Crude Prices Drop as U.S. Inflation Surges

SECTOR COMMENTARY:

Energy stocks are set to open lower, tracking broader oil prices and some profit harvesting following strong YTD gains.  Energy earnings are winding down and news flow is light.  The U.S. bond market is closed in observance of Veterans Day.

Oil prices dropped to $82 a barrel on Thursday, extending sharp falls triggered by concerns over rising U.S. inflation while OPEC cut its 2021 oil demand forecast due to high energy prices. OPEC said in a monthly report it expects oil demand to average 99.49 million bpd in the fourth quarter of 2021, down 330,000 bpd from last month's forecast. The group however stuck to its prediction of robust growth to above pre-pandemic rates in 2022.

Natural gas futures are higher ahead of weekly inventory data.  Analysts expect a build of 7 bcf.

BY SECTOR:

US INTEGRATEDS

Chevron said its Australian unit will invest A$40 million ($29.49 million) to address a carbon dioxide injection shortfall at its Gorgon liquefied natural gas facility in Western Australia, Reuters reported. Under the investment, Chevron Australia will address the shortfall over a five-year period, and acquire and surrender 5.23 million greenhouse gas offsets, it said in a statement.

INTERNATIONAL INTEGRATEDS                                            

bp and Aker announced that they are exploring a potential block sale of some of the shares they hold in leading independent Norwegian oil and gas producer Aker BP ASA, through a private placement. Aker and BP currently control approximately 40% and 30% of the shares outstanding in Aker BP. The two are contemplating selling shares representing approximately a total of 5% of Aker BP shares through an accelerated book-building process.

Eni, through Eni gas e luce, signed with Zouk Capital and Aretex the closing that formalized the acquisition of 100% in BE Power. The agreement for the deal had already been signed in August subject to the receipt of approval from the relevant authorities.

According to Reuters, Amancio Ortega, the billionaire founder of Zara parent Inditex is buying a 49% stake in a wind farm operated by Spanish energy group Repsol(REP.MC), Repsol said on Thursday. In its first push into renewable energy, Pontegadea, the Ortega family investment vehicle, will pay 245 million euros ($280.70 million) for the stake in the 335 megawatt Delta wind farm in northern Spain, according to Repsol's statement.

CANADIAN INTEGRATEDS

No significant news.                       

U.S. E&PS

Barclays upgraded Kosmos Energy to Overweight from Equal Weight.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

KBR announced that it has received a letter of award from Northern Petrochemical Corporation to provide the license and basic engineering design for the ammonia-methanol co-production technology developed jointly by KBR and Johnson Matthey (JM), global leaders in sustainable technologies, for Northern Petrochemical's new facility in Alberta, Canada.

KBR announced its Board of Directors has declared a regular quarterly dividend of $0.11 per share on the company's common stock, par value $0.001 per share, to be paid on January 14, 2022 to stockholders of record on December 15, 2021.

DRILLERS

No significant news.

REFINERS

HollyFrontier announced the promotion of Tim Go to the position of President and Chief Operating Officer of HollyFrontier effective immediately. As President and Chief Operating Officer, Mr. Go’s responsibilities will include oversight over HollyFrontier’s Refining and Lubricants and Specialty Products segments. Mike Jennings, who previously served as Chief Executive Officer and President of HollyFrontier, will continue to serve as Chief Executive Officer of HollyFrontier.

MLPS & PIPELINES

Scorpio Tankers reported its results for the three months ended September 30, 2021. The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.10 per share on the Company’s common stock. For the three months ended September 30, 2021, the Company had a net loss of $73.3 million, or $1.34 basic and diluted loss per share.  For the three months ended September 30, 2021, the Company had an adjusted net loss of $76.1 million, or $1.39 basic and diluted loss per share, which excludes from the net loss a $2.9 million, or $0.05 per basic and diluted share, gain recorded as part of the refinancing of the lease financing for five vessels.

MARKET COMMENTARY

U.S. stock index futures rose after a drop in the previous session sparked by worries over a strongest inflation reading in over three decades, which encouraged bets on interest rate hikes. European shares were mostly up, supported by a slew of strong corporate earnings. In Asian equity markets, Japan's Nikkei closed higher as investors were selective and scooped up stocks that were undervalued relative to their latest outlooks, while Chinese stocks ended in the green as property shares surged on policy easing bets. The dollar hit a 16-month high against its major peers. In commodities, gold prices gained as investors moved towards the safety of bullion, while oil prices dropped.

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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