Commodities: Oil sector and the global economy
The oil prices increased on Friday. The price of Brent crude rose by 3 cents to $60.98 a barrel.
Meanwhile, the price of West Texas Intermediate (WTI) increased by 8 cents to $56.38. It is an interesting fact that the price of Brent crude is increasing for several weeks in a row. Moreover, WTI crude is also in a good position. The WTI crude oil price is one the rise for a second week.
There are various factors which determine oil prices. However, one of the primary reasons was and most likely will remain the trade war. Yesterday, Chinese and U.S. officials agreed to meet in Washington D .C. in October. Nevertheless, the trade dispute between the biggest oil consumers is a massive problem for the oil sector. The two markets are crucial for the future of this commodity.
Another reason is OPEC and its allies. By reducing the daily oil production they managed to stabilize the oil sector. Current oil prices are not ideal for the OPEC member states, but it is still better than even lower oil prices. Thanks to their coordinated actions the Brent crude oil increased by 13% since the beginning of 2019.
Exxon and its oil fields in Norway
U.S. energy giant Exxon is going to sell its business in Norway. According to various sources, the company agreed to sell its shares in 20 fields. Exxon will receive 4 billion dollars as a result of this deal. These oil fields are operated by Equinor and Shell. There are several companies which showed the interest to acquire Exxon’s business.
The list of the companies includes Akerp BP, DNO, Lundin Petroleum, Var Energi and Hitech Vision.
Moreover, it is not the first time when talks about possible deal circulated in the media. Several months ago, a Norwegian newspaper reported about this topic. In June an Exxon spokesperson stated that company was thinking about this decision.
According to Rystad Energy, the price of Exxon’s business in Norway was $3.1 billion. This was the price in June. By the beginning of 2019, Exxon controlled 530 million barrels of oil equivalent in Norway. The most valuable asset of the company is a stake in Snorre Field. The price tag of this field is $700 million.
The possible sale of its Norwegian business is another important decision. Last month, Exxon announced that it was leaving the U.K’s the North Sea. Moreover, by selling its business company will earn $2 billion. It is worth mentioning that Exxon operates 40 oil and gas fields in that region.
Mexico’s oil hedge
Mexico is working on the hedge program. According to several sources, the Mexican government asked banks for quotes. In 2018, Mexico allocated $1.23 billion to protect its 2019 revenues. The point was to have a fixed price of $55 per barrel.
There are several important details which remain unknown to the public. For example, what will be the size of the hedge. Also, the price at which it will be hedged. Usually, the size of the hedge varies from 200 million to 300 million barrels.
Oil prices rose on Friday. However, there is other interesting news as well. The sale of Exxon’s portfolio and Mexico’s oil hedge.
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