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What Will $15 Oil Mean For Producers?

1. Gasoline demand plunges to 26-year low

- Unsurprisingly, U.S. gasoline demand has fallen sharply.

- With the U.S. economy in a form of hibernation, the impact is finally showing up in the data. The weekly EIA release shows a 13.8-million-barrel increase in crude inventories, gasoline stocks rose by 7.5 million, and refinery rates fell by 1 mb/d.

- Gasoline demand is down to 6.5 mb/d, a figure not seen since 1994.

- “This underlines our hypothesis that the harm caused to the US oil industry will outweigh the benefits for consumers,” Commerzbank wrote in a note.

2. Shale cuts growing

- More spending cuts are coming from the U.S. shale sector. Roughly 22 U.S. independents have cut spending by around $20 billion so far, an average of between 35 and 50 percent or more, according to Wood Mackenzie.

- “[C]ompanies today are far leaner than back then; and what we’ve seen so far may just be a taste of what’s to come,” WoodMac said.

- For the majors, share buybacks “will stop…Shell (US$4 billion), Chevron (US$5 billion), Total (US$2 billion) and Equinor (US$0.7 billion) have already shelved planned buyback programmes for 2020,” the consultancy added. The big question is whether the dividend payouts are going to get trimmed as well.

- Whiting Petroleum (NYSE: WLL) became the first major victim of the latest collapse in oil prices. The Denver-based driller declared…





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