The energy sector is poised for a mixed to higher start, backed by strength across the underlying commodities but capped by weakness in the major equity indices which slid ahead of Federal Reserve Chairman Jerome Powell’s testimony to congress later today and the release of the Fed meeting minutes. Investors will be scouring both for clues on the central bank’s future interest rate policy direction.
WTI crude oil futures are up over 2% in early trading, in line with Brent, supported by last night’s API data that showed U.S. inventories fell more than expected and on reports that major U.S. producers were evacuating rigs in the Gulf of Mexico before a storm. Last night’s API report showed U.S. crude inventories fell by 8.1 million barrels in the week to July 5 to 461.4 million, compared with analyst expectations for a decrease of 3.1 million barrels. Weather forecasts for the Gulf of Mexico warned that a tropical disturbance might become a storm on Wednesday or Thursday, promoting producers to begin evacuating crews and shutting down their production. Traders will be looking to the EIA data later today as the next major catalyst.
Natural gas futures are up over 1% this morning, garnering support from potential weather disruptions in the GoM and warmer weather forecasts in key consuming regions that should stoke demand.
Reuters - Indonesian state energy company PT Pertamina may purchase around 109,000 barrels per day (bpd) crude from contractors of domestic oil fields in the second half of 2019. This will include purchase from the Rokan block, operated by Chevron Pacific Indonesia, a unit of Chevron.
(Late Tuesday) Reuters - Major U.S. oil producers began evacuating and shutting in production at their deepwater Gulf of Mexico platforms in advance of a tropical disturbance expected to become a storm this week. Chevron, Royal Dutch Shell, BP Plc and BHP Group are removing staff from 15 offshore energy platforms. ExxonMobil is "closely monitoring" the disturbance to determine if its facilities may be affected.
(Late Tuesday) Reuters - Louisiana, Mississippi and Texas coastal refineries operated by Royal Dutch Shell and Chevron were monitoring a developing weather disturbance in the northeastern Gulf of Mexico that may produce heavy wind and rain later this week.
(Late Tuesday) Reuters - Chevron began shutting in and evacuating five production platforms in the Gulf of Mexico, joining a move by major oil companies to prepare for a tropical storm. Chevron is also removing some non-essential workers at a sixth platform, Jack/St. Malo, as a precaution. The company did not disclose the amount of production affected.
(Late Tuesday) Reuters - The Trump administration is discussing the renewal of a license allowing Chevron to continue operating in Venezuela despite U.S. sanctions on the country's oil sector. The waiver issued by the U.S. Treasury's Office of Foreign Assets Control will expire on July 27.
Reuters - HitecVision and Petrogas have teamed up to buy a portfolio of Total's British North Sea oilfields for $635 million. The fields, which are set to produce 25,000 barrels of oil equivalent per day this year, will be owned by a subsidiary of the two groups called Petrogas NEO UK which they want to expand to produce more than 100,000 boed within two to three years.
(Late Tuesday) Reuters - Bolivia's state-owned oil company YPFB plans to bid on a stake in a natural gas pipeline linking the country to Brazil to secure better terms for its gas sales there. YPFB intends to bid on an unidentified portion of the 51% stake that Petroleo Brasileiro SA Petrobras owns in the Transportadora Brasileira Gasoduto Bolivia-Brasil, which pipes Bolivian natural gas from the Bolivian-Brazilian border to Sao Paulo.
Credit Suisse upgraded Total to ‘Outperform’ from ‘Neutral.’
Credit Suisse downgraded BP to ‘Neutral’ from ‘Outperform.’
(Late Tuesday) Reuters - Major U.S. oil producers began evacuating and shutting in production at their deepwater Gulf of Mexico platforms in advance of a tropical disturbance expected to become a storm this week. Chevron, Royal Dutch Shell, BPand BHP Group are removing staff from 15 offshore energy platforms.
(Late Tuesday) Reuters - BP began to evacuate and shut in production at four offshore U.S. Gulf of Mexico production platforms as a developing weather disturbance moves across the Gulf of Mexico. The four platforms - Thunder Horse, Atlantis, Mad Dog and Na Kika - produce more than 300,000 barrels of oil equivalent per day.
(Late Tuesday) Reuters - Royal Dutch Shell evacuated non-essential staff from four oil and gas platforms in the eastern U.S. Gulf of Mexico ahead of an approaching storm. The company said it expects minimal impacts to operations as a result of the weather disturbance. It has reduced staff on the Appomattox, Mars, Olympus and Ursa platforms and reduced production by about 2,535 barrels per day (bpd) on its Mars and Olympus platforms.
