Crude Steadies after IEA Lowers 2021 Oil Demand Estimate
SECTOR COMMENTARY
Energy stocks are on the upswing as Congress continued negotiations on another economic relief package and Covid-19 vaccines began to roll out across the country. Corporate news was light although there were ratings changes in big cap oil at Wells Fargo and oil prices trended higher despite a bearish IEA monthly report.
WTI and Brent traded higher after closing yesterday at more than 9-month highs. The IEA this morning in its Monthly Oil Market Report lowered its 2021 oil demand estimate by 170K bpd on weaker expectations for jet fuel/kerosene. Recent vaccination news has helped push Brent to above $50/bbl, but they highlight that it will take time to reach a critical mass of vaccinated people that are economically active. They warn what the holiday season can create another surge in virus cases. EU demand is going backward amid stricter lockdowns/restrictions newly implemented or extended in Germany, Italy and London. API stockpile data comes tonight ahead of government numbers tomorrow with consensus currently expecting a crude draw and builds of gasoline/distillates.
Natural gas futures are lower on profit taking after rising for a 4th straight session yesterday. LNG feedgas flows over the weekend set a new record at over 11.5 Bcf. S&P Global Platts notes US LNG terminals appear to be running at/near full capacity.
U.S. INTEGRATEDS
Chevron was downgraded to equal weight form overweight at Wells Fargo.
Exxon Mobil was upgraded to overweight from equal weight at Wells Fargo.
INTERNATIONAL INTEGRATEDS
Royal Dutch Shell was upgraded to overweight from equal weight at Wells Fargo.
CANADIAN INTEGRATEDS
Canadian Natural Resources was upgraded to overweight from equal weight at Wells Fargo.
Suncor was downgraded to equal weight from overweight at Wells Fargo.
U.S. E&PS
BofA started coverage on CNX Resources with a Neutral rating.
Truist downgraded Comstock Resources to Hold from Buy.
BofA started coverage on EQT with a Buy rating.
Murphy was downgraded to underweight from equal weight at Wells Fargo.
Occidental Petroleum was upgraded to equal weight from underweight at Wells Fargo.
CANADIAN E&PS
Canacol Energy announced that it has declared a dividend of CAD$.052 per share, payable on January 15, 2021, to shareholders of record at the close of business on December 31, 2020. The ex-dividend date for all shareholders is December 30, 2020. This dividend qualifies as an 'eligible dividend' for Canadian income tax purposes. The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors.
OILFIELD SERVICES
Citi downgraded Baker Hughes to Neutral from Buy.
Fluor announced that Stork, part of Fluor’s Diversified Services segment, was awarded a 26-month maintenance contract extension by Sitech Manufacturing Services in the Netherlands. Fluor will book the undisclosed value in the fourth quarter of 2020.
Citi upgraded Halliburton to Buy from Neutral.
A ground-breaking mixed reality training solution, developed by KBR in collaboration with Microsoft, has won a prestigious UK industry award for innovation. For 12 months, KBR's Government Solutions EMEA Advisory team has been working to create the world's first mixed reality solution for Chemical, Biological, Radiological and Nuclear (CBRN) medical training for the Defence Medical Services section of the UK Ministry of Defence (MOD), with help from Microsoft.
PGS, TGS and CGG announced a pioneering strategic partnership to offer a shared ecosystem providing direct access to their subsurface MultiClient data libraries.
Citi upgraded U.S. Silica Holdings to Neutral from Sell.
DRILLERS
Citi downgraded Helmerich and Payne to Sell from Neutral.
Reference is made to the announcements by Seadrill on 20 November 2020 regarding forbearance agreements entered into by the Company with certain creditors in respect of the group's senior secured credit facility agreements and leasing arrangements. The term of the forbearance agreements expired on 14 December 2020, and, accordingly, the creditors with whom forbearance agreements were entered into are no longer prevented from taking actions in respect of events of default that may arise under the senior secured credit facility agreements and leasing arrangements as a result of the group not making interest and charter hire payments under the group's senior secured credit agreements and leasing arrangements.
REFINERS
PBF Energy reported planned maintenance at Torrance, California Refinery, Reuters reported.
MLPS & PIPELINES
EnLink Midstream announced the pricing of $500.0 million aggregate principal amount of 5.625% senior notes due January 2028 (the Senior Notes) at a price of 100% of their face value.
Keyera released its inaugural environment, social, and governance (ESG) report. The announcement coincides with Keyera and Samsung Renewable Energy Inc. signing a 15-year power purchase agreement (PPA).
BMO downgraded Pembina Pipeline to Market Perform from Outperform.
Stifel downgraded Pembina Pipeline to Hold from Buy.
TC Energy announced it has entered into a definitive agreement and plan of merger to acquire all the outstanding common units of TC PipeLines, LP not beneficially owned by TC Energy or its affiliates in exchange for TC Energy common shares. Pursuant to the agreement, TCP common unitholders would receive 0.70 common shares of TC Energy for each issued and outstanding publicly-held TCP common unit. This represents a 19.5 per cent premium to the TCP closing price before the original offer as of October 2, 2020.
MARKET COMMENTARY
U.S. stock index futures rose as progress toward a government spending bill and COVID-19 relief measures kept spirits high, while investors awaited new economic cues from the Federal Reserve's final meeting of the year. European shares were up with optimism from vaccine roll-outs helping traders shake off concerns about tighter curbs due to the rising cases. Most Asian equities ended in the negative territory. The dollar edged lower, whereas gold prices gained. Oil prices advanced, supported by hopes of demand recovery.
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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