 9.7 million barrels per day (bpd) for May-June, after four days of marathon talks and following pressure from U.S. President Donald Trump to arrest the price decline. “The big Oil Deal with OPEC+ is done. This will save hundreds of thousands of energy jobs in the United States,” Trump wrote on Twitter, thanking Russian President Vladimir Putin and Saudi King Salman for pushing the deal through.“I just spoke to them... Great deal for all,” Trump said.OPEC+ has 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.Three OPEC+ sources said effective oil output cuts could be close to 20 million bpd if contributions from non-members, steeper voluntary cuts by some OPEC+ members and strategic stocks purchases were taken into account.Gulf members of the Organization of the Petroleum Exporting Countries would be cutting output more steeply than agreed, OPEC+ sources said.
The sources said the International Energy Agency (IEA) would announce purchases into stocks by its members on Monday. The IEA did not immediately respond to a request for comment.
Source