Oil Prices Dip on Concerns of Low Fuel Demand, Recession Fears
The energy sector is set for a mix to higher start, supported by strength in the major equity futures despite losses in the oil markets. U.S. stocks are poised to rebound ahead of an expected interest rate hike by the Federal Reserve.
WTI and Brent crude oil futures are trading down on concerns about fuel demand and the possibility of a recession ahead of an expected interest rate hike by the U.S. Federal Reserve. Global macro continues to drive the oil markets as new inflation reports mixed with fast-changing views in the financial markets have increased the possibility the Fed will be more hawkish than investors had anticipated. This has opened the door to a 75-basis-point interest rate hike, in an attempt to curb inflation. China’s latest COVID-19 outbreak has lent some support to oil futures as investors are worried about a new phase of lockdowns. The EIA said in its monthly report that world oil demand will rise more than 2% to a record high in 2023, although soaring oil prices and weakening economic forecasts dimmed the future outlook.
Natural gas futures have gained followed yesterday’s sharp losses buoyed by intense heat, forecasts for more demand and higher global gas prices.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Aramco said that by 2035, it aims to reduce its Upstream carbon intensity, already one of the lowest in the industry, by 15% to 8.7kg of CO2 equivalent per barrel of oil equivalent (CO2e/boe), against a 2018 baseline of 10.2kg CO2e/boe.
BP has agreed to buy a 40.5% stake and become operator of an Australian renewable energy project that could become one of the world's biggest producers of green hydrogen, the global oil major said, without disclosing how much it paid. The Asian Renewable Energy Hub in outback Western Australia would develop up to 26 gigawatts of wind and solar power capacity which could be used to produce 1.6 million tonnes of green hydrogen - hydrogen produced from renewable energy - or 9 million tonnes a year of ammonia.
BP is beefing up its hydrogen management team as the energy company prepares to accelerate investments in the low-carbon fuel which it believes will play a key role in the world's shift away from fossil fuels. The revamp of the hydrogen team is the first clear sign of changes Anja-Isabel Dotzenrath, a former head of RWE Renewables, has made since becoming BP's head of natural gas and renewables in March. BP's new hydrogen organisation will be led by Felipe Arbelaez, a veteran BP executive who has helped shape its renewables strategy since Chief Executive Bernard Looney took office in 2020, according to an internal memo seen by Reuters. The business will include six regional team leaders as well as two separate teams dedicated to technical developments and integration of hydrogen in BP's operations, the memo said. The changes will take effect on July 1. BP also plans to recruit around 100 people to the hydrogen team this year after hiring a similar number last year, a spokesperson said.
Bloomberg reported that Eni SpA is in talks to boost gas imports from Egypt to Italy and Europe, as Rome looks for ways to wean itself off Russian supplies of energy. The Italian oil giant already has a deal with Egyptian state energy firm EGAS to boost flows of liquefied natural gas to Europe by 3 billion cubic meters per year, and the new agreement would see Eni and Egypt add capacity for export to Italy beyond that level within the next two years.
Bloomberg reported that Gazprom PJSC has cut gas supplies to Italy, state-controlled oil giant Eni SpA said Wednesday, citing a communication from the Russian company. The reduction amounts to about 15% of total flows from Russia to Italy, an Eni spokesperson said. Gazprom didn’t provide any reason for the decision.
According to Reuters, Equinor becomes a partner in Mærsk Mc-Kinney Møller Center for zero carbon shipping to accelerate decarbonization in the shipping industry.
Offshore Engineer reported that Equinor has drilled a dry well at the production licence 209, in the Norwegian Sea. The news was shared by the Norwegian Petroleum Directorate, which said that Equinor had concluded the drilling of wildcat well 6305/5-C-3 H, using the Transocean Barents semi-submersible drilling rig, and that the well was dry.
Petrobras, following the announcement made on June 10, 2022 about the injunction decision issued by the Court of Justice of the State of Rio de Janeiro determining the suspension of contractual negotiations related to the sale process of the Bahia Terra Cluster, informed that the suspensive effect of the appeal filed against such decision was denied.
Petrobras and Raízen have signed an agreement to jointly evaluate potential businesses involving the production, purchase and sale of biomethane, a 100% renewable fuel produced by Raízen from sugarcane waste (vinasse and filter cake), generated in the agro-industrial operations of the company's Energy Bioparks.
Reuters reported that Petrobras will avoid raising fuel prices until after Congress finishes debating further tax cuts. Petrobras said in a statement it maintains its commitment to competitive market prices, while wanting to avoid immediate price hikes caused by volatility in the international oil markets.
