Crude Continues Rise as Russia-Ukraine Peace Talks Hit Dead End
Energy stocks are set for further gains, underpinned by higher oil and natural gas prices, though broader benchmark futures have turned negative following another surge in inflation data. March Producer Prices Index (PPI) rose 11.2% Y-o-Y, the biggest gain on record, as tight global supply chains, conflict in Ukraine, a rebound in global consumer demand from the pandemic, years of rising housing prices, and loose global monetary policy for over a decade, have all culminated in a rise in global consumption prices.
Oil prices rose by more than 2% on Wednesday after Moscow said that peace talks with Ukraine had hit a dead end, fueling supply worries, while weak economic data from China and Japan kept a lid on gains. "The downside for oil prices is limited," said OANDA senior market analyst Jeffrey Halley, citing the Russian comments on peace talks and U.S. President Joe Biden accusing Russia of genocide. These "are reinforcing that the Ukraine-Russia situation will not be de-escalating any time soon". Russian President Vladimir Putin on Tuesday blamed Ukraine for derailing peace talks and said Moscow would not let up on what it calls a "special operation" to disarm its neighbor.
Natural gas futures are rising again, up another 3%, with prices reaching $6.90, driven by colder weather and lower production.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Petrobras following up on the release disclosed on 04/06/2022, informed that, as per the respective minutes already disclosed, the People Committee, in its role as Eligibility Committee (COPE/CELEG), which is responsible for advising shareholders on verifying the conformity of the nomination process for members of the Board of Directors of Petrobras, giving its opinion on the fulfillment of the requirements and the absence of restrictions on the nominees, considered that the nomination of Mr. José Mauro Ferreira Coelho as a member of the Board of Directors meets the requirements set forth in Law No. 13,303/2016 and Decree No. 8,945/2016, and does not incur any restrictions. Additionally, the COPE/CELEG opined that, in case the nominee is elected at the Annual General Meeting (AGM) of 04/13/2022, his nomination for the position of CEO of the company is apt to be appreciated by the Board of Directors. The election of the Board of Directors will take place, 04/13/2022, at the AGM. On 04/14/2022, a meeting of the new Board of Directors is scheduled to consider the nomination of Mr. José Mauro Ferreira Coelho for the position of CEO of the company. If elected, his inauguration is scheduled for April 14 in the afternoon.
TotalEnergies and ENEOS signed a joint venture agreement to develop onsite B2B solar distributed generation across Asia. The 50/50 Joint Venture between two major players in the field plans to develop 2 GW of decentralized solar capacity over the next five years.
A group of Netherlands-based investors has filed a resolution ahead of TotalEnergies' May 25 shareholder meeting to demand the French oil major's emissions targets are consistent with the Paris Climate Agreement.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Southwestern Energy announced that it has entered into an Amended and Restated Credit Agreement, dated April 8, 2022, which amends the Company’s Credit Agreement, dated April 26, 2018. The Amended Credit Agreement, among other things: Extends maturity date of $3.5 billion reserve-based credit facility by three years to April 2027; Increases the borrowing base to $3.5 billion; the Company maintains elected commitments of $2.0 billion.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Compass Minerals announced it has received an earnout payment of approximately R$88 million, or $18.5 million based on current exchange rates, associated with the sale of the company’s South America specialty plant nutrition business. This payment represents the maximum earnout possible under the terms of the sale.
KBR announced that it has been awarded a contract for its ROSE supercritical Solvent De-Asphalting (SDA) technology and Vacuum Distillation Unit (VDU) from Taiwan's state-owned oil company, CPC Corporation.
DRILLERS
Noble and The Drilling Company of 1972 A/S ("Maersk Drilling") provided an update on the ongoing merger control process for the business combination announced on 10 November 2021. At this point in time, the Transaction has been unconditionally approved by the competition authorities in Brazil, Norway, and the Republic of Trinidad & Tobago. Accordingly, the only outstanding pre-closing merger control clearances are in Angola and the United Kingdom. The Parties expect the competition authority in Angola to unconditionally approve the Transaction during April 2022.
REFINERS
Phillips 66 has named its current President and Chief Operating Officer, Mark Lashier, as President and Chief Executive Officer effective July 1. Lashier will succeed Greg Garland, who will remain as Executive Chairman of the Board of Directors until he retires in 2024.
MLPS & PIPELINES
Nordic American Tankers said that it sees a clear upswing in the market now. It has recently fixed three ships at rates ranging from USD 40,000 to USD 55,000 per day with a duration from 30 up to 70 days. A large part of its fleet is operating in the sort term spot market. Based on current rates, NAT would generate more than USD 200 million on an annualized basis above and beyond the daily operating costs of USD 8,000 per ship. In this scenario, NAT can become debt free in a year or two, just as it has been in the past. Dividends have been paid for 97 consecutive quarters and will always remain a priority for NAT. It expects the upswing to continue.
MARKET COMMENTARY
U.S. stock index futures edged lower after a hotter than expected reading for March PPI. Meanwhile, investor focus also turns to the first-quarter earnings season set against the backdrop of surging inflation. European shares fell as anxiety about elevated inflation and its potential impact on upcoming earnings season dampened the mood. The Nikkei closed at three weeks high. The dollar index was up, supported by high yields on 10-year Treasury notes. Gold prices gained as investors sought refuge in the safe-haven metal.
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