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Oil Prices Gain 2% on Tightening Supply

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The Oil Sector That Will Suffer The Most

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COVID Market Update

- Oilfield service providers continue to be hit hard. Having suffered during the last oil price crisis, it looks like this group will not be spared this time around either. Baker Hughes booked a $15 billion in non-cash goodwill impairment for Q1, and is expected to cut its 2020 capex by 20%. Schlumberger has furloughed employees, cut executive salaries by 20%, cut its dividend by ¾, and booked an $8.5 billion impairment charge. Halliburton has cut 600 layoffs in Texas and Oklahoma. Weir Group expects to see a reduction in exploration and development capital expenditure of 30%.

- All the same, the Saudis enjoyed a quadrupling of oil exports to the United States, amid an oil price war, from February to the first half of April. The US imported 1.46 million bpd of Saudi oil in the first two weeks of April.

- The DoE is still set to rent out available SPR storage capacity in a last-ditch effort to provide some relief to oil companies choking on their oil inventory amid the price and demand slump. Nine companies have raised their hand to use the SPR, with 23 million barrels of capacity up for grabs. In addition to providing relief to oil companies at home, the program is an unspoken acknowledgment that the DoE is well aware the OPEC cuts alone will not provide the market with relief sufficient to keep oil inventories from ballooning out of control.

- Several pipeline projects have stalled due to the pandemic, including the 700-mile…





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