Leadership

Crude Climbs, Supported by Tighter Oil Supply

Monday, April 1, 2019

SECTOR COMMENTARY

The energy sector is poised for a higher start, supported by strength in the underlying commodities and broader equity futures which received a boost from a surprise recovery in China factory data and further hints of progress in U.S.-China trade talks.

Oil prices on both sides of the Atlantic continued to climb after closing out their best quarter since June 2009. Gains were supported by tighter oil supply, positive signs for the global economy, and unexpected strong Chinese manufacturing numbers. On the supply front, booming American production has steadied, with the U.S. government reporting on Friday that domestic output in the world's top crude producer edged lower in January to 11.9 million barrels per day.

Natural gas futures are also higher in morning trading, supported by below-seasonal temperatures for the next few days which should increase demand.

U.S. INTEGRATEDS

Morgan Stanley initiated coverage of Chevron at ‘Overweight.’

Morgan Stanley initiated coverage of Exxon Mobil at ‘Equal-Weight.’

(Sunday) Reuters - Ocean LNG, an international joint venture marketing company in which Qatar Petroleum affiliates own 70 percent and Exxon Mobil owns 30 percent, will be responsible for the offtake and marketing of all LNG volumes to be produced and exported from the Golden Pass LNG Export Project in Sabine Pass, Texas.

INTERNATIONAL INTEGRATEDS

Reuters - Eni’s Vaar Energi AS has entered into an agreement with Mime Petroleum to divest 10 percent ownership interests in a total of six licenses across the balder and Ringhorne fields. Vaar Energi is the operator of the balder, Ringhorne and Ringhorne east fields, located in the North Sea.

(Sunday) Reuters - Petrobras will take part in Israel's latest tender for offshore oil and gas exploration. Yuval Steinitz announced the agreement as Brazilian President Jair Bolsonaro began a four-day visit to Israel. Bolsonaro was joined in Israel by his Energy Minister Bento Albuquerque, with whom Steinitz said he had met three weeks ago.

(Sunday) Reuters - Petrobras is considering bidding in a new tender to explore for oil and gas offshore Israel. The possibility of Petroleo Brasileiro SA, as the company is formally known, taking part in Israel's newest auction for offshore blocks was raised during a meeting in Houston earlier this month between Israeli Energy Minister Yuval Steinitz and his Brazilian counterpart Bento Albuquerque.

(Late Friday) Reuters - An overhaul of the gasoline-producing unit at Royal Dutch Shell’s 218,200 barrel-per-day (bpd) Norco, Louisiana, refinery was on schedule for completion by early May. Shell shut the 112,000 bpd gasoline-producing Residual Catalytic Cracking Unit (RCCU) on March 7 for the overhaul that was scheduled to take 65 days to complete. 

Reuters - Total has signed an agreement with Ecoslops S.A. that gives the oil major a 25% interest in its affiliate Ecoslops Provence. Ecoslops Provence is building a unit to regenerate oil residues at Total's La Mède complex. The new facility is scheduled to come on stream in late 2019. In 2019, the La Mède complex will be the site of France’s first world-class biorefinery, for a capital expenditure of €275 million. It will produce 500,000 tons of hydrotreated vegetable oil (HVO) biodiesel a year

OILFIELD SERVICES

Press Release - KBR announced that it has been awarded a contract by Saudi Aramco for KBR's market leading Supercritical Solvent Deasphalting (SDA) technology ROSE. Under the terms of the contract, KBR will provide a 3-product ROSE technology license, basic engineering design, and proprietary equipment for Saudi Aramco's residue upgrading and clean fuels project at the Riyadh Refinery in Saudi Arabia. The proven 3-product ROSE scheme will be designed to meet Saudi Aramco's specific objectives for their project.

REFINERS

Reuters - CVR Energy said goal is to reduce lost profit opportunities by 50% in 2019. The company sees 2019 total capex budget of $180 million - $200 million. The 2019 turnaround spending planned at $40m.

MLPS & PIPELINES

Jefferies downgraded Kinder Morgan and ONEOK to ‘Hold’ from ‘Buy.’

(Late Friday) Reuters - Magellan Midstream Partners will evaluate adding a new origin point near Midland, Texas, as it extends an open season of its proposed Voyager crude pipeline from the Cushing, Oklahoma storage hub to Houston.

MARKET COMMENTARY

Futures for Wall Street's major indexes and world stocks rallied on strong Chinese factory activity data and progress in trade negotiations between the U.S. and China. Appetite for riskier assets pulled gold prices down. Data from China also lifted the Australian dollar and the euro, while the sterling edged up ahead of Brexit votes. Oil prices rose on tight supply and positive signs for global economy. Retail sales and manufacturing PMI data are due for release later during the day.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


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