Crude Climbs on Optimistic Demand Forecasts
SECTOR COMMENTARY:
The energy sector is set for a mixed-to-higher start, supported by strength in the crude complex, but pressured by modest losses in the major equity futures. The broader market futures retreated this morning after July’s PPI print came in hotter than expected. The producer price index, rose more than expected last month, advancing 0.3%. Economists polled by Dow Jones expected an increase of 0.2%.
WTI and Brent crude oil futures are higher this morning, and are set to post gains for their seventh-consecutive week, following optimistic demand forecasts from OPEC+ and the IEA which overshadowed demand concerns from China. Last night, OPEC+ said it expects global oil demand to rise by 2.25 million bpd in 2024, as the firm anticipates China’s economic growth will boost oil consumption. This morning, the IEA warned global inventories could decrease further throughout the end of 2023, which would add to the headwinds fueling oil’s recent rally. However, the agency also expects demand growth to slow to 1 million barrels per day in 2024, down 150K bpd from their previous forecast.
Natural gas futures have erased earlier gains and are now lower on a larger than expected storage build. The EIA weekly storage report (week ended 4-Aug) showed build of +29 Bcf vs consensus +24 Bcf and vs 5-yr average of +46 Bcf.
BY SECTOR:
US INTEGRATEDS
Australia's labour regulator has issued an order allowing a workers union to conduct a protected action ballot of employees over a planned strike at Chevron's Wheatstone and Gorgon liquefied natural gas (LNG) facilities.
Chevron said it would invest in two lower-carbon pilot projects in Western Australia.
Chevron, through its Chevron Australia New Energies Pty Ltd and Chevron Australia Pty Ltd subsidiaries, announced investments in two lower carbon projects in Western Australia (WA).
INTERNATIONAL INTEGRATEDS
Petrobras is not planning to sell its 36% stake in petrochemical firm Braskem BRKM5.SA, newspaper Valor Economico reported on Thursday citing sources.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
1PointFive, a wholly owned subsidiary of Occidental, announced it was selected to receive a grant from the U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED) for the development of its South Texas Direct Air Capture (DAC) Hub. The hub, to be located on the King Ranch in Kleberg County, is expected to include the world’s first DAC plant designed to remove up to 1 million metric tons of CO2 per year.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
CES Energy Solutions announced record second quarter financial results for Q2 2023, as quarterly revenue, Adjusted EBITDAC and cash flow generation continued to grow year over year. In the second quarter CES generated revenue of $515.8 million, representing a sequential decrease of $41.9 million or 8% compared to Q1 2023, on seasonally lower activity levels in Canada, and an increase of 19% compared to Q2 2022 as activity levels have seen a modest increase year over year. Net income for the three and six months ended June 30, 2023 increased 69% to $33.9 million from $20.1 million, and 120% to $66.9 million from $30.4 million, respectively, compared to the prior year periods, driven by significantly higher industry activity levels.
Mammoth Energy Services reported financial and operational results for the second quarter ended June 30, 2023. Total revenue was $75.4 million for the second quarter of 2023, a decrease of 16% compared to $89.7 million for the same quarter last year and a decrease of 35% compared to $116.3 million for the first quarter of 2023. Net loss for the second quarter of 2023 was $4.5 million, or $0.09 loss per diluted share, compared to net income of $1.7 million, or $0.04 per share, for the same quarter last year and net income of $8.4 million, or $0.17 per share, for the first quarter of 2023.
Shawcor Ltd., dba Mattr Infratech reported its operational and financial results for the three and six months ended June 30, 2023. On a consolidated basis, revenue was $401 million, income from operations was $28 million and Adjusted EBITDA was $67 million.
Total Energy Services announced its consolidated financial results for the three and six months ended June 30, 2023. The company announced quarterly share of $0.15 and quarterly revenue of $208.8 million.
Wajax announced its 2023 second quarter results. All monetary amounts are in Canadian dollars unless otherwise noted. Second quarter revenue of $586.2 million, up 14.7% over 2022. The Corporation generated net earnings of $29.0 million, or $1.35 per share, in the second quarter of 2023 versus $21.7 million, or $1.01 per share, in the same period of 2022. The Corporation generated adjusted net earnings of $27.1 million, or $1.26 per share, in the second quarter of 2023 versus $19.7 million, or $0.92 per share, in the same period of 2022. Adjusted net earnings in the second quarter of 2023 excludes non-cash gains on mark to market of derivative instruments of $1.9 million after-tax, or $0.09 per share (2022 – gains of $2.0 million, or $0.10 per share).
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
EnLink Midstream announced that it has named Dilanka Seimon as Executive Vice President and Chief Commercial Officer (CCO). Seimon joins EnLink on Tuesday, August 15.
ONEOK announced that it has priced an offering to sell $5.25 billion of senior notes, consisting of: $750 million of 3-year senior notes at a coupon of 5.550%; $750 million of 5-year senior notes at a coupon of 5.650%;$500 million of 7-year senior notes at a coupon of 5.800%; $1.50 billion of 10-year senior notes at a coupon of 6.050%; and $1.75 billion of 30-year senior notes at a coupon of 6.625%.
MARKET COMMENTARY
U.S. stock index futures were subdued following a turbulent session, with investors cautious ahead of the producer prices data due later in the day. European shares fell after the cooling U.S. consumer prices data released Thursday, failed to calm nerves. London's FTSE slumped after the British economy registered a surprising growth in the second quarter, fanning BoE rate hike concerns. On the Asian front, Chinese stocks plummeted as investors were disappointed by authorities' latest stimulus measures. Gold prices were little changed while the dollar was flat. Oil rose amid optimistic demand forecasts from OPEC and IEA.
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 Rich Pontillo.
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