Crude Extends Gains on Drop in U.S. Stockpiles, Vaccine Hopes
SECTOR COMMENTARY
The energy sector is poised for another higher start, backed by further strength in the crude complex and major equity indices which gained as signs of a working COVID-19 vaccine raised hopes of a faster-than-expected economic rebound even as some states braced for new business restrictions to combat surging infections.
WTI and Brent crude oil futures extended their trend higher for the third-consecutive session and are both up over 2% in early trading, near two month highs, backed by hopes of an effective COVID-19 vaccine and an industry report showing U.S. crude inventories fell more than expected. Ahead of the official EIA data later this morning, last night’s API report showed U.S. crude oil stocks dropped 5.1mm barrels last week compared with expectations of a 913k barrel draw while gasoline and distillate inventories fell 3.3mm and 5.6mm barrels, respectively. Analysts had only forecasted a 263k drop for gasoline and 1.9mm barrel decline for distillates. Renewed restrictions in Europe and the United States and restored Libyan oil output kept a cap on sentiment.
Natural gas futures carried over yesterday’s gains into this morning’s session, boosted by forecasts for cooler weather and higher heating demand next week and near record LNG exports.
U.S. INTEGRATEDS
Reuters reported that Easton Energy has agreed to buy a petrochemical pipeline system that runs from Houston to Corpus Christi from oil major Exxon Mobil, moving to capitalize on South Texas' growing petrochemical market.
INTERNATIONAL INTEGRATEDS
Norwegian private equity group HitecVision and Eni have formed a joint venture to develop green energy projects in the Nordic region, Reuters reported.
Berenberg upgraded Royal Dutch Shell to Buy from Hold.
Royal Dutch Shell will halve crude processing capacity and cut jobs at its Pulau Bukom oil refinery in Singapore as part of an overhaul to reduce its carbon emissions.
U.S. E&PS
Reuters said that Abraxas Petroleum reported a quarterly adjusted loss of 100 cents per share for the quarter ended in September. The mean expectation of three analysts for the quarter was for breakeven results per share. Revenue fell 60.1% to $12.60 million from a year ago; analysts expected $15.15 million.
Continental Resources the pricing of its private placement of new 5.75% senior unsecured notes due 2031, which was upsized to $1.5 billion in aggregate principal amount from the originally proposed $1.0 billion offering.
JPMorgan downgraded Occidental Petroleum to Underweight from Neutral.
CANADIAN E&PS
Canacol Energy regrets to announce that Mr. Oswaldo Cisneros, non‐executive director of Canacol since 2015, has passed away.
NuVista Energy is pleased to announce results for the three and nine months ended September 30, 2020 and provide an update on our future business plans. The company achieved adjusted funds flow of $41.5 million ($0.18/share, basic); Limited capital spending to $7.1 million, resulting in free adjusted funds flow of $34.4 million; Reduced net debt by $34 million to $623 million, reducing bank drawings from $429 million to $393 million in line with our goal to reduce net debt by $50 - $60 million during the second half of 2020.
OILFIELD SERVICES
KBR announced that its joint venture with SOCAR, who is undertaking the engineering design phase of the Azeri Central East (ACE) platform, is now nearing completion.
MARKET COMMENTARY
Wall Street futures were higher, mirroring global share markets, as optimism around a COVID-19 vaccine offset concerns about the economic damage from surging infections. Japan’s Nikkei jumped to close at a fresh 29-year peak. A stronger dollar weighed on gold prices. Brent oil touched a more than two-month high, supported by an industry report that showed U.S. crude inventories fell more than expected.
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