Crude Drops After 'Constructive' Russia-Ukraine Peace Talks
The energy sector is set for a lower start, pressured by a sharp retreat in the underlying commodities while major equity indices rose as investors hoped for a breakthrough in Russia-Ukraine peace talks being held in Istanbul.
WTI and Brent crude oil futures are down ~6% in early trading, extending losses from the previous day after Russia called peace talks with Ukraine constructive and China's new lockdowns to curb the spread of the coronavirus hit fuel demand. Ukrainian and Russian negotiators met in Turkey for the first face-to-face talks in nearly three weeks. The top Russian negotiator said the talks were "constructive". Ukraine proposed adopting neutral status in exchange for security guarantees at the talks, meaning it would not join military alliances or host military bases, Ukrainian negotiators said. Prices initially rose almost $2 earlier in the day as Kazakhstan's supplies continued to be disrupted and major producers showed no sign of being in a hurry to boost output significantly. Kazakhstan is set to lose at least a fifth of its oil production for a month after storm damage to mooring points used to export crude from the Caspian Pipeline Consortium, the energy ministry said.
Natural gas futures carried over their declines, weighed down by further declines in the crude complex and a small decline in demand next week that should allow utilities to inject gas into storage.
BY SECTOR:
US INTEGRATEDS
No progress was made in talks on Monday between the United Steelworkers union (USW) and Chevron to end a strike at the company's Richmond, California, refinery, said a union official.
Exxon Mobil failed to find oil in its first well in a new exploration area off Brazil's Northeast coast, its partner Enauta Participacoes SA said on Monday, the latest in a series of setbacks for the U.S. producer in the country.
INTERNATIONAL INTEGRATEDS
Aramco, Hyundai Motor Group, and King Abdullah University of Science and Technology (KAUST), have agreed to jointly research and develop an advanced fuel for an ultra lean-burn, spark-ignition engine that aims to lower the overall CO2 emissions of a vehicle.
bp and Uber Technologies announced a new global strategic convenience delivery partnership, extending their existing local arrangements to reach more consumers across the world. Together, the partners will offer a huge range of quality convenience products, including fresh and prepared ranges, from select retail locations. bp is the first convenience retailer to team up with Uber Eats on a global level and aims to have more than 3,000 retail locations available on the delivery platform over the next three years.
Eni’s Versalis and Novamont are strengthening their partnership to reinforce synergies in the ecological transition of green chemistry, leveraging what has been built so far to maximize spin-offs and seize new opportunities.
Empire Offshore Wind, a joint venture between Equinor and bp, has awarded a contract to Maersk Supply Service for charter of its newbuild wind installation vessel (WIV). This vessel, together with US constructed barges and tugs built and operated by Kirby Offshore Wind, will be used for the installation of the project’s Vestas V236-15MW turbines.
Brazilian President Jair Bolsonaro has tapped a well-known academic and energy consultant as the next head of state-run oil company Petrobras, effectively ending the tenure of current CEO Joaquim Silva e Luna less than a year after he was appointed. In a statement on Monday, Brazil's Mines and Energy Ministry announced the slate of board members it would put forward at a shareholders' meeting in April, with Adriano Pires tapped for the CEO spot and Rodolfo Landim, a well-known sports magnate with significant oil experience, set to be the new chairman.
Brazil's surprising move to sack the chief executive of state-controlled oil company Petrobras brings a huge element of uncertainty to the global sugar market, experts said, as the country's fuel pricing can impact global sugar supply.
Reuters reported that Aramco Trading Company, the trading arm of Saudi Aramco, has hired Zhang Yufeng, a former senior trader from PetroChina International, to trade in London.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Murphy Oil announced that drilling has concluded at the Cutthroat-1 exploration well in block SEAL-M-428 in the Sergipe-Alagoas Basin offshore Brazil.
Talos Energy announced that a division of a shared oil deposit in the Gulf of Mexico has been reached between it and Mexican national oil company Pemex.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Kirby announced the signing of a commercial agreement for its wholly owned subsidiary, Kirby Offshore Wind, to provide barge transportation services for offshore wind towers and turbines to Maersk Supply Service, which has been selected by Empire Offshore Wind, a joint venture between Equinor and bp, as the installation contractor for the project off the coast of New York. Kirby’s contract with Maersk represents a 20-year framework agreement with the Empire Wind projects being the first.
SECURE Energy Services announced that it has amended its Unit Incentive Plan to provide that the number of common shares in the capital of the Corporation reserved for issuance from treasury pursuant to units credited under the Plan be reduced. The Amendment will reduce the aggregate number of Common Shares reserved for issuance under the Plan from 7% to 5% of the total number of then issued and outstanding Common Shares, less the number Common Shares issuable under any other security-based compensation arrangement of the Corporation. The Amendment will decrease the Plan's estimated cost and SECURE believes that the Amendment will ensure that the cost of the Plan, in aggregate, is at or less than the applicable benchmarks determined by proxy advisory services.
DRILLERS
Transocean announced that it has purchased a minority interest in Ocean Minerals Ltd., a company engaged in the exploration of seabed resources containing metals critical to the growing renewable energy market.
REFINERS
No significant news.
MLPS & PIPELINES
Energy Transfer LP, ENN Natural Gas and ENN Energy Holdings Limited announced that ENN NG and ENN Energy have entered into LNG Sale and Purchase Agreements with Energy Transfer LNG Export, LLC, a subsidiary of Energy Transfer LP, related to its Lake Charles LNG project. Under the two SPAs, ET LNG is expected to supply 1.8 million tonnes of LNG to ENN NG, and 0.9 million tonnes of LNG to ENN Energy, per annum on a free-on-board (FOB) basis. The purchase price is indexed to the Henry Hub benchmark plus a fixed liquefaction charge. Both SPAs are for a term of 20 years, and first deliveries are expected to commence as early as 2026. The SPAs will become fully effective upon the satisfaction of the conditions precedent by ET LNG, including reaching FID.
Scorpio Tankers announced that the Company has entered into a Memorandum of Understanding with Carbon Ridge LLC to collaborate on the development of onboard carbon capture for maritime vessels. Carbon Ridge is a US-based startup working to commercialize existing gas separation technology without the need for large structural modifications. The Agreement addresses the collaboration for detailed front-end engineering, design, and validation process with a small-scale test unit onboard one of the Company’s vessels.
MARKET COMMENTARY
Wall Street futures rose as investors eyed peace negotiations between Moscow and Kyiv taking place in Turkey. European stocks were up and Asian markets closed higher. The euro edged higher against the dollar, while gold prices slipped. Oil prices were buoyed by disruptions in Kazakhstan supplies and as major producers showed no signs of boosting output significantly.
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