Oil Prices Dip on Rising Interest Rates, Strong U.S. Dollar
The energy sector is poised for a lower start, pressured by weakness in the underlying commodities and in the major equity indices. Wall Street futures fell as investors fretted over the prospect of an economic downturn and a hit to corporate earnings from the U.S. Federal Reserve's aggressive policy tightening moves to quell inflation.
WTI and Brent crude oil futures are trading lower on a stronger dollar and as demand fears were stoked by rising interest rates, though losses were capped by Moscow's mobilization campaign in its war with Ukraine along with an apparent deadlock in talks on reviving the Iran nuclear deal. Global equities hit a two-year low while the dollar index reached its highest level in two decades, putting downward pressure on oil. Russia began referendums aimed at annexing four occupied regions of Ukraine, raising the stakes of the seven-month-old war in what Kyiv called an illegal sham that saw residents threatened with punishment if they did not vote. On the oil supply side, efforts to revive the 2015 Iran nuclear deal have stalled as Tehran insists on the closure of the U.N. nuclear watchdog's investigations, easing expectations of a resurgence of Iranian crude oil exports.
Natural gas futures extended declines this morning as the NOAA's 6-10 day outlook shows below-normal temps over the eastern US, with above-normal temps from the Pacific Coast extending to the western Great Lakes region and Upper MS Valley, as well as across the FL Peninsula.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Jefferies upgraded TotalEnergies to Buy from Hold.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
No significant news.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
TechnipFMC has been awarded a significant engineering, procurement, construction and installation (EPCI) contract by Shell plc for the Jackdaw development, located in the United Kingdom North Sea.
DRILLERS
Transocean Ltd. announced that the harsh environment semi-submersible, Transocean Norge, received a contract award from Wintershall Dea Norge and OMV Norge granting the exclusive right to drill all of the wells for their respective drilling campaigns starting in 2023 through 2027, subject to rig availability and other conditions.
REFINERS
No significant news.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
U.S. stock index futures were lower, mirroring global equities, as worries around more interest rate hikes by the major central banks weighed on sentiment. UK's FTSE 100 tumbled to a more than two-month low as the new government's economic plan did little to ease concerns about a potential recession. The euro and sterling dropped after surveys showed the downturn in business activity across the euro zone and Britain. A stronger dollar hurt gold prices. Oil fell over 3% amid recession fears.
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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