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Continuing Crisis in Syria Driving Oil Prices

Monday, April 9, 2018

Sector Commentary

The energy sector is pointing to a higher start this morning while U.S. stock futures trade in positive territory as U.S.-China trade war fears ease. Global markets came under pressure last week as the United States and China threatened each other with tens of billions worth of tariffs. Investors remained on edge as they feared protectionist measures would hit global economic growth.

Both WTI and Brent rose on Monday after last week’s 4.5% selloff. The dollar is slightly stronger against the major currencies this morning, including against both the euro and yen; however, geopolitical concerns are driving oil prices higher despite the currency. Markets are eyeing the situation in Syria after reports - denied by the Pentagon - that U.S. forces had struck a major air base there.

Natural gas was even, while preliminary storage draw estimates for week's-ending April 6 and April 13 are slightly smaller from late last week, and estimates for the week-ending April 20 now see a build of 30 Bcf to 35 Bcf vs what had been an estimated 70 Bcf as of last Friday.

INTERNATIONAL INTEGRATEDS

Reuters - BP said it will develop second phase of Oman’s Khazzan gas field.

(Saturday) Press Release - Eni intends to sell a minority interest in an oil discovery in Campeche Bay, offshore Mexico, to Qatar Petroleum International.

(Sunday) Press Release - PJSC "Gazprom" will build 10 gas pipelines in the Chechen Republic. This became known during an expanded meeting dedicated to strengthening payment discipline in the supply of gas in the domestic market.

(Late Friday) Press Release - Petroleo Brasileiro informs that it has started the opportunity disclosure stage related to the sale of its 50% non-operated working interest in Tartaruga Verde field and Module III of Espadarte field, both deep water offshore exploration and production assets located in the Campos Basin.

(Late Friday) Press Release - Petroleo Brasileiro, further to the Material Fact of March 31, 2017, reports that Consortium BM-S-11, formed by Petrobras (65%), as operator, in partnership with Shell Brasil Petroleo Ltda. (25%) and Petrogal Brasil (10%), received on March 29, 2018, the decision of the National Agency of Petroleum, Natural Gas and Biofuels - ANP, for the nullity of the administrative proceeding whose scope was to recalculate government participations in the Lula Field, in the pre-salt layer of the Santos Basin.

(Late Friday) Press Release - Petroleo Brasileiro, further to the Material Fact disclosed on August 28, 2017 and press release disclosed on November 17, 2017, informs the beginning of the binding phase of the processes related to the full sale of its exploration, development and production rights in two sets of onshore fields, Riacho da Forquilha and Miranga, located in Rio Grande do Norte and Bahia states, respectively.

(Late Friday) Press Release - Petroleo Brasileiro informs that it has started the opportunity disclosure stage regarding the transfer of Petrobras' total stake in Bauna field, located in Santos Basin, in shallow waters.

(Saturday) Press Release - Petroleo Brasileiro intends to sell 100% interest in BM-S-40 concession located in the Santos Basin, offshore Brazil.

(Saturday) Press Release - Indian Oil Corporation Ltd, through its wholly-owned subsidiary IOCL Singapore Pte. Ltd, completed the acquisition of a 17% interest in Mukhaizna oilfield located in Oman, from Royal Dutch Shell, for a purchase consideration of US$329 million.

U.S. E&PS

Johnson Rice and Company downgraded Concho Resources to ‘Hold’ from ‘Accumulate’.

(Saturday) Press Release - Halcon Resources completed the acquisition of oil and gas properties located in West Quito Draw area in Ward County, Texas, the US, from Swepi LP, an affiliate of Shell Oil Company, for a purchase consideration of US$200 million (MM), subject to customary price adjustments.

Stifel Nicolaus and Co initiated Northern Oil and Gas at ‘Buy’.

CANADIAN E&PS

(Late Friday) Press Release - Obsidian Energy and FrontFour Capital Group LLC announced that they have found common ground and entered into a settlement agreement, pursuant to which FrontFour will nominate two directors to be put forth for election to the Board of Directors at the Company's 2018 Annual and Special Meeting. Two of FrontFour's previously announced director nominees, Michael J. Faust and Stephen E. Loukas will be included in management's slate of 10 director nominees. In conjunction with the nomination of Messrs. The Company also announced that long-serving director George H. Brookman will be retiring from the Board following the end of his term at the Company's upcoming AGM.

MLPS & PIPELINES

Press Release - Kinder Morgan said it is suspending all non-essential activities and related spending on its controversial Trans Mountain pipeline expansion project that would nearly triple the flow of oil from Canada's oil sands to the Pacific Coast.

RCB Capital Markets upgraded Magellan Midstream Partners to ‘Outperform’ from ‘Sector Perform’.

Suntrust Robinson Humphrey upgraded Plains All American Pipeline to ‘Buy’ from ‘Hold’.

RBC Capital Markets downgraded Spectra Energy Partners to ‘Sector Perform’ from ‘Outperform’.

MARKET COMMENTARY

Wall Street looked set to open higher as fears over U.S.-China trade dispute ebbed. Most European shares rose, though stocks exposed to Russia fell after a fresh round of U.S. sanctions. Japanese shares were up, lifted by defensive shares. The dollar rose, hurting the demand for gold. Oil prices steadied.


Nasdaq Advisory Services Energy Team Nasdaq's Advisory Services Tamar Essner
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