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Oil

Crude Oil Futures Rise Amid Signs of Strong Fuel Demand in Western Economies

WTI and Brent crude oil futures continued to build on yesterday’s gains, backed by signs of strong fuel demand in western economies and the dwindling likelihood that Iranian supplies will return to the market.

SECTOR COMMENTARY:

The energy sector is poised for a higher start, supported by strength across the underlying commodities while major equity futures were flat as the S&P 500 is hovering around last month’s record close ahead of key inflation data.

WTI and Brent crude oil futures continued to build on yesterday’s gains, backed by signs of strong fuel demand in western economies and the dwindling likelihood that Iranian supplies will return to the market. The EIA yesterday updated its forecasts, now expecting fuel consumption growth this year in the United States to be 1.49 million bpd, up from a previous forecast of 1.39 million bpd. Futures are also seeing some support from last night’s API report that showed U.S. crude oil inventories fell in line with expectations last week and despite fuel stockpiles rising significantly more than anticipated. The official EIA data is due later this morning.

Natural gas futures extended its swing higher and touched a 15-week high, supported by forecasts for warmer weather over the next two weeks than previously expected.

US INTEGRATEDS

ExxonMobil today said it made a discovery at Longtail-3 in the Stabroek Block offshore Guyana. Drilling at Longtail-3 encountered 230 feet (70 meters) of net pay, including newly identified, high quality hydrocarbon bearing reservoirs below the original Longtail-1 discovery intervals. The well is located approximately two miles (3.5 kilometers) south of the Longtail-1 well. It was drilled in more than 6,100 feet (1860 meters) of water by the Stena DrillMAX.

Valaris announced that it has been awarded a three-year contract with Chevron in the U.S. Gulf of Mexico for drillship, VALARIS DS-18. The contract is expected to commence in the first quarter of 2022 in direct continuation of the current contract. 

INTERNATIONAL INTEGRATEDS

Aker Solutions was awarded a large framework agreement from Petrobras to provide subsea lifecycle services for Petrobras-operated oil and gas fields offshore Brazil. The agreement has a fixed period of three years and includes an option to extend the contract for two additional years.

Saudi Aramco launched its first US.dollar-denominated sukuk bond on Wednesday which will be issued in three tranches, according to a term sheet seen by Reuters. The deal will consist of three, five and ten year tranches, the term sheet showed. 

Shell said it plans to accelerate its energy transition strategy and is likely to take "some bold but measured steps over the coming years" after a Dutch court ruled last month that the company must sharply reduce its CO2 emissions this decade.

CANADIAN INTEGRATEDS

Canadian Natural ResourcesCenovus EnergyImperialMEG Energy and Suncor Energy formally announced the Oil Sands Pathways to Net Zero initiative. These companies operate approximately 90% of Canada's oil sands production. The goal of this unique alliance, working collectively with the federal and Alberta governments, is to achieve net zero greenhouse gas emissions from oil sands operations by 2050 to help Canada meet its climate goals, including its Paris Agreement commitments and 2050 net zero aspirations.

U.S. E&PS

Hess Corporation today announced a discovery offshore Guyana at the Longtail-3 well on the Stabroek Block. Drilling at Longtail-3 encountered 230 feet (70 meters) of net pay, including newly identified, high quality hydrocarbon bearing reservoirs below the original Longtail-1 discovery intervals. The well is located approximately two miles (3.5 kilometers) south of the Longtail-1 well. It was drilled in more than 6,100 feet (1,860 meters) of water by the Stena DrillMAX. The Longtail-1 discovery on the Stabroek Block was drilled in 2018, encountering approximately 256 feet (78 meters) of high-quality, oil-bearing sandstone reservoir.

Ovintiv's CEO Doug Suttles announced he will retire effective August 1, 2021. Ovintiv's Board of Directors has named Brendan McCracken as President & Chief Executive Officer and elected him to the Board effective August 1, 2021.

SM Energy announced that it intends, subject to market and other conditions, to offer $350 million in aggregate principal amount of a series of senior unsecured notes due 2028. SM Energy intends to use the net proceeds from the offering to fund a cash tender offer for all of its outstanding 6.125% Senior Notes due 2022 and a portion of its outstanding 5.00% Senior Notes due 2024.

SM Energy announced that it has commenced cash tender offers to purchase (i) any and all of its outstanding 6.125% Senior Notes due 2022 (CUSIP No. 78454L AK6), and (ii) up to an aggregate principal amount not to exceed $130,000,000 of its outstanding 5.000% Senior Notes due 2024 (CUSIP No. 78454L AH3).

CANADIAN E&PS

Scotiabank downgraded Enerplus to Sector Perform from Sector Outperform.

Ovintiv's CEO Doug Suttles announced he will retire effective August 1, 2021. Ovintiv's Board of Directors has named Brendan McCracken as President & Chief Executive Officer and elected him to the Board effective August 1, 2021.

OILFIELD SERVICES

Air Products and Baker Hughes announced a strategic global collaboration to develop next generation hydrogen compression to lower the cost of production and accelerate the adoption of hydrogen as a zero-carbon fuel.

PGS has revitalized 3D data over the Bauna field in southwest Santos Basin and its surrounding area. This preprocessed dataset is now available for evaluation of blocks for Brazil's upcoming Permanent Offer Round.

Simmons Energy initiated coverage of Weatherford with an ‘Overweight’ rating.

DRILLERS

Valaris announced that it has been awarded a three-year contract with Chevron in the U.S. Gulf of Mexico for drillship, VALARIS DS-18. The contract is expected to commence in the first quarter of 2022 in direct continuation of the current contract.

REFINERS

No significant news. 

MLPS & PIPELINES

SunCoke Energy announced that it has successfully priced its offering of $500 million aggregate principal amount of senior secured notes due 2029. The notes will bear an interest at an annual rate of 4.875% and will be issued at a price of 100 percent of face value. The offering is expected to close on June 22, 2021, subject to customary closing conditions. The Notes will pay interest semi-annually and will mature on June 30, 2029.

MARKET COMMENTARY

U.S. stock index futures were little changed as investors awaited fresh cues from inflation data this week and an upcoming Federal Reserve meeting.  European equities were largely in the red, ahead of a policy decision from the European Central Bank. Japanese shares closed lower on profit-booking in shippers and semiconductor stocks. The dollar edged lower. Gold prices fell. Oil prices were up on signs of strong fuel demand in western economies.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


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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