Crude Oil Futures Swing Higher Backed by Data on Shrinking U.S. Stockpiles
SECTOR COMMENTARY:
The energy sector is set to kick off the final trading day of the month and quarter higher, backed by strength across the underlying commodities but pressured by mild weakness in the broader equity futures which fell a day after the S&P 500 and the Nasdaq closed at record levels. Investors are keeping off to the sidelines ahead of private payrolls data for clues on the health of the labor market and subsequent policy support.
WTI and Brent crude oil futures continued to swing higher this morning, backed by data suggesting U.S. crude stockpiles were shrinking but gains were capped as OPEC warned of a possible significant glut building by the end of next year. Traders are also monitoring a highly contagious Delta coronavirus variant that taking hold in many countries, prompting new lockdowns or restrictions on movement from Australia to Portugal. Ahead of the official EIA data later this morning, last night’s API report projected U.S. crude stocks dropped 8.2mm barrels last week, significantly more than analysts are anticipating while gasoline stocks showed a surprise build.
Natural gas futures extended their trend higher for the seventh-consecutive session and touched a fresh 30-month high this morning, rallying as global gas trading at more than triple U.S. prices stoked already high demand for American exports. Traders noted gas futures gained despite reined-in forecasts for slightly milder weather and less air conditioning demand in the United States over the next two weeks.
BY SECTOR:
ExxonMobil Chemical Company signed an agreement with Celanese for the sale of its global Santoprene business for $1.15 billion, subject to working capital and other adjustments. The sale includes two world-scale manufacturing sites in Pensacola, Florida and Newport, Wales along with associated product, process development and laboratory equipment, operating and administration buildings, control systems and documentation, and intellectual property.
According to Reuters, BP Plc raised natural gas production from Oman's Block 61 from 1 billion cubic feet per day to 1.5 bln cubic feet per day, the state-run Oman News Agency reported. The company also plans to increase gas condensate output from Block 61's two main reservoirs, Khazzan and Ghazeer, it said.
ENI UK and Uniper sign MOU to jointly evaluate decarbonisation initiatives in north wales, according to Reuters.
Repsol Europe Finance, a wholly-owned subsidiary of Repsol agreed to issue two series of Sustainability-Linked Eurobonds for an aggregate amount of EUR 1,250 million, to be listed on the regulated market of the Luxembourg Stock Exchange.
Repsol and Technicas Reunidas sign deal to develop new decarbonization technologies, according to Reuters.
Citi upgraded Royal Dutch Shell to Neutral from Sell.
No significant news.
ConocoPhillips will host a market update today to reaffirm its commitment to the disciplined, returns-focused strategy it launched in 2016. The company will outline details of a compelling 2022-2031 operating and financial plan that reflects numerous transformational activities undertaken over the past 18 months, most notably the acquisition of Concho. Today’s market update includes the following highlights: Increasing anticipated Concho transaction-related synergies and savings to $1 billion annually; Reducing 2021 capital expenditures and adjusted operating cost guidance by $200 million and $100 million, respectively, due to stronger-than-projected business execution; Increasing 2021 planned share repurchases by $1 billion, bringing total planned distributions for the year to approximately $6 billion, or 7% of current market capitalization; Expected cash from operations of ~$145 billion and free cash flow of ~$70 billion over the 10-year plan period at $50 per barrel WTI based on 2020 real prices, escalating at 2% annually; Capital expenditures expected to average approximately $7 billion annually, resulting in approximately 3% compounded annual production growth at an average reinvestment rate of ~50%; Over $65 billion in estimated shareholder returns of capital across the plan period, fully funded from cash from operations; Return on capital employed projected to grow 1 to 2 percentage points annually, with balance sheet strength further improving throughout the plan period; and Progress on the company’s ambition to become net-zero for operational (Scope 1 and 2) emissions by 2050.
No significant news.
Baker Hughes announced that it has been awarded two flexible pipe contracts by Petrobras in the second quarter of 2021. The first contract covers up to 96 kilometers of flexible pipe for the Sapinhoá and Tupi fields and the second contract covers up to 226 kilometers of flexible pipe for the Marlim 2 and Itapu fields.
Calfrac Well Services announced that it has entered into an agreement with its lenders which amends and extends its credit facilities.
SECURE Energy Services and Tervita are aware that the Commissioner of Competition made an application in respect of the proposed merger between SECURE and Tervita on June 29, 2021. SECURE and Tervita have reviewed the application and will continue to work cooperatively with the Competition Bureau and the Competition Tribunal to resolve any concerns relating to the Transaction, which they believe relate to certain waste disposal assets. SECURE and Tervita will comply with all necessary requirements under the Competition Act prior to closing the Transaction. The statutory waiting period expires on June 30, 2021. SECURE and Tervita believe the resolution of such proceedings will not be material to the combined company's asset base or EBITDA.
TechnipFMC announced that it has been awarded a substantial subsea contract by Petrobras for the Búzios 6-9 fields. Located in the Santos basin offshore Brazil, these fields are part of the pre-salt area, with a water depth of 2,000 meters.
According to SEC filing, on June 23, 2021, Nabors Drilling Canada Limited and Nabors Global Holdings II Limited, each of which is an indirect wholly owned subsidiary of Nabors Industries entered into an asset purchase agreement with Ensign Drilling pursuant to which Nabors Canada has agreed to sell all of its drilling rigs and certain related assets to Ensign. The purchase price to be paid by Ensign for the Assets is $117,500,000 CAD, or approximately $95,500,000 U.S. as of the date of the Agreement. NGH2L is guaranteeing the obligations of Nabors Canada under the Agreement.
Valaris announced that it has been awarded a 200-day extension to its bareboat charter agreement with ARO Drilling for VALARIS JU-250 (Bob Palmer), a heavy-duty ultra-harsh environment jackup. The extension is in direct continuation of the existing contract and, as a result, the VALARIS JU-250 is now expected to be under contract through the end of 2021. ARO Drilling’s contract with Aramco has been extended for the same period.
No significant news.
No significant news.
U.S. stock index futures fell, and world shares retreated from recent record peaks, as markets once more grew jittery about the pandemic ahead of the half-year-end and before key U.S. jobs data later this week. The dollar was heading for its biggest monthly rise since March while gold prices edged down and were on track for their biggest monthly decline since November 2016. Oil prices were broadly steady after data suggested U.S. crude stockpiles were shrinking while an OPEC report warned of a possibly significant glut building by the end of next year. On the economic data calendar, ADP National Employment data and pending home sales data is scheduled for release later in the day.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 5/19/21 –VIDEO: Energy Sector Catalysts
- 5/17/21 – VIDEO: Oil prices could become ‘a little disjointed’: Nasdaq Analyst
- 2/18/21 – VIDEO: Why the Texas energy crisis may send gasoline prices higher
- 2/17/21 – VIDEO: Texas Freeze Hits Oil Supply
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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