Crude Extends Gains on Signs of Tight Supply
Energy stocks are set for further gains, with higher broader index futures and rising oil and natural gas prices aiding the group. News flow is generally light across the sector, though some individual analyst ratings changes may influence a handful of constituents.
Oil prices rose on Thursday, extending a cautious rally this week on signs of tight supply while the EU wrangles with Hungary over plans to ban imports from Russia, the world's second-largest crude exporter, after it invaded Ukraine. A bigger-than-expected drawdown in U.S. crude inventories in the week to May 20, following soaring exports, buoyed the market on Wednesday. U.S. refiners picked up the pace of activity, boosting overall capacity use to the highest levels since before the pandemic. "The fundamental backdrop...is getting price supportive as the driving season is approaching and will turn even more bullish once the EU sanctions on Russian oil sales are endorsed by all parties involved," PVM Oil's Tamas Varga said.
Natural gas futures are higher again, now trading around $9.20, with the June contract set for expiration today. Weekly inventory data is expected to show a build of 89 bcf.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Equinor plans to make a final investment decision on what would be its first offshore wind farm in South Korea in 2024, and is considering a third project near the holiday island of Jeju, the head of its South Korean unit said.
Petrobras said it has signed an agreement with Grepar Participacoes to sell its Lubrificantes e Derivados de Petroleo do Nordeste (LUBNOR) oil refinery, plus related logistics assets, for $34 million.
Bolivia said it is seeking higher prices for natural gas sold to Petrobras, adding that its current contract with the Brazilian oil giant generates steep losses.
Petrobras, following up on the release disclosed on 05/23/2022, regarding the Ministry of Mines and Energy's Official Letter requesting the convening of an Extraordinary General Meeting (EGM) to promote the substitution and election of a member of the Board of Directors and the nomination of Mr. Caio Mario Paes de Andrade, to substitute Mr. José Mauro Ferreira Coelho, informed that the Board of Directors met on this date and deliberated that the nomination of Mr. Caio Mario Paes de Andrade will be submitted to the internal governance process, observing the Policy for the Nomination of Members of Senior Management, for the analysis of legal and management and integrity requirements and subsequent manifestation of the People Committee.
Repsol and Saudi Arabia's state-controlled Saudi Aramco plan to use Fischer Tropsch technology developed by UK technology firm Johnson Matthey and BP for a synthetic fuels plant in Bilbao, Spain.
Aramco Trading Company, the trading arm of oil giant Saudi Aramco, has more than doubled fuel oil shipments from Yanbu to Asia in May from April, according to Refinitiv and market sources.
Shell is in talks with a consortium of Indian energy companies to sell its stake in a major liquefied natural gas plant in Russia, three sources told Reuters, highlighting India's willingness to step into the space left by Western companies following Moscow's invasion of Ukraine.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Barclays downgraded Devon Energy to Equal Weight from Overweight.
Barclays upgraded Diamondback Energy to Overweight from Equal Weight.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Invictus confirmed it has executed a binding well services contract with Baker Hughes for its basin opening drilling campaign in the Muzarabani-Mbire area of Zimbabwe, scheduled to commence end of July 2022.
MRC Global announced that Chalmette Refining (CR) has selected MRC Global (US) Inc. as the primary pipe, valves and fittings (PVF) products provider for CR’s Renewable Diesel Project in St. Bernard Parish, Louisiana. Chalmette Refining is a subsidiary of PBF Energy.
TechnipFMC has been awarded a significant engineering, procurement, construction, and installation (EPCI) contract by Equinor for subsea tiebacks for the Halten East development on the Norwegian Continental Shelf.
DRILLERS
JPMorgan upgraded Patterson-UTI Energy to Neutral from Underweight.
REFINERS
PBF Energy announced that its subsidiary, PBF Holding Company LLC, successfully completed a multi-year extension of its asset-based revolving credit facility, with an aggregate commitment of $4.3 billion. The Credit Facility includes two committed tranches, an extended tranche of $2.75 billion that will mature in January 2025 and an existing tranche of $1.55 billion that retains the current maturity date in May 2023. The extended tranche of the Credit Facility may be increased under the accordion by up to $2.0 billion. The Credit Facility was extended with no other significant change in terms.
MLPS & PIPELINES
Crestwood Equity Partners LP announced it has entered into a series of agreements under which the company will i) acquire Sendero Midstream Partners, LP for $600 million in cash, ii) acquire First Reserve’s 50% equity interest in Crestwood Permian Basin Holdings LLC for $320 million in Crestwood common units, plus the assumption of asset level debt, and iii) divest its legacy, non-core Barnett Shale assets to EnLink Midstream, LLC for $275 million in cash. The transactions are expected to close early in the third quarter 2022, subject to customary regulatory approvals.
Enbridge announced the advancement of its Venice Extension Project and Gator Express Meter Project to deliver 1.5 billion cubic feet per day of natural gas to Venture Global's Plaquemines LNG facility located in Plaquemines Parish, LA. The Projects generally will involve 36-inch diameter pipe, metering, and compressor station additions and improvements. The Gator Express Meter Project is expected to be in service in 2023 and Venice Extension Project is expected to be in service in 2024, with an estimated cost for both projects of US$400 million, which is underpinned by long-term take or pay contracts.
Golar LNG Limited reported Q1 2022 Net income of $345.2 million. Adjusted EBITDA was $93.4 million for the quarter inclusive of FLNG Hilli, Golar Arctic and Golar Tundra but excluding the 8 TFDE vessels and management companies sold to Cool Company Ltd.
MARKET COMMENTARY
Futures tracking the Dow and S&P 500 rose. European shares were up, aided by energy shares. Japan's Nikkei ended lower, weighed by losses in chip-related stocks. The dollar edged lower. Gold prices fell, following the Fed’s tight monetary policy.
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.
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