Crude Mixed Following Inflation Data
The energy sector is poised for a higher start, supported by strength in the underlying commodities. U.S stocks index futures lost earlier gains and tumbled as investors reacted to hotter-than-expected inflation data in June which increased concerns about future aggressive rate hikes.
Oil futures edged up in early trading the day after WTI and Brent crude oil settled below $100 a barrel for the first time since April, on tight supply. However, gains were capped by higher inflation, the possibility of a recession and rising inventories. Trading has been volatile as the global oil markets try to balance tight supply with recession concerns, the IEA said on Wednesday. A mix of higher global energy prices and worsening economic conditions have already taken a toll on demand. China’s COVID-19 containment measures have also sent oil futures lower as the world’s top crude buyer imported 11% less supply in June compared to a year ago and 19% less than the level in May.
Natural gas futures rose as heat waves continue to batter key consuming regions, increasing demand in order to keep businesses and homes cool.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
SSE Thermal and Equinor are developing what could become Scotland's first flexible power station equipped with carbon capture technology and have appointed a consortium to deliver the Front End Engineering Design (FEED) contract. Mitsubishi Heavy Industries Group, Worley and Técnicas Reunidas will deliver a detailed plan for Peterhead Carbon Capture Power Station, which would have a generating capacity of up to 910MW.
Equinor announced that the seven first Hywind Tampen turbines will come on stream this year as planned. The final four will be installed next spring.
Italy will be able to replace 50% of Russian gas flows with other energy sources in the coming winter, the chairwoman of Eni said.
Brazil's Economy Minister Paulo Guedes said that Petrobras' frequent updating of fuel prices may not be the "best tool" for the economy and consumers.
Petrobras informed the beginning of the non-binding phase for the sale of its entire 18.80% stake in the company UEG Araucária S.A. (UEGA), located in the state of Paraná.
Petrobras announced the expiration and expiration date results of the previously announced cash tender offers by its wholly-owned subsidiary, Petrobras Global Finance B.V., with respect to any and all of (i) its notes of the series under the heading "Tender Group 1" and (ii) its notes of the series under the heading "Tender Group 2."
Bloomberg reported that Germany is in negotiations with some of the world’s top liquefied natural gas suppliers, including Shell Plc, to replace Russian fuel with alternative supplies.
Bloomberg reported that TotalEnergies is in talks to potentially provide a floating liquefied natural gas unit to Germany. The company may supply one of two units to Deutsch Regas to boost import capacity, TotalEnergies said in a statement. The facility would be located at the port of Lubmin, where the Nord Stream 1 and 2 pipelines from Russia end.
Gas prices are likely to remain near their elevated levels as a result of the conflict between Russia and Ukraine, TotalEnergies chairman and chief executive Patrick Pouyanne told a hearing of the French Senate.
France is talking to Abu Dhabi about importing fuel and diesel for the coming winter season, TotalEnergies Chairman and CEO Patrick Pouyanne said.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Bloomberg reported that the state of Alaska is in talks with Hilcorp Energy and ConocoPhillips to secure natural gas for a project that would liquefy the fuel for export to Asia.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Compass Minerals announced the appointment of Melissa M. Miller to the company’s board of directors.
KBR announced it is a major partner to Axiom Space, which NASA selected as one of two companies eligible to support the development of NASA's next-generation spacesuit and spacewalk systems through the Exploration Extravehicular Activity Services (xEVAS) contract. This comprehensive contract includes a full range of services, including design, testing, and verification of manufacturing and processing of the new spacesuits. KBR will co-locate with Axiom Space in their facilities.
National Bank of Canada downgraded Toromont Industries to Sector Perform from Outperform.
Morgan Stanley upgraded U.S. Silica Holdings Inc to Equal Weight from Underweight.
DRILLERS
No significant news.
