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Crude on Track for Weekly Loss as Demand Concerns Persist


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Friday, June 14, 2019

SECTOR COMMENTARY

Energy stocks are poised for a lower start, tracking mild weakness in the crude complex and broader index futures which declined on global growth fears as data from China showed industrial output growth in the world's second largest economy slowed to more than a 17-year low in May.

Oil prices are steady this morning following yesterday's rally amid attacks on two oil tankers in the Gulf of Omen, but futures on both sides of the Atlantic remain on track for a weekly loss. The IEA cut its demand growth forecast for 2019 by 100,000 bpd to 1.2 million bpd, citing worsening prospects for world trade. However, the IEA said it expects demand growth to climb to 1.4 million bpd for 2020. "The main focus is on oil demand as economic sentiment weakens ... The consequences for oil demand are becoming apparent," the IEA said in its monthly oil report. "The worsening trade outlook (is) a common theme across all regions", it added.

Natural gas futures are up 1%, following yesterday's declines despite a smaller than expected inventory build as stockpiles remain well above 5-year averages. Meanwhile, weather forecasts next week turned warmer which should drive cooling demand.

INTERNATIONAL INTEGRATEDS

(Late Thursday) Reuters - Petroleo Brasileiro announced it concluded the sale of gas pipeline system TAG to a group led by Engie SA and Caisse De Depot Et Placement Du Quebec (CDPQ). According to a securities filing, Petrobras, as the company is known, said it received a total of 33.5 billion reais ($8.69 billion) from buyers on Thursday for the 90 percent stake it had in TAG. The announcement follows a decision last week by Brazil's Supreme Court clearing the deal.

(Late Thursday) Reuters - Ouro Preto Oleo e Gas delivered the highest bid to acquire a pair of Brazilian oil clusters from Petroleo Brasileiro . Petrobras, as the oil company is known, said that bids for the Pampo and Enchova shallow water fields surpassed $1 billion but did not disclose the highest offer or winner.

Reuters - Total is close to acquiring a 30% stake in Indian gas distribution company Adani Gas ADAG.NS for upwards of rupees 5,500 crore ($800 million). The deal is expected to trigger an open offer to public shareholders of Adani Gas, and Total may end up having a roughly equal stake in the company as billionaire promoter Gautam Adani.

Reuters - Britain's energy regulator ordered Shell 's utility business to refund and compensate around 12,000 customer accounts it overcharged on default tariffs when the price cap was introduced earlier this year. Ofgem said Shell Energy Retail Ltd will pay 200,000 pounds ($253,520) in addition to the refund to its consumer redress fund, bringing the total payment to 390,000 pounds.

(Late Thursday) Reuters - Mexico's oil regulator approved exploration plans for four deepwater areas operated by Royal Dutch Shell after it gave the green light to five others earlier this week, committing the oil major to invest at least $791 million. The plans stipulate that the Anglo-Dutch company could invest up to $1.06 billion in the four blocks, mostly dedicated to drilling at least six new wells.

Reuters - Total and other foreign firms have started to renew their business licences with Libya's internationally recognised government to keep operating in the country.

CANADIAN E&PS

(Late Thursday) Press Release - Whitecap Resources announced that a cash dividend of Cdn. $0.0285 per common share in respect of June operations will be paid on July 15, 2019 to shareholders of record on June 30, 2019. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada).

DRILLERS

(Late Thursday) Press Release - The Ensco Rowan board of directors received a proposal from Luminus Management dated June 12, 2019. EnscoRowan's board of directors welcomes investor perspectives on matters such as the Company's capital structure and the return of capital to shareholders, and will evaluate the Proposal. The Company proactively evaluates and manages its capital structure to execute its strategic priorities and deliver value for shareholders. To achieve these objectives, the Company has significant financial flexibility within its capital structure, including the ability to issue debt that would be structurally senior to the Company's currently outstanding debt on both an unsecured and secured basis.

Citigroup downgraded Transocean to 'Neutral' from 'Buy.'

MLPS & PIPELINES

Mizuho Securities initiated coverage in Western Midstream Partners with a 'Buy' rating.

MARKET COMMENTARY

U.S. stock futures were lower as trade fears were exacerbated by Broadcom's warning of a slowdown in chip demand and a weak Chinese industrial output data renewed woes about the health of the global economy. European tech shares led the indexes lower and most Asian equity indexes ended down. The dollar rose ahead of a U.S. central bank meeting next week where policymakers might signal when it plans to cut interest rates for the first time in a decade. Gold jumped, surpassing the key $1,350 level for the first time since April last year, as safe-haven bets were back in play. Oil prices slipped on fears over global demand. Investors will keep a close watch on industrial production and retail sales data later in the day.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP

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.




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