Crude Continues Decline on Demand Concerns from China Lockdowns, Ukraine Talks
The energy sector is pointing towards a third-straight day of heavy declines, weighed down by further weakness across the underlying commodities which in turn helped ease economic concerns and lift the major equity futures. Broader market sentiment however remained stunted as traders continued to weigh the latest with ceasefire negotiations in the Ukraine against China’s Covid lockdowns and while investors remain reluctant to commit capital ahead of tomorrow’s Fed decision. The FOMC kicks off their two-day meeting on interest rates today where the central bank is expected to hike rates for the first time since 2018.
WTI and Brent crude oil futures have extended their slide lower and dropped back below the $100-mark for the first time since the start of the month. Another round of ceasefire talks between Russia and Ukraine that have helped ease supply disruptions fears and surging COVID-19 cases in China that fueled concerns about slower demand continued to weigh on futures this morning but reports that Russia had indicated it is in favor of the Iran nuclear deal resuming as soon as possible drove another round of outsized declines. Russian foreign minister Sergi Lavrov said that Moscow is in favor of the 2015 Iran nuclear deal resuming as soon as possible and is waiting for Washington to lift sanctions on Tehran. A steep jump in daily COVID-19 infections in China raised concerns about demand and the increasing economic costs of the country's tough containment measures.
Natural gas futures extended yesterday’s declines into this morning session, falling amid a pickup in output and new milder forecasts for the weather to turn milder than normal for this time of year. The price declines came even though global gas prices continued to trade around eight times over U.S. futures, keeping demand for U.S. LNG exports at a record high.
BY SECTOR:
US INTEGRATEDS
The United Steelworkers union (USW) won a vote to continue representing workers at an Exxon Mobil oil refinery in Beaumont, Texas, the U.S. National Labor Relations Board said.
INTERNATIONAL INTEGRATEDS
On 8 February 2022, the Directors of BP p.l.c. announced that the interim dividend for the fourth quarter 2021 would be US$0.0546 per ordinary share (US$0.3276 per ADS). This interim dividend is to be paid on 25 March 2022 to shareholders on the share register on 18 February 2022. Sterling dividends payable in cash will be converted from US dollars at an average of the market exchange rate over the three dealing days between 9 and 11 March 2022 (£1 = US$1.31266). Accordingly, the amount of sterling dividend payable in cash on 25 March 2022 will be 4.1595 pence per share.
Eni said it would lift a force majeure on exports of Nigerian Brass River crude oil this week after it completed repairs to a pipeline damaged by a blast.
Equinor said it will stop trading in Russian oil as the company shuts down operations in Russia following its invasion of Ukraine.
KCA Deutag has been appointed to carry out an energy optimisation project for its client, Equinor on two CAT J rigs in the Norwegian North Sea. This project, which is part of Equinor's long-term low emissions strategy for 2050, is valued at around $12m.
Brazil's federal prosecutor's office asked audit court TCU to investigate alleged interference by the government in Petrobras and its pricing policy, the agency said.
Environmental lawyers ClientEarth said they were preparing legal action against the directors of Shell over the company's climate transition plan, in what they said would be the first such case of its kind.
French government spokesman Gabriel Attal said it was paramount that French companies respect sanctions against Russia decided by the European Union and that oil giant TotalEnergies was doing that.
Two leading French NGOs plan to take legal action against TotalEnergies over possible human rights abuses unless it cuts its business ties with Russia following the country's invasion of Ukraine, they said in a letter to the energy major's CEO. Greenpeace France and Les Amis de la Terre (Friends of the Earth) France, in a registered letter to CEO Patrick Pouyanne, said the company must comply with a 2017 French law requiring multinationals to be vigilant about violations of human rights associated with their commercial activities in countries affected by armed conflict.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Reuters reported that a group of oil and gas "mini-majors" are emerging among U.S. shale producers, built from aggressive dealmaking that industry players expect will accelerate on strong commodity prices and the retreat of Europeans from U.S. onshore production. The players, including Devon Energy, EQT Corp, Continental Resources, Pioneer Natural Resources and Diamondback Energy, are poised for another round of dealmaking, according to interviews with a dozen sources.
Northern Oil and Gas, Inc. today announced an updated long-term base dividend growth plan.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Citi downgraded Cactus to Neutral from Buy.
Granite announced the approval and award of the approximately $22 million contract for the Moreno Valley/March Field Metrolink Station Track and Platform Expansion. Located in Moreno Valley, California, the project was awarded and is funded by the Riverside County Transportation Commission. The award is anticipated to be included in Granite’s first quarter CAP.
KBR was awarded a new $70 million contract to provide technical analysis for sensor development that addresses current and future threats for the U.S. Army Program Executive Office Missiles and Space, Search, Track, Acquire, Radiate, Eliminate (STARE) Project Office. KBR was awarded this contract under the Department of Defense Information Analysis Center's (DoD IAC) multiple-award contract (MAC) vehicle. These DoD IAC MAC task orders are awarded by the U.S. Air Force's 774th Enterprise Sourcing Squadron to develop and create new knowledge for the enhancement of the DTIC repository and the R&D and S&T community.
Citi downgraded NOV to Neutral from Buy.
Schlumberger announced a major contract award by Saudi Aramco for integrated drilling and well construction services in a gas drilling project.
SECURE Energy Services announced that its Board of Directors has declared a quarterly dividend of $0.0075 (0.75 cents) per common share payable on or about April 15, 2022, to shareholders of record on April 1, 2022. This dividend is an eligible dividend for the purpose of the Income Tax Act (Canada).
U.S. Silica Holdings, Inc. today released its Sustainability Report, summarizing the company's global sustainability activities, performance, and results from calendar year 2021. The revised report includes enhanced disclosures for Environmental, Governance, and Social categories in alignment with the Sustainability Accounting Standards Board (SASB) recommended disclosure topics for the Metals & Mining and Construction Materials industry standards. This report provides insight into how U.S. Silica manages its operations to make positive impacts both internally, through its corporate culture, and externally, in partnership with its customers and the communities in which it operates.
DRILLERS
Citi upgraded Nabors Industries to Neutral from Sell.
REFINERS
Flutura a pioneering Industrial AI company recently deployed its suite of Industrial AI solutions Cerebra for Delek US at their Big Spring Refinery as part of the Refinery of the Future initiative. Flutura and Delek US signed a multi-year agreement to collaborate and expand the deployment into newer functional areas across its 4 refineries and provide advanced decision-making capabilities to its operations and reliability teams.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
U.S. stock index futures were little changed ahead of the start of the Federal Reserve's two-day policy meeting. European shares slumped and Asian equities mostly ended in the red as rising COVID-19 cases in China hurt sentiment. The euro rose against the dollar on hopes of progress in peace talks between Ukraine and Russia. Oil extended losses, sliding to a two-week low on demand concerns. Gold fell over 1% as U.S. Treasury yields surged. The producer prices data for February is scheduled to release later in the day.
Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services – the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Energy Commodities Nasdaq Advisory Services
MarketInsite
Nasdaq
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio