CCTV Transcripts

CCTV Script 08/06/20

— This is the script of CNBC's news report for China's CCTV on June 8, 2020, Monday.

Saudi Arabia's latest move could mean that the major producer is using every tool at its disposal to try to boost oil prices and make up for lost revenue from the price war and the epidemic.

The latest data we shows that Saudi crude exports fell 21.9 per cent in the first quarter and revenues fell by $11bn. Other OPEC producers are facing similar problems, such as the latest figures from Algeria, which showed a 26 per cent fall in energy revenues in the first quarter, adding more than 26 per cent to the country's trade deficit. Now that Saudi Arabia has set new export prices, expect other OPEC members to follow soon. The Saudi move will also squeeze the margins of downstream refineries. In particular, Asia, Saudi Arabia's main export market, has seen the biggest price increases.

We know that OPEC and its Allies recently agreed to extend their production cut by 9.7 million barrels a day for another month, which is a positive factor for oil prices. The one-month extension was shorter than the market had expected. This is largely due to concerns that the recent rebound in oil prices and the expected improvement in demand could lead US oil companies to start increasing production again, according to the report.

In fact, Texas-based Parsley Energy already plans to resume most of the capacity it cut in early June. EOG Resources and others have also started to reuse their wells. The company has also said it will accelerate production in the second half of the year.

Now, both Brent oil prices and US WTI oil prices have been trading above the price of $40/barrel.

This will further accelerate the resumption of US shale production. But the United States is facing weather obstacles in resuming production. As tropical Storm Cristobal approaches, oil and gas producers in the U.S. Gulf of Mexico have reduced offshore oil capacity by nearly 35 percent and natural gas output by more than 32 percent. Oil platforms in the Gulf of Mexico account for about 16 percent of daily U.S. crude production. In addition, more than 45 percent of U.S. refining is located in the region.

In addition to the uncertainty in the US, there are concerns about the implementation of production cuts by OPEC and its Allies. Combined with Saudi Arabia's latest price move, this could add up to a near-term price shock.

At the recent OPEC + meeting, the issue of commitment implementation was discussed again. 

The OPEC member's compliance rate is 89%, and the OPEC+'s compliance rate is 92%.

Kingsley Jones  

Founder and CIO. Jevons global  

I think we're gonna expect volatility, if you add to those concerns about compliance, we just dont know what the US shale sector response will be, you know these price some guys can come back on stream and start producing again, or even drilling new wells 

We will continue to pay attention to the trend of oil prices.