Oil Prices Rebound After OPEC Fuels Supply Worries, China Increases Demand
The energy sector is pointing to a higher start and set to recover most of yesterday’s losses as benchmark crude futures bounce off six-week lows while major equity futures surged higher and treasury yields backed off following key inflation data. The March consumer prices report showed inflation excluding food and energy costs were slightly less than expected, taking some pressure off markets concerned about aggressive interest rate hikes.
WTI and Brent crude oil futures rebounded this morning, gaining amid reports that Shanghai relaxed some of its COVID-19 restrictions which eased concerns about Chinese demand and as OPEC warned it would be impossible to replace potential supply losses from Russia. Shanghai yesterday said that more than 7,000 residential units had been classified as lower-risk areas after reporting no new infections for 14 days and districts have since been announcing which compounds can be opened up. At talks held in Vienna with representatives of the EU, OPEC told officials that current and future sanctions on Russia could create one of the worst ever oil supply shocks and it would be impossible to replace those volumes, signaling it would not pump more. The EU has yet to agree any embargo on Russian oil but some foreign ministers said the option is on the table.
Natural gas futures extended their rally higher, putting the contract on track for its highest levels in 13 years, on forecasts for higher heating demand than previously expected and as much higher global gas prices keep U.S. LNG exports near record highs.
BY SECTOR:
US INTEGRATEDS
Chevron and the United Steelworkers union (USW) met on Monday to seek an end to a three-week-old strike by 500 workers at the company's Richmond, California, refinery, a union official said.
INTERNATIONAL INTEGRATEDS
TotalEnergies and KGHM signed a partnership to participate on a 50/50 basis in the Polish government tender for the development of offshore wind projects. The government has launched a new auction scheme covering 11 areas in the Polish Baltic Sea, representing an expected total capacity of over 10 GW, in order to leverage the Baltic Sea's strong potential for wind power generation due to favorable weather conditions.
Uniper has signed an agreement with Shell to progress plans to produce blue hydrogen at Uniper’s Killingholme power station site, in the East of England. The hydrogen produced could be used to decarbonise industry, transport and power throughout the Humber region.
Petrobras announced the expiration and expiration date results of the previously announced cash tender offers by its wholly-owned subsidiary, Petrobras Global Finance B.V., with respect to any and all of (i) its notes of the series set forth under the heading "Tender Group 1" and (ii) its notes of the series set forth under the heading "Tender Group 2."
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Barclays reinstated coverage on APA with an Overweight rating.
Murphy Oil announced that it has achieved first oil from the Khaleesi, Mormont and Samurai field development project in the deepwater Gulf of Mexico, as production has begun flowing through the Murphy-operated King’s Quay floating production system.
W&T Offshore announced that Shahid A. Ghauri, W&T’s Vice President, General Counsel and Corporate Secretary is leaving the Company to pursue other personal interests. Nadege Assale, who has served as Assistant General Counsel for the past two years, will assume the role of Acting General Counsel until Mr. Ghauri’s successor is named. Mr. Ghauri will remain with W&T through April 22, 2022 to assist in the transition.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Compass Minerals reported above-average fiscal 2022 second-quarter winter weather activity in its North American-served market compared to the 10-year historical average. When coupled with the fiscal 2022 first-quarter activity, this resulted in a relatively average winter for the full season ended March 2022 when compared to the 10-year historical average. Eleven representative cities in the company’s primary North American highway deicing service area reported a total of 114 snow events during the fiscal 2022 second quarter, which was approximately 10% above the 10-year average and approximately 14% above the prior-year comparable period. The company sold approximately 4.8 million tons of highway deicing salt products in the fiscal 2022 second quarter compared to 4.6 million tons in the prior-year period. This total includes all highway maintenance products sold in the U.S., Canada and the U.K., as well as rock salt sold to the chemical industry. Sales of all Salt products were approximately 5.3 million tons in the fiscal 2022 second quarter compared to 5.0 million tons in the prior-year comparable quarter.
KBR announced that JKC Australia LNG Pty Ltd joint venture, in which KBR has a 30% ownership interest, and Kellogg Brown & Root Pty Ltd have entered into a conditional settlement agreement to resolve outstanding claims and disputes between JKC and its power plant subcontractor, the consortium comprising: (i) the unincorporated joint venture between CH2M Hill Australia Pty Limited and UGL Infrastructure Pty Limited, (ii) General Electric Company, and (iii) General Electric International. As a result of the Settlement Agreement, KBR expects to receive approximately $271 million of cash in two payments: $203 million in April 2022 and $68 million in March 2023, at prevailing exchange rates. KBR expects to report a non-cash loss of approximately $140M in its 1st quarter 2022 results for the period ended March 31, 2022.
DRILLERS
Benchmark initiated coverage on Helmerich and Payne with a Buy rating.
In connection with the business combination between The Drilling Company of 1972 A/S (“Maersk Drilling”) and Noble announced on 10 November 2021, the United States Securities and Exchange Commission declared the U.S. Registration Statement, filed by Noble Finco Limited on Form S-4, effective on 11 April 2022. Furthermore, Noble has announced that it will hold an extraordinary general meeting of Noble shareholders relating to the Business Combination on 10 May 2022.
REFINERS
No significant news.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
U.S. stock index futures edged higher amid key inflation data for March. European shares fell as Deutsche Bank and Commerzbank slumped after a big stake sale. The Nikkei ended lower. The dollar held firm supported by high U.S. bond yields and the euro slipped. Oil prices surged after OPEC warned it would be impossible to replace potential supply losses from Russia. Gold prices gained.
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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