Crude Climb on Potential Output Cuts by OPEC+, Conflicts in Libya
The energy sector is poised for a lower start, pressured by weakness in the broader markets. U.S. stock are down in the pre-market as investors remain worried the Federal Reserve will remain Hawkish to control inflation.
WTI and Brent crude oil are up in early trading on the possibility of output cuts by OPEC+ and as conflicts in Libya outweigh recession concerns. Production cuts by OPEC+ would occur in response to the revival of the 2015 Iran Nuclear Deal as Saudi Arabia said this would restore market balance. On Sunday, charred cars and buildings covered by bullets scarred Libya's capital, the day after intense fighting killed 32 people yet appeared to leave the Tripoli government more firmly entrenched. The brief nature of the flare up has not quashed fears of a wider conflict resuming between rivals after months of stalemate in a nation that has endured more than a decade of chaos and violence.
Natural gas futures rose this morning on forecasts for warmer weather and higher demand than previously expected.
BY SECTOR:
US INTEGRATEDS
Exxon Mobil has reached an agreement with Flywheel Energy to sell to the closely held U.S. oil and gas producer natural gas properties in Arkansas, an Exxon spokesperson confirmed on Friday.
INTERNATIONAL INTEGRATEDS
BP has completed planned maintenance at the Shah Deniz Alpha oil platform in Azerbaijan, it said.
The U.S. Environmental Protection Agency and Transportation Department on Saturday took steps to help alleviate potential fuel shortages in four states after the unanticipated shutdown of the BP Whiting, Indiana refinery.
Norwegian carbon dioxide (CO2) storage company Northern Lights and its owners have agreed to store emissions captured at fertiliser-maker Yara's Dutch operation from 2025 in what they say is a commercial breakthrough for the business. The joint venture founded by oil firms Equinor, TotalEnergies and Shell plans to inject CO2 from industrial plants into rock formations beneath the North Sea ocean floor.
Equinor is considering selling a 28% stake in Statfjord field, which straddles the Norwegian and British continental shelves, alongside minority stakes in several satellite fields, a presentation seen by Reuters showed.
Europe could face several winters of gas shortage as a result of the cuts to Russian supplies, Shell Chief Executive Ben van Beurden told a news conference in Norway.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Roth Capital initiated a coverage on Battalion Oil Corp with a Buy rating.
As per SEC filing, on August 24, 2022, Continental Resources, as borrower, MUFG Bank, Ltd., as administrative agent, the guarantors party thereto, the issuing banks and the lenders party thereto entered into that certain Amendment No. 1 and Agreement to that certain Revolving Credit Agreement, dated as of October 29, 2021, among the Borrower, the Administrative Agent, the guarantors party thereto and the lenders party thereto. The Amendment, among other things: (i) increases the amount of the aggregate commitments by $255 million to total aggregate commitments of $ 2.255 billion; and (ii) amends the Existing Credit Agreement to replace LIBOR as a benchmark with Term SOFR and provide that, at the Borrower’s option (other than with respect to swingline loans), loans will bear interest at (A) the Adjusted Reference Rate plus an applicable margin of 0% to 1.000% based on the Borrower’s index debt ratings or (B) Adjusted Term SOFR plus an applicable margin of 1.000% to 2.000% based on the Borrower’s index debt ratings.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
NCS Multistage Holdings announced that a jury in the U.S. District Court for the Western District of Texas, Waco Division has found that an NCS patent, U.S. Patent No. 10,465,445, is valid and infringed by TCO AS’s TDP-PO casing flotation device. The jury awarded NCS approximately $1.9 million in past damages for infringement of the patent from late 2019.
Green Energy Groups (SeaBird Exploration Plc) 55% owned subsidiary Green Minerals announced a Memorandum of Understanding with Oil States Industries Ltdestablishing collaboration for the development of a Harsh Environment Deep Sea Mining System (HEDSMS) against a long-term contract for exclusive use in Norwegian waters has been entered into.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
DHT Holdings announced that it has entered into agreement to sell the DHT Edelweiss, a 2008 built VLCC, for $37.0 million. The vessel is not fitted with an Exhaust Gas Cleaning System and is due for its 3rd Special Survey and installation of a Ballast Water Treatment System in the first quarter of 2023. The Company expects to deliver the vessel to its new owner during the third quarter. The sale will reduce the average age of the Company’s fleet and improve its AER and EEOI metrics. The vessel’s outstanding bank debt of about $12.2 million will be repaid in connection with the sale and the Company expects to record a gain of about $6.8 million in the third quarter of 2022. Following the abovementioned sale and the recently announced retrofit program, 100% of the Company’s fleet will be fitted with Exhaust Gas Cleaning Systems by the first quarter of 2023.
TC Energy said on Friday it did not expect any interruption to its transportation services after work was halted at its Nova Gas Transmission Line (NGTL) Edson Mainline work site near Caroline, Alberta, following an injury at the site.
MARKET COMMENTARY
U.S. stock futures fell, and world stocks slumped as prospects of more aggressive rate hikes from major central banks hurt investor sentiment, pushing Treasury yields higher. The dollar climbed to a 20-year high against other major currencies, while gold dropped. Oil prices rose on potential OPEC+ output cuts and conflict in Libya.
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