Oil Prices on Track for Weekly Decline as Worries of Interest Rate Hike Persists
Energy stocks are set to open lower, tracking a ~1.2% decline in S&P 500 Index futures (As of 8:50 AM ET) as inflation and rising rates continue to weigh on investor sentiment. Additionally, a profit and recession warning from FedEx is contributing to the growing calls from the corporate community of an impending slowdown. Trading volumes will be elevated today as quarterly index and stock options and futures expire today, also known as “quadruple witching.”
Oil prices were broadly steady on Friday but on track for a weekly decline on fears of sharp interest rate increases expected to curb global economic growth and fuel demand. Both benchmarks are headed for third consecutive weekly losses, hurt partly by a strong U.S. dollar, which makes oil more expensive for buyers using other currencies. The dollar index held near last week's high above 110. Investors are vigilant of a drop in demand, which follows the IEA’s outlook for almost zero growth in oil demand in the fourth quarter owing to a weaker demand outlook in China. "Both the IMF and World Bank warned that the global economy could tip into recession next year. This spells bad news for the demand side of the oil coin and comes a day after the IEA forecast (on) oil demand," said PVM analyst Stephen Brennock. "Recession fears coupled with higher U.S. interest rate expectations made for a potent bearish cocktail."
Natural gas futures are lower by 10 cents, trading around $8.20, following yesterday’s declines. Factors weighing include forecasts for a warmer than normal shoulder season and a weekly storage build above expectations reported by the EIA yesterday.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
AP reported that BP reached a $2.75 million settlement over air pollution from its largest refinery after environmentalists complained of repeated emissions violations at the Whiting facility in Indiana.
Enjoy, Eni's car sharing service, is going electric in Bologna, with the introduction of the battery swapping equipped city cars XEV YOYO to its fleet.
The Service of the Commission for the Protection of Competition has received a notification of a concentration concerning the proposed acquisition of the share capital of VGP Holdings LLC (international product company division of Valvoline) by Saudi Arabian Oil Company, via Aramco Overseas Company B.V.
Shell said it was "unaffected" by the German government putting the 233,000 barrel per day PCK Schwedt oil refinery under trust, effectively taking control from its Russian majority owner Rosneft.
TotalEnergies reported unauthorized emissions from Tank 941 were emitted due to a leak at Port Arthur, Texas, refinery.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Devon Energy announced that the company’s board of directors expects to appoint Barbara Baumann as chair of the board, succeeding Dave Hager, who has notified the board of his plans to retire from the board in January 2023.
CANADIAN E&PS
Scotiabank downgraded Vermilion Energy to Sector Perform from Sector Outperform.
OILFIELD SERVICES
CES Energy Solutions announced that it will pay a cash dividend of $0.016 per common share on October 14, 2022 to the shareholders of record at the close of business on September 30, 2022.
Granite Construction announced that its Board of Directors has declared a quarterly cash dividend of $0.13 per common share. The dividend is payable on October 14, 2022, to all shareholders of record at the close of business on September 30, 2022.
The Securities and Exchange Commission charged Granite Construction and its former Senior Vice President, Dale Swanberg, with fraud for inflating the financial performance of the major subdivision Swanberg managed. In 2021, Granite restated its financial statements from 2017 through 2019 to correct revenue and profit margin errors allegedly caused by Swanberg's misconduct. The company agreed to pay $12 million to settle the SEC's charges.
Shawcor announced that it has filed a notice of intention with the Toronto Stock Exchange to commence a normal course issuer bid for common shares of the Company, the implementation of which remains subject to TSX approval. Pursuant to the Bid, Shawcor intends to purchase for cancellation up to 10% of Shawcor’s public float, subject to a maximum of C$25 million in aggregate repurchases of Common Shares based on the actual price paid for such repurchased Common Shares pursuant to the Bid.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
The Ontario Energy Board has accepted an Assurance of Voluntary Compliance from Enbridge Gas, the rate-regulated gas distributor that serves the majority of natural gas customers in the province. This AVC follows a review by the OEB of Enbridge's performance against certain customer service quality requirements set out in the OEB's Gas Distribution Access Rule. Under the terms of this AVC, Enbridge will pay an administrative monetary penalty of $250,000.
HF Sinclair announced the appointment of Atanas H. Atanasov as Executive Vice President and Chief Financial Officer of HF Sinclair effective September 30, 2022, and Holly Energy Partners, L.P. announced the appointment of Michael C. Jennings as President of Holly Logistic Services, L.L.C. HLS is the ultimate general partner of HEP. Richard L. Voliva III, who served as Executive Vice President and Chief Financial Officer of HF Sinclair and President of HLS, agreed to a mutual separation with HF Sinclair and HLS.
MARKET COMMENTARY
Wall Street futures slipped after logistics industry bellwether FedEx withdrew its financial forecast and recession warnings from the World Bank and the International Monetary Fund. European shares were also trading in the red. Japan's Nikkei closed lower. Gold prices fell as expectations of a huge rate hike from the Fed next week boosted the dollar and Treasury yields. Oil prices steadied but were on course for a weekly decline. Later in the day, University of Michigan is scheduled to report its preliminary consumer sentiment index for September.
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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