Oil Prices Fall After Initial Price Jump by Saudi Arabia
The energy sector is poised for a higher start, supported by strength in major market indices despite weakness in the crude complex. U.S. stocks are higher as Chinese based companies are leading the gains on optimism around easing regulatory crackdowns and on expectations for more demand as the country relaxes COVID-19 restrictions.
WTI and Brent crude oil were trading higher but have now turned negative. Prices initially jumped as Saudi Arabia raised crude prices for July and amid doubts that an increase of production from OPEC+ will help alleviate tight supply issues. Saudi Arabia raised July crude oil prices for Asian buyers to higher-than-expected levels amid concerns over tight supply and increased demand this summer. The selling price of $6.5 a barrel over Oman/Dubai quotes was much greater than the market forecasts for an increase of about $1.5 a barrel. Additionally, expectations that the OPEC+ output increase will not do much to help with the tight supply also helped support the price jump.
Natural gas futures spiked this morning on forecasts for higher demand than previously expected and an increase in LNG exports.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Eni and Repsol could begin shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude, five people familiar with the matter said, resuming oil-for-debt swaps halted two years ago when Washington stepped up sanctions on Venezuela.
Petrobras said it started the sale process of its 18.8% stake in UEG Araucaria, a joint venture with Grupo Copel that owns a natural gas power plant in the southern Parana state.
Shell and Japanese liquefied natural gas (LNG) buyers Tokyo Gas and Osaka Gas will together explore potential opportunities to accelerate decarbonisation across their respective production value chains. Shell said that it has signed separate non-binding memorandums of understanding (MOUs) with its long-standing Japanese LNG buyers. The agreements include assessing a range of potential solutions including hydrogen, carbon capture, utilisation & storage (CCUS), biomethane and renewables-based synthetic gas among others. In addition, a tripartite side letter has been signed between Shell, Tokyo Gas and Osaka Gas to jointly explore and evaluate the potential of renewables-based synthetic gas, added Shell.
CANADIAN INTEGRATEDS
Cenovus Energy announced a new and substantial long-term sponsorship agreement with the Calgary Stampede. The four-year, Champion level sponsorship builds on more than a decade of involvement with the Stampede. The enhanced relationship, which runs through 2025, includes premier sponsorship of the Saddle Bronc competition and a new fan experience with company volunteers handing out treats and other giveaways to lucky fans seated in the designated Cenovus Energy Zone during the rodeo. In addition, the agreement provides opportunities for Cenovus staff to volunteer at the Stampede, which runs from July 8 to July 17.
U.S. E&PS
APA Corp was upgraded to buy from hold at Tudor Pickering Holt, target $57.
Callon Petroleum Co holder Kimmeridge Energy Management Group, LLC discloses sale of 6.5M shares. Kimmeridge Energy Management Group, LLC beneficially owns 5.2M shares following the transaction.
California Resources announced that it is soliciting consents from holders of its outstanding 7.125% Senior Notes due 2026 as of 5:00 p.m. New York City time, on June 3, 2022 to a proposed amendment to the indenture governing such Notes. The Consent Solicitation is being made solely upon the terms and conditions described in the Company’s Consent Solicitation Statement, dated June 6, 2022. The Consent Solicitation will expire at 5:00 p.m., New York City time, on June 10, 2022, unless extended or earlier terminated by the Company.
Evolution Petroleum Corp files $500M mixed shelf.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
No significant news.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
ECP has entered into a definitive agreement to sell Sendero Midstream Partners, LP to Crestwood Midstream Partners LP, an affiliate of Crestwood Equity Partners for an enterprise value cash purchase price of $600 million, plus/minus adjustments for working capital.
Energy Transfer LP announced that China Gas Hongda Energy Trading Co., LTD, a subsidiary of China Gas Holdings Limited (China Gas) has entered into an LNG Sale and Purchase Agreement with Energy Transfer LNG Export, LLC (Energy Transfer LNG), a subsidiary of Dallas-based Energy Transfer LP, related to its Lake Charles LNG project. Energy Transfer LNG will supply 0.7 MTPA on FOB basis for 25 years.
MARKET COMMENTARY
U.S. stock index futures bounced, as a report of Beijing regulators concluding a year-long probe into Didi Global lifted shares of other NY-listed China stocks. European shares rose, helped by banks and commodity-linked stocks, while investors kept an eye on the European Central Bank meeting later this week. Japan's Nikkei ended higher supported by energy shares. Gold prices edged higher, aided by a slight pullback in the dollar and Treasury yields. Oil prices hit $120 a barrel after Saudi Arabia raised crude prices for July.
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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