FILE PHOTO: FILE PHOTO: FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada on July 21, 2014. REUTERS/Todd Korol/File Photo

A plunging demand for oil due to the coronavirus pandemic has continued to drive prices down to an 18-year low, at less than $19 a barrel. The crash follows an agreement reached last week by the Organization of the Petroleum Exporting Countries – an alliance of the top oil-producing nations in the world – to reduce output and buoy prices. 

Each of the countries in the OPEC and their allies agreed to slash production by 9.7 million barrels per day, but economists say it will not be enough to offset an “epic collapse” of the oil and gas industry. Lamenting poor oil market outlooks for the year, Bloomberg called the quarterly outlook “truly horrifying.” According to the International Energy Agency, demand this quarter could drop by as much as the entire consumption of the U.S. and Canada combined, or 23 million barrels a day.

MEDIA PERSPECTIVE

Just How Big Is the Biggest-Ever Slump in World Oil Demand? – Bloomberg – 4/17/20
All three expect things to get better, or at least not to be quite so bad, in the second half of the year. By then the IEA and OPEC agree that global oil demand will (only) be down by about 5 million barrels a day compared with the same period last year.

Half of announced North American oil cuts come from just three companies – Reuters – 4/17/20
Numerous U.S. and Canadian oil companies have said they are reducing output in 2020, but a Reuters analysis of the announcements so far show that just three companies – Chevron, ConocoPhillips and Occidental Petroleum – account for more than half of the cuts.

Schlumberger Cuts Jobs, Slashes Dividend 75% in Historic Oil Rout – The Wall Street Journal – 4/17/20
Schlumberger Ltd., the world’s largest oil-field-services company, cut its shareholder dividend 75% and is restructuring businesses, cutting jobs and closing facilities to cope with a historic energy rout. Chief Executive Olivier Le Peuch said on Friday that Schlumberger is bracing for an acute downturn, with North American oil-field activity set to decline 40% to 60% in the second quarter, the steepest drop in several decades.

INFLUENCER PERSPECTIVE

Andrew Leach on Twitter, 4/19/20: Check out the difference between the @EIAgov outlooks for global crude oil consumption in January, February, and March vs their latest numbers in April.  Woah. And EIA is bullish relative to some.

Institute for Energy Research on Twitter, 4/19/20: Gasoline demand has plummeted because of state lock-downs and stay-at-home policies to encourage social distancing due to the coronavirus pandemic.

Nasser Saidi on Twitter, 4/19/20: The cratering of oil prices has blown a major hole in the budgets of oil producers, now needing financing: #SaudiArabia’s #bond sale to raise $7bn was heavily oversubscribed, with total orders amounting to more than $54bn @NSA_economics by http://bit.ly/2KjlUvD

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