Oil Prices Rise on Reduced COVID-19 Restrictions in China, Fears of Norwegian Oil Worker Strike
The energy sector is set for a higher start supported by strength in the underlying commodities despite weakness in U.S equities. The major market futures are down as tech-driven optimism eased and as a rise in oil prices has increased existing concerns of a further rise in global inflation.
WTI and Brent crude oil are up early trading on the easing of China’s COVID-19 restrictions and a possible strike by Norwegian oil workers. Oil futures are extending their upward trend despite economic data showing builds for crude and oil products as traders expect oil demand to pick up following China’s decision to end its COVID-19 related lockdowns. The API report showed U.S crude, gasoline and distillate inventories rose for the week ending June 3rd, which was largely ignored by the markets. Additionally, Norwegian oil workers plan to strike from June 12 if state-brokered wage meditation fails, potentially putting crude output at risk of shutdown. However, the Chief of the Lederne labor union says gas may not be affected as they will try to avoid hurting gas production, pointing out supply issues created by the war in Eastern Europe.
Natural gas futures have edged up this morning on a decline in output and forecasts for warmer weather and higher demand than previously expected.
BY SECTOR:
US INTEGRATEDS
Chevron, through its subsidiary Chevron Munaigas, and JSC NC “KazMunayGas” (KMG) have announced a memorandum of understanding (MoU) to explore potential lower carbon business opportunities in Kazakhstan. Chevron and KMG plan to evaluate the potential for lower carbon projects in areas such as carbon capture, utilization, and storage (CCUS); hydrogen; energy efficiency and methane management; and carbon financial disclosure methodology.
INTERNATIONAL INTEGRATEDS
Reuters reported that Qatar has picked Exxon Mobil, TotalEnergies, Shell and ConocoPhillips as partners in the expansion of the world's largest liquefied natural gas (LNG) project.
Petrobras, regarding the news published in the media about the Investment Partnership Program of the Presidency of the Republic (PPI), informed that Resolution CPPI no. 240/2022 was published in the Official Federal Gazette, through which the PPI Council opined favorably to the inclusion of Petrobras in the PPI, in order to coordinate studies and actions necessary for the evaluation of the company's privatization, and submitted the topic for deliberation to the President of the Republic.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Scotiabank upgraded Crescent Point Energy to Sector Outperform from Sector Perform.
As per SEC filing, on June 2, 2022, Diamondback Energy, as parent guarantor, and Diamondback E&P LLC, as borrower (as successor-by-merger to Diamondback O&G LLC), entered into a thirteenth amendment to the Second Amended and Restated Credit Agreement, dated as of November 1, 2013, with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto.
Scotiabank upgraded Enerplus to Sector Outperform from Sector Perform.
Northern Oil and Gas Inc acquires Williston Basin assets for $170M with cash, average production >2,500 Boe per day (83% oil) expected over the next twelve months. Company said it will be accretive to all material valuation metrics.
CANADIAN E&PS
Scotiabank downgraded Canadian Natural Resources to Sector Perform from Sector Outperform.
Scotiabank downgraded MEG Energy to Sector Perform from Sector Outperform.
OILFIELD SERVICES
As per SEC filing, on June 7, 2022, Balchem announced that Mark Stach, General Counsel and Secretary of the Company, has notified the Company of his intent to retire and will step down upon the appointment of his successor. Mr. Stach will then stay on for a transition period, retiring from the company by December 31, 2022.
Chart Industries Inc was downgraded to equal weight from overweight at Barclays.
Ranger Energy Services Inc appoints Melissa Cougle as CFO, succeeds Brandon Blossman who will be stepping down to pursue other opportunities, effective 10-Jun-22.
Deutsche Bank initiated coverage on Weatherford International PLC with a Buy rating.
Stock analysts at Goldman Sachs started coverage on shares of Weatherford International PLC in a research report issued on Wednesday. The brokerage set a “buy” rating and a $43.00 price target on the stock.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
As per SEC filing, on June 7, 2022, EQM Midstream Partners, LP, a wholly owned subsidiary of Equitrans Midstream, completed its previously announced private offering of $500 million aggregate principal amount of new 7.500% senior notes due 2027 and $500 million aggregate principal amount of new 7.500% senior notes due 2030.
Evolve Transition Infrastructure LP announces approval by the United States Bankruptcy Court for the Southern District of Texas of the previously announced Settlement agreement between Evolve and Mesquite Energy, Inc.
International Seaways announced that it has completed a transaction in which the Company has sold its 50% stake in two floating storage and offshore (FSO) vessels to its joint venture partner Euronav NV. The purchase price values the two FSO vessels at $300 million in total. Net of adjustments for working capital and expenses, International Seaways received approximately $140 million in cash from the sale. Additionally, the Company announced that its Board of Directors has declared a cash dividend of $0.12 per share for the second quarter of 2022. The declaration represents an increase of $0.06 per share from the Company’s historical quarterly dividend of $0.06 per share since the start of 2020. The dividend will be paid on June 29, 2022, to shareholders of record at close of business on June 17, 2022.
Scorpio Tankers announced an update on Q2 2022 events, including the quarter to date Daily TCE Revenues. Average daily TCE revenue: LR2: $35,000; MR: $34,000; Handymax: $35,000. As of June 6, 2022, Scorpio Tankers’ outstanding principal balance on debt was $2,711.3 million. Since December 31, 2021, the Company has had a net reduction in debt of $452.4 million, which includes the repayment of $69.7 million upon the maturity of the Convertible Notes Due May 2022. The Company has recently repurchased $10.8 million in aggregate principal amount of its Convertible Notes due 2025 in the open market. As of June 6, 2022, the Company has completed the sale of 12 vessels (10 LR1s and two MRs) and has six vessels held for sale (two LR1s, three LR2s and one MR). The vessels held for sale are scheduled to be sold before the end of the third quarter of 2022. The Company estimates that the fully diluted weighted average number of shares for the earnings per share calculation under the if-converted method will be approximately 64.5 million shares for the three months ended June 30, 2022.
TC Energy announced the appointment of Cheryl Campbell as a new independent director to the Board of Directors effective June 7, 2022.
MARKET COMMENTARY
Wall Street futures were in the red as technology and growth stocks pulled back a little just a day after fueling a rally. European shares fell as markets reacted to a profit warning from Credit Suisse. Japan's Nikkei index closed at its highest rallied by technology heavyweights and energy stocks. Gold prices dipped as the dollar and Treasury yields bounced back with investors looking to U.S. inflation data. Oil prices rose on the easing of Chinese COVID-19 related lockdowns and a possible strike by Norwegian oil workers.
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