Oil Prices Edge Upwards but Companies Make Cuts

Oil companies have returned to their upward trajectory after yesterday’s small slump but companies and personnel are still feeling the pain while big players in the industry cut numbers further.

Mexico’s crude oil basket saw 2.36 percent shorn from its value yesterday, closing the day’s trading session at US$21.10 per barrel according to PEMEX. The drop was to be expected as WTI and Brent mixes had both ended the day with a fall, following five days of gains.

According to Reuters, todays’ increase of 1.75 percent, gaining 52 cents to hit US$30.24 per barrel for Brent and WTI’s 47 cent gain, or 1.96 percent, to reach US$24.46 per barrel, both by 10:23 GMT, was driven by a surprise rise in China’s exports for April.

China was the first country to shutdown following the outbreak of the COVID-19 pandemic that occurred in the city of Wuhan and it has now been among the first countries to restart its economy. According to Reuters, Chinese imports of crude rose just shy of 1MMb/d in April, from 9.68MMb/p in March to 10.42MMb/d.

The gradual reopening of economies in China and Europe, as well as the impact of OPEC+ production cuts and slowly falling storage limits, has boosted the market and enabled prices to cautiously rise.

However, nothing is moving quickly enough for the companies bearing the brunt of the demand drop.

Oil field service companies have taken heavy blows as their services have been sidelined with operators shutting in wells and delaying projects. More largescale layoffs are taking place within companies that have strong market presence in Mexico. Among these are Halliburton, the world’s largest oil field service company, which yesterday announced it will cut 22 percent of its staff, around 1,000 people, at its headquarters in Houston, says Reuters.

According to Bloomberg, Enbridge, which is North America’s largest pipeline supplier, will make cuts too. The reduction in personnel will save the company around US$213 million. Meanwhile, Refinitiv reports that Aker BP has reduced its 1Q20 dividends to investors by two-thirds in the wake of the COVID-19 pandemic. This move echoes the decisions taken by Norwegian operator Equinor and oil service company Schlumberger last month.