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Permalink Reply by Skip Peel - Mineral Consultant on March 9, 2020 at 2:45

U.S. markets crater as coronavirus-sparked oil war sends prices spiraling

The Dow plunges more than 1,800 points in a brutal global sell-off, and treasury yields dive to new lows, amplifying recession fears

Excerpt.

Cratering oil prices might please consumers at the pump, but they would be devastating for oil companies and global markets, which have already been ransacked by coronavirus panic. Brent crude, the global oil benchmark, plunged more than 21 percent to $35 a barrel, its biggest drop since the Gulf War. The price of West Texas Intermediate crude, largely used in the United States, fell from about $41 to $32 a barrel Sunday night, a low not seen in four years.

Global markets were apoplectic. Japan’s Nikkei closed down more than 5 percent, while Hong Kong’s Hang Seng Index shed more than 4.2 percent. European markets were tumbling more than 7 percent across the board in midday trading.

Panic pushed the yield on the U.S. 10-year treasury below 0.4 percent for the first time in history Monday as investors fled for safe havens. The trajectory could be an ominous sign of a weakening economy, because a low yield can indicate a lack of confidence in economic growth. Yields decline as bond prices rise. Gold, another safe haven, was up 0.4 percent in early trading.

 

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Permalink Reply by Skip Peel - Mineral Consultant on March 9, 2020 at 4:19

Falling oil is a shot in the arm for U.S. gas drillers

By Sayer Devlin on 3/6/2020 worldoil.com

NEW YORK (Bloomberg) --As the collapse of OPEC+ talks on production cuts sent energy stocks into a tailspin, one corner of the industry defied the rout: U.S. natural gas drillers.

Shares of gas producers including Cabot Oil & Gas Corp., Southwestern Energy Co., Range Resources Corp. and EQT Corp. climbed on speculation that the nosedive in crude prices will force oil explorers in the Permian Basin of West Texas and New Mexico to pull back. Soaring gas output from the basin, where the fuel is extracted as a byproduct of oil drilling, has contributed to a massive glut.

“The collapse in the crude market is going to create a more constructive gas setting,” said Matthew Portillo, managing director of exploration and production research at Tudor, Pickering, Holt & Co. “Slowing U.S. growth is going to significantly affect associated gas production.”

U.S. gas producers still face obstacles to recovery, however. Prices for the heating and power-plant fuel are trading near four-year lows as output from shale basins continues to climb, albeit at a more measured pace. The coronavirus outbreak has sapped global gas demand, prompting buyers to refuse U.S. cargoes of the fuel and stoking concern that American exports will slow.

Note: This article was published on 3/6 and does not account for the announcement of Saudi oil price cuts.

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Permalink Reply by Skip Peel - Mineral Consultant on March 9, 2020 at 6:37

I doubt that any of the Haynesville operators will get a significant bump in stock price.  I think they may enjoy a higher price for their un-hedged natural gas production.  And more importantly, so may royalty owners.

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