Crude Falls as OPEC+ May Ease Production Cuts
SECTOR COMMENTARY
Energy stocks are set to open mixed, weighed down by weakness in the underlying commodities while U.S. stock index futures extended last week’s rally on positive COVID-19 vaccine news and despite a record spike in cases in Florida over the week.
Oil prices are off about ~1% in early trading as traders eyed an OPEC technical meeting this week which is expected to recommend an easing in supply cuts that have been propping up crude prices. “The planned easing of OPEC+ production cuts next month ... and a potential rebound in U.S. production could add pressure on the supply side of the equation,” Stephen Innes, chief global markets strategist at AxiCorp said in a note.
Natural gas futures are also lower, weighed down by declines in the crude oil market and despite forecasts for temperatures to be above-average which should boost cooling demand.
INTERNATIONAL INTEGRATEDS
(Late Friday) Reuters - Petroleo Brasileiro SA Petrobras has begun the binding phase of the sale of its majority stake in the firm's Gaspetro gas pipeline unit, it said in a securities filing.
Reuters - Royal Dutch Shell completed shutting the small crude distillation unit (CDU) at its 318,000 barrel-per-day (bpd) joint-venture Deer Park, Texas, refinery, said sources familiar with plant operations. The length of the shutdown of the 70,000-bpd DU-1 CDU was unknown, the sources said. The refinery is operating at 75% of its capacity because of the COVID-19 pandemic, the sources told Reuters on July 9.
(Late Friday) Reuters - Saudi Aramco said it will raise domestic gasoline prices for July, state news TV reported. The new price for 91 octane grade will be 1.29 riyals instead of 0.98, and 95 octane grade will be at 1.44 riyals from 1.18 in June.
CANADIAN E&PS
(Late Friday) Press Release - Canacol Energy announced that at the annual general and special meeting held in Bogotá, Colombia on July 10, 2020 holders of common shares of Canacol: (i) re-elected Charle Gamba, Michael Hibberd, David Winter, Gregory D. Elliot, Francisco Diaz, Oswaldo Cisneros, Gonzalo Fernández-Tinoco and Ariel Merenstein to the Board of Directors; (ii) appointed KPMG LLP, as Canacol's auditors; and (iii) approved the amended stock option plan of the Corporation and the unallocated stock options thereunder.
Press Release - Obsidian Energy provided an additional details to the proposed Long Term Incentive plan amendments to be voted on by shareholders at the July 30, 2020 Annual General Meeting. The Company's LTI plan amendments are to the Restricted & Performance Share Unit Plan and the Stock Option Plan.
OILFIELD SERVICES
Press Release - Hi-Crush announced it has entered into a Restructuring Support Agreement with certain noteholders, collectively owning or controlling approximately 94% of the aggregate outstanding amount of the Company's 9.5% Senior Unsecured Notes due 2026. To implement the terms of the Agreement, the Company also announced that it has voluntarily filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
(Late Friday) Press Release - On July 8, 2020, Kirby, with the concurrence of KPMG LLP, the Company’s independent registered public accounting firm responsible for auditing its financial statements, determined that it will be required to restate its previously issued unaudited condensed financial statements for the first quarter ended March 31, 2020 previously filed on Form 10-Q on May 8, 2020. This determination occurred following discussions of the matter between KPMG and the officers of the Company. Accordingly, investors should no longer rely upon previously issued financial statements included in the Company’s previously filed Form 10-Q for the first quarter ended March 31, 2020. The Company has determined its non-cash non-recurring goodwill impairment charge for the three months ended March 31, 2020 was understated by $127,933,000 before taxes, $98,773,000 after taxes, or a $1.65 loss per share, due to not applying a specific provision of a new accounting standard that the Company had recently adopted on January 1, 2020.
REFINERS
Reuters - Marathon Petroleum restarted on Sunday a crude distillation unit (CDU) at its 585,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas, sources familiar with plant operations said. Marathon began restarting the 225,000-bpd Pipestill 3B CDU on Friday, the sources said. Pipestill 3B was shut on July 6 to connect units that have been shut since late May as part of a multi-unit overhaul underway at the refinery.
MLPS & PIPELINES
UBS upgraded DCP Midstream to ‘Neutral’ from ‘Sell’.
Press Release - EnLink Midstream announced the appointment of Pablo G. Mercado as its new Executive Vice President and Chief Financial Officer and a member of EnLink's Executive Leadership Team, effective immediately.
(Late Friday) Press Release - Keyera announced a cash dividend for July 2020 of 16.00 cents per common share. The dividend will be payable on August 17, 2020, to shareholders of record on July 22, 2020. The ex-dividend date is July 21, 2020. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada). For non-resident shareholders, Keyera's dividends are subject to Canadian withholding tax.
MARKET COMMENTARY
Wall Street futures and global stock markets rose as investors’ focus turned towards the onset of second quarter corporate earnings beginning this week. Gold prices were higher supported by uncertainty over the impact of surging coronavirus cases, while the dollar declined. Oil dipped on demand concerns after a record daily rise in global coronavirus cases with big spikes in infections over the weekend in the U.S., while traders awaited an OPEC technical meeting expected to recommend an easing of supply cuts.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 1/8/20 – CNBC’s Squawk Alley: Oil market reaction to US-Iran tensions
- 1/8/20 – Bloomberg Day Break – Steady escalation of US-Iran tensions
- 12/5/19 – Bloomberg Balance of Power – OPEC's Limited Efficacy
- 9/17/19 - Oil's New Risk Premium Discussion on CNBC TV
- 9/16/19 - Discussion on Bloomberg TV about Impact of Abqaiq Attack
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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