Brief Energy: Carnarvon Petroleum (CVN AU) Equity Raise: Opportunity to Get Exposure to Cheap Pre-FID Oil Assets and more

In this briefing:

1. Carnarvon Petroleum (CVN AU) Equity Raise: Opportunity to Get Exposure to Cheap Pre-FID Oil Assets
2. Weekly Oil Views: US-China Trade Deal Suspense Puts Oil Market in Limbo

1. Carnarvon Petroleum (CVN AU) Equity Raise: Opportunity to Get Exposure to Cheap Pre-FID Oil Assets

Carnarvon Petroleum (CVN AU) has announced a A$50mm equity raise to fund the appraisal of its key Dorado discovery this year and a further exploration well in the area. We discuss why we see Carnarvon’s assets as attractive.

2. Weekly Oil Views: US-China Trade Deal Suspense Puts Oil Market in Limbo

A high-level US delegation will be in Beijing for trade talks in the week of February 11, but Donald Trump rattled the markets on February 7 by saying that he would not be meeting his Chinese counterpart Xi Jinping before the March 1 deadline for the two countries to forge a deal or possibly end up escalating their battle.

That forced the financial markets to recalibrate their optimism with regard to the two countries putting all their conflicts behind them soon. Oil swooned along with global equities.

Trump had tweeted at the end of January that a “final deal” would not be made until he and Xi met and thrashed out some of the “long-standing” and “more difficult” issues the US has with Chinese trade practices.

With a comprehensive US-China trade deal in the next few weeks ruled out, and a ratcheting up of US tariffs from March 2 equally inconceivable, we discuss the likely middle-ground scenarios and what they mean for crude price direction.

Overall, though, the oil market could remain in limbo for a while. There are a number of supply risks gathering on the horizon, but those will likely not move center-stage until the economic worries that have gripped investors since the fourth quarter of last year are laid to rest.