COVID Market Update
- Continental Resources - the largest producer in the Bakken - has shut in production, sounding alarms across the entire U.S. shale patch. It has also notified several of its clients that it will suspend deliveries. Continental is thought to have shut in about one-third of its production. Unlike some other shale companies in the United States, Continental has not hedged its 2020 production and is floundering as Bakken crude trades around $3 per barrel, compared to WTI’s $17.
- Oil ETFs and ETNs went for a wild ride this week, with front-month WTI futures contracts trading in the red on Monday. Barclays OIL ETN, iPath S&P GSCI Crude Oil Total Return Index ETN is being liquidated. The USO ETF has escaped this liquidation fate, but narrowly. OIL ETN holders will receive a portion - a tiny portion - of what they had invested in their unsecured ETN. The payout to holders will be based on the valuation of the ETN as of April 23rd closing.
- Marathon Petroleum - the largest U.S. refiner - warned this week that it was expecting a $7.8 billion writedown as fuel demand crashed. The loss before charges is expected to be $250 million for Q1. As stay-at-home orders in the US continue, Marathon has tapped a $3.5 billion credit facility and is also looking at taking out a $1 billion 1-year loan.
- Mexico’s famous oil hedge, which likely cost the country slightly north of $1 billion, is expected to produce a $6B windfall for the…