Power Line: The epic oil glut in photos, leaked documents reveal more industry furloughs, and 3 clean-energy sectors the pandemic is accelerating

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Congratulations, everyone. We made it to May.

April should never be welcome into the calendar year ever again.

The toll of the coronavirus continued to climb. Oil prices went negative. Who even registered Earth Day? Well, the skies were clearer, I guess — which seems as worthy of celebration as cheap gas.

Anyway, it's May. So let's start off with some positive news before we quickly spiral into mounting concerns for oil companies, their employees, and the firms that back them.

The chief executive of a massive investment firm says the pandemic could actually accelerate 3 energy sectors

That CEO is Hans Kobler, a smart man who heads up Energy Impact Partners. With $681 million under management, the utility-backed firm is the largest fund focused on the energy transition.

• In a call last week, Kobler told me the pandemic isn't shaking his conviction that clean energy is poised for explosive growth, even in the medium-term.

The crisis could even give three industries a boost, most of which will benefit from a renewed fear of power outages.

• Cybersecurity. "God forbid we have a power outage and the hospitals cannot operate," he said. "God forbid, we had somebody interfere and shutdown entire charging stations."
• Digital innovation. The grid was already going digital. Now there's a pandemic that makes it difficult to do anything in person.
• Clean-energy infrastructure. It benefits from both the need for resilient infrastructure and low-interest rates. There's also a chance that clean-energy will get some support in a stimulus package, Morgan Stanley said in a note last week.

But: The electric vehicle industry is being hammered, Kobler said. And that means battery startups will hurt, too.

• Wood Mackenzie projected that sales for electric vehicles would fall by almost half this year.

Some more good news: Oil prices have recovered … a bit

As I write this, a barrel of Brent is going for about $26. Sure, it's still down more than 60% since the start of the year, but hey! We're in positive double-digits.

The official start of OPEC Plus oil production cuts, slated for today, has something to do with it.

• Refresher: OPEC Plus, an alliance of oil-producing countries led by Saudi Arabia and Russia, reached a historic agreement to cut production by nearly 10 million barrels per day, starting on May 1.

So do other production cuts that companies have been forced to make, simply because cheap oil means extracting it from the ground is no longer profitable.

• In the US, at least 300,000 barrels per day will be shut-in this month and next, according to the research firm Rystad Energy.

Taken all together, that means the epic gap between supply and demand is shrinking.

• Rystad expects the surplus to halve from 26.4 million barrels per day to 13.6 million bpd in May, and fall further to 6.1 million barrels per day in June.

With negative oil in the rearview, now is the time to invest in energy stocks, Goldman Sachs says

Goldman Sachs thinks investors should add exposure to energy stocks now, as Matthew Fox on our markets team reported, for a few reasons.

1. Ultra-low prices are forcing a reduction in oil production, thus reducing supply and helping put a floor in oil prices.
2. Global oil demand has basically bottomed out and only has up to go. The bank expects oil consumption to begin ramping up before the end of June.
3. "Stocks on average have stopped falling on recent bad micro news," such as dividend and capex cuts, the bank said.

OK, but where exactly should you park your money? The bank has an answer for that, too.

Here are the bank's top 24 energy stock picks — including a handful in the renewable-energy industry

Still, the worst is yet to come for the oil industry

Let's not forget: The world is still drowning in oil.

While demand may soon start to recover, it was down close to 30% in April. So there are literally millions of barrels of oil just sitting around — in supertankers, railroad cars, floating-roof tanks, and underground caverns.

I mean, check out these supertankers off the coast of California last week! There were more than two dozen of them carrying more than 20 million barrels of oil.

We collected a bunch of other images here.

All that oil means prices will be depressed for a while — likely through next year. That's why oil companies are taking drastic measures to shore up their finances.

More bankruptcies, furloughs, and dividend cuts hit the industry

• Royal Dutch Shell, the second-largest oil company in the world, slashed its dividend for the first time since World War II. We break down why that's such a huge deal — and what it means for the company's low-carbon ambitions.
• The largest oilfield services company in the world, Schlumberger, is implementing furloughs for its North American workforce, according to leaked documents that we reviewed. The firm also told some of its workers that it was cutting their pay in a letter that looked as if it was drafted using a promotion template.
• Diamond Offshore Drilling joined Whiting Petroleum in filing for bankruptcy. Chesapeake Energy is also preparing a potential bankruptcy filing, Reuters reports.

All that private money dumped into the US oil industry is at risk of drying up

The US shale boom, brought to you by private equity.

That's right: Private-equity firms like EnCap and Lime Rock have poured about $125 billion into the North American oil and gas industry since 2008, helping the US become a net petroleum exporter.

But now, dark clouds are headed for many of those firms, according to nearly a dozen industry experts, from lawyers to analysts, that Casey Sullivan and I talked to for a story this week.

• Firms focused on the oil and gas industry may be forced to shutter their doors as their portfolio companies go bankrupt and they struggle to raise funds.
• It puts the future expansion of America's oil and gas industry into uncertain territory.

We list the top 10 energy private equity firms and some of their comments here.

4 big stories we didn't cover

• Solar and onshore wind are now the "cheapest sources of new-build generation for at least two-thirds of the global population," according to a new report by the research firm BloombergNEF.
• Global energy demand is expected to fall by 6% this year, according to the International Energy Agency, making it "the largest [drop] in 70 years in percentage terms and the largest ever in absolute terms."
• The pandemic is slowing measures to prepare for wildfire season, Bloomberg reports. That could make power outages and shut-offs more common this year.
• Pretty much all of the world's oil majors reported Q1 earnings this week. Some highlights:
• Exxon lost $610 million in the first quarter — the first loss for the company in decades.
• Chevron said it would cut more from its capital spending plan.
• BP's net profit fell by two-thirds in the first quarter

That's it! Have a great weekend.

- Benji

Ps. Here's a photo of a 1.1-megawatt solar array that I stumbled upon last week while on a run. It's apparently the first farm of its kind that pairs vanadium flow batteries and solar tracking.

And here's me, perched in a tree where I took the photos. Hi!