Crude Continues Slide, Weighed Down by Rising COVID-19 Cases in China
The energy sector is poised for a higher start, supported by strength in the major equity futures which rallied after another report signaling inflation could be slowing reignited optimism for equities and helped investors look past weakness in the crude complex.
WTI and Brent crude oil futures continued to slide lower for the second-straight day, weighed down by rising COVID-19 cases in China that heightened fears of lower fuel consumption for the region and after OPEC cut its forecast for 2022 global oil demand growth for a fifth time since April. China's COVID cases rose further on today, including in the capital Beijing and the country's factory output growth slowed. On the heels of the news, JPMorgan cut their quarterly and full-year forecasts for economic growth in China because of the ongoing COVID restrictions. OPEC cut its forecast for 2022 global oil demand and further trimmed next year's figure, citing mounting economic challenges including high inflation and rising interest rates. The group now expects oil demand in 2022 will increase by 2.55 million bpd or 2.6%, down 100,000 bpd from the previous forecast. Futures however pared gains on concerns over tight supplies this winter and bullish U.S. economic data.
Natural gas futures continued to inch higher, backed by forecasts for colder weather and higher heating demand than previously expected through the end of November. The gains came despite lingering expectations that Freeport LNG will delay the restart of its LNG export plant in Texas from November to December.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
bp has successfully loaded the first LNG cargo from Mozambique’s offshore Coral Sul FLNG facility, the country’s first LNG project and first floating LNG facility ever deployed in the deep waters of the African continent. Under its long-term contract, bp will purchase 100% of LNG output from Coral Sul FLNG which has the capacity to produce up to of 3.4 million tonnes of LNG per year.
Equinor and bp, in partnership with the Sunset Park Task Force and the New York City Economic Development Corporation (NYCEDC), will officially launch the new “Offshore Wind Ecosystem Fund”.
TotalEnergies has completed the joint acquisition with ConocoPhillips of the 8.16% interest held by Hess in the Waha concessions, in Libya. As a result of this transaction, TotalEnergies’ interest in these concessions is increased from 16.33% to 20.41%.
TotalEnergies and its partner Eni have signed, with the State of Israel, a Framework Agreement to implement the agreement on maritime boundary which has been reached between Israel and Lebanon on October 27, 2022. In Lebanon, TotalEnergies is the operator of the exploration Block 9, and holds a 60% interest, alongside its partner ENI (40%). Following the signature of this Framework Agreement, the Block 9 partners will initiate the exploration of an already identified prospect which might extend both in Block 9 and into Israel waters South of the recently established Maritime Border Line.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Hess announced that it has completed the sale of its 8.16% interest in the Waha Concession in Libya in equal shares to TotalEnergies and ConocoPhillips.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Fluor announced that it has achieved substantial engineering completion for Albemarle’s Lithium Conversion project in China. Fluor is providing engineering, procurement and construction management services for the facility. Lithium is an essential precursor material for high performance lithium-ion batteries for electric vehicles. When complete, the facility will produce 50,000 tons of lithium hydroxide per year.
TD Securities downgraded Shawcor to Hold from Buy.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Cheniere Energy Partners, L.P. announced that its subsidiary, Sabine Pass Liquefaction, LLC, has priced its previously announced offering of Senior Secured Amortizing Notes due 2037. The principal amount of the SPL 2037 Notes will be $430 million and the SPL 2037 Notes will bear interest at a rate of 5.900% per annum. The SPL 2037 Notes will be issued at a price equal to 99.856% of par and will mature on September 15, 2037, with a weighted average life of approximately 9.5 years. The closing of the offering is expected to occur on November 29, 2022. The SPL 2037 Notes will be fully amortizing according to a fixed sculpted amortization schedule with semi-annual payments of principal and interest.
As per SEC filing, Delek Logistics Partners, LP and Delek Logistics GP, LLC, the general partner of the Partnership, entered into an Equity Distribution Agreement by and among the Partnership, the General Partner and RBC Capital Markets, LLC. Pursuant to the terms of the Distribution Agreement, the Partnership may sell from time to time to or through the Manager, as sales agent and/or principal, as applicable, common units representing limited partner interests in the Partnership having an aggregate offering price of up to $100,000,000.
MARKET COMMENTARY
U.S. stock index futures rose Stock futures after another report signaled that inflation could be slowing, reigniting a rally in stocks. The produce price index, a measure of wholesale inflation, rose 0.2% for the month, versus the consensus estimate for a 0.4% increase from Dow Jones. The report comes after last week’s consumer price index data showed signs of inflationary pressure abating last month, sparking a sharp rally.
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