TotalEnergies and Compagnie des Bois du Gabon (CBG) have joined forces to develop a forward-looking model of sustainable and responsible forest management that combines sustainable harvesting, biodiversity conservation, and long-term carbon storage. TotalEnergies has become CBG's leading partner after acquiring 49% of its capital from Criterion Africa Partners.
CANADIAN INTEGRATEDS
Imperial Oil announced that it has taken up and paid for 32,467,532 common shares at a price of $77.00 per Share under Imperial’s offer to purchase for cancellation up to $2.5 billion of its Shares. All amounts are in Canadian dollars.
U.S. E&PS
California Resources announced amendments to and extension of its solicitation of consents from the holders of its outstanding 7.125% Senior Notes due 2026 (CUSIP Nos. 13057QAH0, 13057QAJ6 and U1303AAE6) to the proposed amendment to the indenture governing the Notes described in the Consent Solicitation Statement dated June 6, 2022, as amended by the Company’s press release dated June 13, 2022 and as further amended by a Supplement dated June 15, 2022. The Consent Solicitation is being made in accordance with the terms and subject to the conditions stated in the Statement.
Stifel downgraded Continental Resources to Hold from Buy.
Wells Fargo downgraded Continental Resources to Equal Weight from Overweight.
Benchmark upgraded Southwestern Energy to Buy from Hold.
As per SEC filing, Talos Energy filed for a potential stock shelf offering. Talos Energy filed for a shelf of up to 9.6 million shares by the selling stockholders.
W&T Offshore announced the appointment of Jonathan Curth to Executive Vice President, General Counsel and Corporate Secretary, effective June 14, 2022. Mr. Curth has extensive legal experience working with public exploration and production companies.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
KBR announced it has entered into a definitive agreement to acquire U.K.-based VIMA Group, a leading provider of digital transformation solutions to defense and other public sector clients, for up to GBP £75 million, inclusive of earn-out opportunities.
Mammoth Energy Services Inc announced the first appeal response from the Federal Emergency Management Agency related to Project Worksheet 251, commonly referred to as the first contract between Mammoth's subsidiary Cobra Acquisitions LLC and the Puerto Rico Electric Power Authority.
DRILLERS
As per SEC filing, Valaris Limited filed a prospectus that relates to the resale, from time to time, of 14,495,079 of its common shares, $0.01 par value per share, and $443,411,639 Senior Secured First Lien Notes due 2028, in each case by the selling securityholders named in the prospectus or in a supplement.
REFINERS
Reuters reported that U.S. President Joe Biden demanded oil companies explain why they aren't putting more gasoline on the market, sharply escalating his rhetoric against industry as he faces pressure over rising prices. Biden wrote to executives from Marathon Petroleum, Valero Energy, and Exxon Mobil and complained they had cut back on oil refining to pad their profits.
MLPS & PIPELINES
Cheniere Energy announced that it entered into a Purchase Agreement to repurchase approximately $350 million of the Company’s common shares beneficially owned by Carl C. Icahn and certain of his affiliates, at a purchase price of $130.52 per share, the closing price of Cheniere’s common shares on June 14, 2022. The purchase of the shares will be funded from Cheniere’s cash on hand and is a part of the Company’s $1 billion share repurchase authorization. The transaction is expected to close no later than June 21, 2022. Pursuant to a nomination and standstill agreement entered in 2015, the Company agreed to give Icahn Enterprises one board seat for as long as it continued to hold at least 7,741,412 Company common shares. This transaction will result in Icahn Enterprises’ holdings in the Company to be under this threshold and the remaining director designee, Andrew Teno, will resign from the board of directors within two business days following the closing of the Purchase Agreement.
MARKET COMMENTARY
U.S. stock index futures inched higher as investors waited to see how high the Federal Reserve would raise interest rates to quell inflation at its policy meeting. European stocks jumped, with banks leading the gains, after the ECB said it will hold an emergency meeting to discuss the recent sell-off in government bond markets. In Asian equity markets, Japan's Nikkei index ended at a more than one-month low, while Chinese shares closed up after data showed surprising growth in industrial production. Gold prices rose, bolstered by a pullback in the dollar and Treasury yields as Fed verdict looms. Oil prices fell on concerns about fuel demand and global economic growth. U.S. retail sales and import-export prices data for May are also scheduled on the economic monitor.
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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Energy Commodities Nasdaq Advisory Services
MarketInsite
Nasdaq
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio