Crude Climbs as Concerns of Tight Supply Outweigh Recession Fears
The energy sector is set for a lower start, pressured by weakness in the broader markets. Wall St futures are down in pre-market trading as a weak forecast from Snap Inc hit shares of social media companies. Snap shares fell 31% premarket, following a revenue warning on Monday, during which the company noted that the macroeconomic environment has deteriorated more than anticipated. Later Tuesday, investors will receive new commentary from Fed Chairman Jerome Powell, data on U.S. new home sales and gauges of U.S. manufacturing activity.
WTI and Brent crude oil recovered earlier losses and are flirting with the flatline as existing concerns over tight supply is slightly outweighing worries over a possible recession and China’s COVID-19 restrictions. Analysts are expecting an increase in fuel demand as the U.S heads into the summer driving season despite soaring prices at the pump. U.S. gasoline demand is expected to be the highest in two years as more drivers hit the road and shake off coronavirus fears. According to the German economic minister, the European Union is moving closer to agreeing on a ban of Russian imports which may be agreed upon “within days”.
Natural gas futures are seesawing between positive and negative territory on forecasts for milder weather and less demand in the next two weeks which is slightly outweighing concerns about how much LNG is left in storage.
BY SECTOR:
US INTEGRATEDS
Chevron U.S.A., through its Chevron New Energies division, Talos Energy, through its Talos Low Carbon Solutions division, and Carbonvert announced the execution of definitive documentation and closing of the expanded joint venture to develop the Bayou Bend CCS offshore carbon capture and sequestration hub, effective May 1, 2022.
Reuters reported that the U.S. Treasury Department is getting ready to renew in the coming days Chevron's license to operate in Venezuela, but likely without the greatly expanded terms the U.S. oil major sought.
Exxon Mobil is looking forward to the first export of liquefied natural gas (LNG) from Mozambique later this year as it continues work on the Rovuma project, its head of global LNG Peter Clarke told the World Gas Conference.
Reuters reported that an unplanned shutdown of Exxon Mobil's 520,000 barrel-per-day (bpd) Baton Rouge, Louisiana, crude oil refinery may last through June 1 depending on repairs to boilers at a third-party steam plant, said sources familiar with plant operations on Monday.
INTERNATIONAL INTEGRATEDS
BP has taken a major step forward in strengthening its strategic partnership with ADNOC and Masdar of Abu Dhabi, bringing international participation to its planned blue and green hydrogen developments in Teesside in the north-east of England. ADNOC – the UAE’s largest energy company – will take a 25% stake in the design stage of bp’s blue hydrogen project, H2Teesside. This will be ADNOC’s first investment in the UK. bp and ADNOC will now advance the project, initially to the next stage of design, the pre-FEED stage. H2Teesside is expected to kickstart the UK’s hydrogen economy at scale with the development of two 500MW hydrogen production units by 2030. The project is targeting start of operations in 2027.
Senior Brazilian economy ministry official Caio Mario Paes de Andrade will be the next chief executive of state-run oil company Petrobras, the government said, replacing a predecessor who served less than two months in the job. Paes de Andrade will take over from outgoing CEO Jose Mauro Coelho, picked to lead Brazil's leading oil company in early April, becoming its fourth chief executive in the past two years. The shakeup is President Jair Bolsonaro's latest bid to influence Petrobras' fuel pricing policy as he seeks to boost his re-election prospects amid galloping energy-driven inflation, according to analysts.
Petrobras alerted the government last week that diesel pumps could run dry this year during the crucial soybean harvest season if the oil company does not sell fuels at market prices, according to four people close to discussions and an internal presentation seen by Reuters.
The fuel pricing policy of Petrobras should be aligned with the views of the country's new energy minister, said Ciro Nogueira, chief of staff for President Jair Bolsonaro, in a TV interview.
Dozens of climate protesters disrupted Shell's annual shareholder meeting on Tuesday, chanting slogans and holding banners as Shell Chair Andrew Mackenzie was forced to temporarily suspend the event. Shell is due to ask its shareholders to vote on a resolution supporting its climate strategy and rebuff an environmental resolution from activists, another iteration of which garnered 30% of votes at last year's annual general meeting.
Against the backdrop of World Gas Conference 2022, TotalEnergies announced the signing of a Sale and Purchase Agreement (SPA) with the Korea’s Hanwha Energy Corporation for the supply of 600,000 metric tons of liquefied natural gas (LNG) per year over 15 years, starting in 2024.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Citigroup assumed coverage on shares of Equitable, issuing a buy rating on the stock.
Pittsburgh International Airport (PIT) officials announced a new phase of their ongoing partnership with CNX Resources on Friday aimed at further reducing carbon emissions in the transportation industry and related sectors – by using natural gas produced at the airport and converted into alternative fuel with CNX proprietary technology.
Talos Energy increased its long-term (2021-2025) cumulative FCF guidance by approximately 50% to over $1.5 billion, roughly equivalent to the Company's current market capitalization. Analyst day today.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
The Board of Directors of Eagle Materials has declared a quarterly cash dividend of $0.25 per share, payable on July 15, 2022, to stockholders of record of its Common Stock at the close of business on June 16, 2022.
NuScale Power LLC announced a Memorandum of Understanding with Romania’s state nuclear power corporation S.N. Nuclearelectrica S.A. to conduct engineering studies, technical reviews, and licensing and permitting activities at a site in Doicesti, Romania that is the preferred location for the deployment of the first NuScale VOYGR power plant.
NuScale Power LLC announced its plans to open the fourth NuScale Energy Exploration Center in collaboration with the U.S. and the Romanian governments. The NuScale small modular reactor simulator will be installed at the University Politehnica of Bucharest to support workforce capacity building of Romania’s next generation of nuclear experts, technologists and operators.
ProFrac Holding Corp enters amended Supply agreement with Flotek Chemistry. Under the Supply agreement, ProFrac Services is obligated to purchase a minimum amount of chemicals over the term of the Supply agreement equal to the greater of a baseline determined by reference to ProFrac Services" first 30 fleets or 70% of ProFrac Services" requirements. Should ProFrac Services fail to purchase the minimum amount of chemicals in any given year, ProFrac Services is obligated to pay to Flotek Chemistry liquidated damages equal to 25% of the shortfall for such year.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Frontline Ltd. reported unaudited results for the three months ended March 31, 2022: Net income was $31.1 million, or $0.15 per basic and diluted share for the first quarter of 2022. Adjusted net loss was $1.6 million, or $0.01 per basic and diluted share for the first quarter of 2022. Reported total operating revenues were $217.4 million for the first quarter of 2022.
As per SEC filing, Holly Energy Partners LP filed for a potential mixed shelf offering. The size was not disclosed. The aggregate initial offering price of all securities sold by the company under the prospectus will not exceed $2 billion. The selling unitholders may from time to time, in one or more offerings, offer and sell up to 59.6 million common units.
As per SEC filing, as previously disclosed, in May 2015, Plains All American Pipeline, L.P. experienced an accidental release of crude oil from its Las Flores to Gaviota Pipeline (Line 901) in Santa Barbara County, California. Following the Line 901 Release, in January 2017, a unitholder derivative lawsuit was filed in Delaware Chancery Court by Inter-Marketing Group USA on behalf of Plains against its general partner PAA GP LLC, certain directors and officers of the General Partner and certain related entities. The Court dismissed all of the Plaintiff’s claims against the various Defendants with the exception of a breach of contract claim against the General Partner, wherein the Plaintiff alleged that the General Partner failed to exercise proper oversight over Plains’ pipeline integrity efforts. The General Partner believes that it has substantial defenses to the remaining claim alleged against it in the Lawsuit, has denied and continues to deny all allegations of wrongdoing and liability, as well as the existence of or responsibility for any damages asserted in the Lawsuit. The General Partner also denies that it has committed or aided and abetted in the commission of any violation of law or breaches of duty and the General Partner maintains that it has diligently and scrupulously complied with its contractual and other legal duties. Nevertheless, the General Partner has concluded that further litigation in connection with the Lawsuit would be time-consuming and expensive. As a result, after negotiations regarding a potential settlement, and solely to eliminate the risk, burden, and expense of further litigation, on April 27,2022, the parties entered into a Stipulation and Agreement of Settlement, Compromise, and Release to settle the Lawsuit. The Settlement Agreement does not provide that the General Partner engaged in any alleged misconduct or wrongdoing and does not contemplate the General Partner paying any monetary consideration; however, in exchange for Plaintiff’s agreement to dismiss the Lawsuit with prejudice and customary releases, the Settlement Agreement commits the General Partner to comply with various covenants regarding the implementation or continuation of certain Board oversight practices with respect to pipeline integrity, all of which are consistent with the General Partner’s longstanding commitment to Plains’ pipeline safety and integrity management efforts.
MARKET COMMENTARY
U.S. stock index futures fell as a weak forecast from Snap hit shares of social media companies, a day after Wall Street enjoyed a relief rally. Asian equities ended in the red, over economic growth concerns fuelled by COVID-19 lockdowns. The euro rose to a one-month high after European Central Bank President Christine Lagarde said interest rates in the euro zone will likely be in positive territory by the end of the third quarter. The dollar edged lower, while gold prices gained. Oil prices were up. S&P Global manufacturing, services and composite PMI Flash and new home sales data are scheduled to be released later in the day.
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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