Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Italian Stock Exchange  >  Eni SpA    ENI   IT0003132476

ENI SPA

(ENI)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsAnalyst Recommendations

Headache for OPEC as oil market structure signals return of glut

share with twitter share with LinkedIn share with facebook
07/30/2020 | 08:29pm EDT
FILE PHOTO: Pump jacks operate at sunset in Midland

Rising OPEC and U.S. oil supply, coupled with stalled economic and crude demand recovery, have pushed the futures market structure back to indicating a surplus, last observed during oil's collapse in April and May amid the coronavirus pandemic.

The development is a headache for OPEC, which had been hoping demand would recover quicker after a round of record global output cuts. The group will either have to consider further production cuts or tolerate lower oil prices for longer.

The surplus market structure, when prompt prices are weaker than future prices, is also a boon for traders, as they can store crude in the hope to resell it later at a profit. Royal Dutch/Shell, Total, Eni and Norway's Equinor have all reported bumper trading profits over the past week.

Front-month September Brent futures in the past week have been trading at a discount of $2 per barrel to March 2021, the steepest discount since May, when lockdown measures against the virus outbreak cut global oil demand by a third.

The structure is known as contango and usually indicates an immediate oil surplus and hopes for a demand recovery in future months. The opposite structure is known as backwardation.

"OPEC's experiment to increase production from August could backfire as we are still nowhere near out of the woods yet in terms of oil demand," said Bjornar Tonhaugen, Rystad Energy's Head of Oil Market Research.

"The market will flip back into a mini-supply glut and a swing into deficit will not happen again until December 2020."

OPEC did not respond to a request for comment.

Howie Lee, economist at Singapore's OCBC bank, said the market was unconvinced demand was recovering and instead was choosing to buy further down the curve at a rising premium.

Record coronavirus infection and death rates in the United States and some other parts of the world are stoking fears that a new virus wave could further hit demand.

Many exchange traded funds were also spreading their long positions more equally across the curve after some asset managers were badly burnt by April's negative expiry of U.S. front-month WTI crude futures, Lee said.

Brent spreads have historically been a good p
roxy for the global production-consumption balance as well as inventories (https://tmsnrt.rs/2BMrcPi)

PHYSICAL CRUDE WEAKNESS

The physical oil market is also weakening.

Cash Dubai and DME Oman prices on Tuesday flipped into discounts to Dubai swaps for the first time since end-May due to weak demand including from China. Dubai August/September inter-month spreads also flipped from backwardation into contango in late July.

Abu Dhabi, Iraqi and Qatari grades all fell to spot discounts to their official selling prices and some cargoes are still hanging unsold, according to three Asian traders.

Demand from top buyer China softened due to weak margins, prolonged port congestion, severe flood and limited crude import quotas, several China-focused traders have said.

In Europe, rising U.S. exports are also depressing spot physical prices.

"U.S. producers are bringing back wells they had previously shut... Given the disappointing demand, it raises the possibility that the market returns to building inventories," said Warren Patterson from ING.

U.S. crude exports have risen to 3.2 million barrels per day last week, the highest since mid-May. Much of the U.S. production curtailments in the spring came from shale wells that were choked back but not shut-in completely.

WTI at Midland, Texas, the heart of the Permian basin, this week slid to trade at a discount to benchmark futures as curtailed volumes returned to the market, traders said.

"The market is most certainly feeling the effects of the China buying ending after the massive buying seen over the last few months," said Scott Shelton from United ICAP.

By Shu Zhang, Florence Tan and Dmitry Zhdannikov

Stocks mentioned in the article
ChangeLast1st jan.
ENI SPA 1.56% 8.373 Delayed Quote.-40.46%
EQUINOR ASA 1.18% 150.3 Delayed Quote.-15.36%
LONDON BRENT OIL 1.93% 45.38 Delayed Quote.-31.89%
TOTAL SE 0.67% 34.42 Real-time Quote.-30.51%
WTI 2.59% 42.635 Delayed Quote.-31.52%
share with twitter share with LinkedIn share with facebook
Latest news on ENI SPA
08/11Mexico president wants plan to execute energy vision by late Sept -sources
RE
08/10Equinor appoints new CEO to speed up renewable investments
RE
08/10BP's green energy targets will be tough to meet
RE
08/10Equinor appoints new CEO to speed up renewable investments
RE
08/06ENI STANDS WITH ITALY : to fund new emergency department for infectious diseases..
PU
08/06ENI CON L'ITALIA : nuovo Pronto Soccorso Infettivologico all'Ospedale Luigi Sacc..
PU
08/04BP halves dividend after record loss, speeds up reinvention
RE
08/04BP halves dividend after record loss, speeds up reinvention
RE
08/04ENI : e ASSTRA, alleanza per promuovere una mobilità sostenibile e decarbonizzat..
PU
08/04ENI : and ASSTRA, a partnership to promote sustainable and decarbonized mobility
PU
More news
Financials
Sales 2020 49 242 M 58 077 M 58 077 M
Net income 2020 -5 324 M -6 279 M -6 279 M
Net Debt 2020 19 791 M 23 342 M 23 342 M
P/E ratio 2020 -5,73x
Yield 2020 6,02%
Capitalization 29 452 M 34 666 M 34 736 M
EV / Sales 2020 1,00x
EV / Sales 2021 0,83x
Nbr of Employees 32 177
Free-Float 67,0%
Chart ENI SPA
Duration : Period :
Eni SpA Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends ENI SPA
Short TermMid-TermLong Term
TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 26
Average target price 9,68 €
Last Close Price 8,24 €
Spread / Highest target 82,0%
Spread / Average Target 17,4%
Spread / Lowest Target -27,9%
EPS Revisions
Managers
NameTitle
Claudio Descalzi Chief Executive Officer, Director & GM
Lucia Calvosa Chairman
Stefano Maione Chief Operations, Technology & Development Officer
Francesco Gattei Chief Financial Officer
Karina A. Litvack Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
ENI SPA-40.46%34 666
SAUDI ARABIAN OIL COMPANY-5.53%1 774 912
ROYAL DUTCH SHELL PLC-47.39%122 688
PETROCHINA COMPANY LIMITED-30.18%111 129
TOTAL SE-30.51%105 786
GAZPROM-25.25%62 082