Fears of global crude storage hitting capacity are now dominating markets, sending oil prices falling towards $15

WTI fell below $18 per barrel in early trading on Friday, as a deepening gloom swept over the market. China reported a contraction in GDP of 6.8 percent for the first quarter. OPEC affirmed in its Oil Market Report that demand would fall by 6.9 mb/d this year. Storage fears are now beginning to dominate market sentiment.

U.S. DOE considers paying drillers not to drill. In the latest scheme to prop up indebted shale drillers, the U.S. Department of Energy is reportedly considering paying oil and gas companies to keep their reserves undrilled. The idea seems farfetched, and is based on the notion that undeveloped projects would act as “storage.” The reserves could be drilled later and sold later, with proceeds going to the government. The proposal would require appropriations from Congress.

Hundreds of layoffs hit oil field this week. Chesapeake Energy (NYSE: CHK) laid off 200 workers in Oklahoma on Wednesday, half in the Oklahoma City headquarters and half in the oil field. Baker Hughes (NYSE: BKR) laid off 234 employees and Halliburton (NYSE: HAL) laid off 33. Baker Hughes said it would take a $15 billion non-cash impairment in the first quarter.

Brazil shuts down shallow water rigs, also battles coronavirus offshore. There have been 126 cases of coronavirus among offshore oil workers in Brazil, according to Reuters. Meanwhile, Petrobras (NYSE: PBR) halted operations at 62 platforms in shallow water offshore because of low prices, curtailing 23,000 bpd.

Chevron sells Azerbaijan assets for $1.57 billion. Chevron (NYSE: CVX) completed the sale of its interests in oil assets in Azerbaijan as part of its divestment program.

ConocoPhillips cuts 225,000 bpd. ConocoPhillips (NYSE: COP) curtailed 225,000 bpd, including 125,000 bpd in U.S. Lower 48. The company will also suspend its share buyback program and cut spending from $6.6 to $4.3 billion. Related: Saudi Arabia Slashes Asian Oil Exports By 2 Million Bpd

Banks set aside billions for losses. Souring loans have forced major Wall Street banks to set aside billions of dollars in losses. Bank of America’s (NYSE: BAC) profit fell 45 percent.

Enterprise opens pipeline to Cushing. Enterprise Products Partners LP (NYSE: EPD) said it would allow oil companies to send oil on its Seaway pipeline from the Gulf Coast to Cushing, utilizing a section of unused pipe to allow more oil to reach storage.

Megadrought in the U.S. West. A climate change-induced megadrought has swept across much of the Western United States.

Jet fuel demand could take years to rebound. Jet fuel demand could fall by 2.1 mb/d in 2020, a 26 percent decline. “Jet fuel consumption will be impacted for a longer time and maybe not recover fully even next year, as travellers remain concerned about long-haul vacations, and businesses get used to online meetings,” said Per Magnus Nysveen, head of analysis at Rystad Energy.

European car sales suffer record decline. European car sales fell 52 percent year-on-year in March, falling to the lowest level since at least 1990.

Saudi Arabia issues new debt. Saudi Arabia sold $7 billion in bonds on Wednesday in order to raise cash.

Real oil prices lower than benchmarks. North Sea oil is trading at $6 per barrel below Brent, the largest discount in a decade. Bakken oil is trading below $10 per barrel. Prices for physical cargoes have dropped below headline benchmark prices as regional grades overwhelm local conditions.

Occidental to pay Warren Buffet in stock, not cash. Occidental Petroleum (NYSE: OXY) chose to pay a quarterly $200 million payment to Berkshire Hathaway in stock rather than cash, fresh evidence of the financial strain facing Occidental.

IEA: Oil demand to fall by 29 mb/d in April. The IEA said that oil demand would fall by 29 mb/d in April and by nearly 10 mb/d for the entire year.

U.S. crude storage 65 percent full. At over 503 million barrels, U.S. commercial stocks are 65 percent full.

Clean energy shed 106,000 jobs. The U.S. clean energy sector lost 106,000 jobs last month as economies shut down.

Thousands of Bakken wells idled. An estimated 4,600 wells in North Dakota have been idled, shutting in roughly 260,000 bpd, according to state data.

Goldman Sachs: Own EV stocks. Goldman Sachs recommended owning Tesla (NASDAQ: TSLA) and other companies exposed to electric vehicles. EVs are cheaper than gasoline vehicles on a total cost of ownership basis, even with gasoline selling for less than $2 per gallon. However, EV sales could contract by 43 percent this year.

Twitter traders make money shorting oil. A bunch of petroleum engineers and traders, banded under the Energy FinTwit (#EFT) hashtag have made money shorting oil and energy stocks this year.

Judge blocked Keystone XL permit. In the latest setback to TC Energy’s (NYSE: TRP) Keystone XL pipeline, a Montana judge blocked a key permit, ordering the Army Corps of Engineers to revisit the project’s impact on endangered species.

Refiners want ethanol waiver. Governors of five U.S. states have asked the Trump administration for a nationwide waiver for refiners to get out of ethanol mandates. The proposal would reignite a war between refining and ethanol industries.

Nigeria struggles to find buyers of oil cargoes. 50 million barrels of Nigerian oil for late-April and May have still not been sold, according to S&P Global Platts. Some is being held in floating storage.

By Tom Kool of Oilprice.com

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