Oil Prices Go Negative in Momentous WeekBy MBN Staff | Thu, 04/23/2020 - 18:28
A historic week in oil and gas as the price of WTI went negative for the first time in history. The Mexican crude oil basket followed. Though prices are now back in the black, there is huge concern as storage begins to fill. Find out about this, and more, in the week’s oil and gas news.
The Perfect Storm
The looming storage crisis, following from a series of downgrades by credit agencies, put PEMEX at risk on Monday morning. As Monday progressed, risk became a reality as oil prices collapsed into negative.
The devastating negative-price turn meant that Mexico’s OPEC+ production refusal was cast in a different light to the celebrations that accompanied it last week as President Andrés Manuel López Obrador announced PEMEX would shut-in new wells to reduce production. How can PEMEX survive in this environment?
Storage Saturation Begins
Mexico’s storage problem meant that 15 tankers were stranded off the coast of Veracruz on Wednesday, unable to unload their cargo of hydrocarbon products. With gas station sales dropping 70 percent in April compared to last year, questions of where production could be stored were raised.
Will Operators Cut Dividend Payouts?
Norwegian operator Equinor became the first major operator to cut dividend payouts as part of the measures it is taking to protect itself against oil’s price collapse and demand destruction. This is not a popular choice for most oil majors, but do they now have a choice?