REFINERS
As per SEC filing, on July 7, 2022, Marathon Petroleum entered into a $5.0 billion, five-year Revolving Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, each of JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, Barclays Bank PLC, BofA Securities, Citibank, N.A., Mizuho Bank, Ltd., MUFG Bank, Ltd., RBC Capital Markets and TD Securities (USA) LLC, as joint lead arrangers and joint bookrunners, Wells Fargo Bank, National Association, as syndication agent, each of Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Mizuho Bank, Ltd., MUFG Bank, Ltd., Royal Bank of Canada and The Toronto-Dominion Bank, New York Branch, as documentation agents, and the other lenders and issuing banks that are parties thereto. The New MPC Credit Agreement provides for a $5.0 billion unsecured revolving credit facility that matures on July 7, 2027. MPC has an option to increase the aggregate commitments by up to an additional $1.0 billion, subject to, among other conditions, the consent of the lenders whose commitments would be increased. In addition, MPC may request up to two one-year extensions of the maturity date of the New MPC Credit Agreement subject to, among other conditions, the consent of lenders holding a majority of the commitments, provided that the commitments of any non-consenting lenders will terminate on the then-effective maturity date. The New MPC Credit Agreement includes sub-facilities for swing-line loans of up to $250.0 million and letters of credit of up to $2.2 billion (which may be increased to up to $3.0 billion upon receipt of additional letter of credit issuing commitments).
The board of directors of Phillips 66 has declared a quarterly dividend of 97 cents per share on Phillips 66 common stock. The dividend is payable on Sept. 1, 2022, to shareholders of record as of the close of business on Aug. 18, 2022.
The board of directors of Phillips 66 has appointed Mark E. Lashier and Gregory J. Hayes to serve on the board, effective July 12, 2022. Following the appointments, the board of Phillips 66 will consist of 13 directors, 11 of whom are independent.
MLPS & PIPELINES
Genesis Energy, L.P. announced that, on July 12, 2022, the Board of Directors of its general partner declared a distribution on Genesis’ common units and 8.75% Class A Convertible Preferred Units attributable to the quarter ended June 30, 2022. These distributions will be paid on August 12, 2022 to holders of record at the close of business on July 29, 2022.
Kinetik Holdings Inc filed $400M mixed shelf; also filed to register 7.6M shares of stock issued as consideration in a prior transaction and received pursuant to a reinvestment agreement.
As per SEC filing, on July 12, 2022, Targa Resources entered into the Term Loan Agreement with Mizuho Bank, Ltd. as the Administrative Agent and a lender, and the other lenders party thereto. The Term Loan Agreement provides for a three-year, $1.5 billion unsecured term loan facility that may only be drawn upon in one borrowing and in conjunction with the closing of the Lucid Acquisition. If the Lucid Acquisition does not close, the Company would not draw upon the Term Loan Facility and would terminate the Term Loan Agreement. At the closing of the Lucid Acquisition, the Company intends to fund the acquisition with i) proceeds from the Term Loan Facility; ii) proceeds from the Company’s recently completed underwritten public offering of $1.25 billion in aggregate principal amount of senior notes; and iii) a portion of available liquidity under its $2.75 billion revolving credit facility.
As per SEC filing, on July 7, 2022, MPLX LP entered into a $2.0 billion, five-year Revolving Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, each of Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Barclays Bank PLC, BofA Securities, Inc., Citibank, N.A., Mizuho Bank, Ltd., MUFG Bank, Ltd., RBC Capital Markets and TD Securities (USA) LLC, as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent, each of Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Mizuho Bank, Ltd., MUFG Bank, Ltd., Royal Bank of Canada and The Toronto-Dominion Bank, New York Branch, as documentation agents, and the other lenders and issuing banks that are parties thereto. The New MPLX Credit Agreement provides for a $2.0 billion unsecured revolving credit facility that matures on July 7, 2027. MPLX has an option to increase the aggregate commitments by up to an additional $1.0 billion, subject to, among other conditions, the consent of the lenders whose commitments would be increased. In addition, MPLX may request up to two one-year extensions of the maturity date of the New MPLX Credit Agreement subject to, among other conditions, the consent of lenders holding a majority of the commitments, provided that the commitments of any non-consenting lenders will terminate on the then-effective maturity date. The New MPLX Credit Agreement includes sub-facilities for swing-line loans of up to $150.0 million and letters of credit of up to $150.0 million (which may be increased to up to $200.0 million upon receipt of additional letter of credit issuing commitments).
MARKET COMMENTARY
Wall Street futures gained, while European shares slipped, with investor focus on the key U.S. inflation data, scheduled for release later in the day, for clues on the pace of interest rate hikes by the Federal Reserve. Japanese shares closed higher, lifted by chip-related stocks and airlines. The euro hovered just above parity against the dollar while gold prices steadied. Oil prices edged slightly higher.
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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