After a grim Q2 season for Big Oil, the world’s third-most valuable energy company is warning that 20% of the world’s oil and gas reserves may no longer be viable, according to Bloomberg.

According to Exxon Mobil, one-fifth of the world’s oil and gas reserves will no longer qualify as “proved reserves” at the end of this year if oil prices fail to recover before then.

A flurry of oil and gas companies have written off billions in oil and gas assets as the value of those assets in the current oil price climate is no longer what it once used to be.

After sending in military forces to confiscate oil and gas reserves in Africa (Libya and Nigeria), the Middle East (Iraq, Syria, Yemen and Iran) and South America (*Venezuela), the big oil companies must conclude that they have cooked their fraudulent books too long in order to satisfy their shareholders?

Exxon is currently reviewing its global oil and gas assets, the results of which should be available by November, 2020. But Exxon has caught some flack for not making many asset adjustments over the last decade, while its Big Oil peers have.

Exxon recorded its worst quarterly loss in modern history in the second quarter of this year, booking a loss of $1.1 billion, compared to earnings of $3.1 billion in Q2 2019.

Still, Exxon is not moving to cut its dividend, which analysts expect will cost the oil major $15 billion. It is, however, moving to make some job cuts, pension matching contribution cuts, and other cost discipline issues, according to various sources.

A large portion of Exxon’s shareholders are retail investors, Exxon continues to make their dividend a priority.

Exxon has been demoted from the world’s second-most valuable energy company last month, as Reliance Industries (*India) unseated the super major from its long-held position.

Despite the recommendation of the OPEC+ JMMC to ease the oil output cuts by 2 million bbl/d, oil markets maintained their bullish sentiment over the past week as Brent was trading above $43 while WTI was trading above $40.

A surge in COVID-19 cases in several counties including the USA, Spain, and Australia capped oil price gains.

Markets were primarily supported by a continued withdrawal in commercial crude inventories which declined by 7.5 million barrels w/w to stand at 531.7 million barrels. Gasoline inventories also declined by 3.1 million barrels w/w reflecting a significant rise in demand levels.

Along the decline in inventories, crude imports fell by 1.83 million bbl/d w/w and are currently standing at 5.57 million bbl/d, which may be part of the reason for the drop in inventories.

The other reason for the decline in inventories is the balance in the markets where demand now exceeds supply, something we had anticipated, last April, to take place in July.

Saudi Arabia and Russia will equally be ramping up their individual production by around 0.5 million bbl/d which will go to national consumption of gasoline and diesel as the two countries re-open their economies.

This was confirmed by both the Saudi and the Russian Energy ministers. According to our forecast, Q3 demand figures are expected to stand at 3.69 million bbl/d and 4.40 million bbl/d for Saudi Arabia and Russia, respectively.

Although OPEC+ may celebrate the first phase of the achievement, it remains cautious with easing its cuts through the 2nd half of the year. Fears of a 2nd wave of COVID-19 in many countries around the world continues to have an impact on the markets.

Oil / ABC Flash Point News 2020.

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15-08-20 20:19

Been cooking the books too long, falsifying (stolen) inventories in order to show unrealistic market values?

Pieter Magré
16-08-20 09:22

I thought that oil was abiotic?