Press Release - EQT and the Rice Team jointly announced that, based on preliminary voting results at the EQT Annual Meeting, shareholders have elected all seven Rice Team-nominated directors as well as the five nominees supported by both EQT and the Rice Team. All 12 elected directors received more than 80% of the votes cast at the Annual Meeting. After voting results are certified by the independent inspector of elections, expected later today, EQT’s reconstituted Board will be comprised of Lydia Beebe, Dr. Philip Behrman, Lee Canaan, Janet Carrig, Dr. Kathryn Jackson, John McCartney, James McManus II, Anita Powers, Daniel Rice IV, Toby Rice, Stephen Thorington, and Hallie Vanderhider. Following certification, the newly constituted Board will meet later today and is expected to name Toby Z. Rice as President and CEO, succeeding Robert McNally.
Press Release - Murphy Oil announced its subsidiary closed the sale to divest the fully issued share capital of the entities primarily conducting Murphy’s operations in Malaysia to a subsidiary of PTT Exploration and Production Public Company Limited. The transaction was previously announced on March 21, 2019, with an effective economic valuation date of January 1, 2019. After closing adjustments, Murphy will receive proceeds of approximately US$2.035 billion, and expects to report a gain on the sale of approximately $1.0 billion. Murphy does not anticipate tax liabilities related to the transaction.
Credit Suisse upgraded Laredo Petroleum to ‘Neutral’ from ‘Underperform.’
Credit Suisse downgraded Gulfport Energy and Southwestern Energy to ‘Underperform’ from ‘Neutral.’
(Late Tuesday) Reuters - Brothers Toby and Derek Rice are on course to win control of EQT's board of directors two years after having sold their own company, Rice Energy, to the natural gas producer. Enough votes have been cast for the Rice Group Brothers to defeat EQT's slate of directors in what has become one of the year's mostly closely watched proxy contests as the pair seeks to take over the board.
(Late Tuesday) Press Release - On July 3, 2019, Quentin R. Hicks, Executive Vice President and Chief Financial Officer of Halcon Resources, informed the Board of Directors that he will be departing from the company. Mr. Hicks will depart the company at a future date to be agreed between Mr. Hicks and the company. Mr. Hicks will continue to serve as the company’s principal financial officer until his departure date
Press Release - Gran Tierra Energy announced an operations update. Current production is approximately 34,500 BOEPD, an increase of 5,500 BOEPD from the previously reported average level of 29,000 BOEPD (5-day average during June 13 to 17, 2019); 4,500 BOEPD of this increase is attributable to the company bringing the Suroriente and PUT-7 Blocks fully back on-line; for second quarter 2019, Gran Tierra’s average production was approximately 35,550 BOEPD.
Press Release - McDermott International announced it has been awarded a contract in excess of $1.5 billion for Package 4 of Saudi Aramco's Marjan Increment Development Project to provide engineering, procurement, construction and installation (EPCI) of offshore gas facilities and pipelines.
Press Release - McDermott International announced it has been awarded a contract in excess of $3 billion for Package 1 of Saudi Aramco's Marjan Increment Development Mega-Project to provide engineering, procurement, construction and installation (EPCI) of the Gas-Oil Separation Plant (GOSP), in a consortium with China Offshore Oil Engineering Company (COOEC).
Susquehanna downgraded Superior Energy Services to ‘Neutral’ from ‘Positive.’
(Late Tuesday) Reuters - Valero Energy restored production to normal at its 180,000 barrel-per-day (bpd) Memphis, Tennessee, refinery after completing overhauls on gasoline-production units.
MLPS & PIPELINES
(Late Tuesday) Reuters - Seaway Crude Pipeline, owned by Enterprise Products Partners and Enbridge, asked U.S. regulators to decrease uncommitted rates for light crude volumes headed to U.S. Gulf Coast destinations from the Cushing, Oklahoma, oil storage hub.
(Late Tuesday) Reuters - U.S. energy and safety regulators told Cheniere Energy the company had to take several steps before the agencies would authorize the return to service of two liquefied natural gas storage tanks that leaked at the Sabine Pass LNG export terminal in Louisiana.
Futures for Wall Street’s major indexes fell and European stocks were subdued ahead of Federal Reserve Chairman Jerome Powell’s congressional testimony. Chinese shares fell as flat producer price inflation fueled concerns about domestic growth and Japan's Nikkei ended slightly lower. Receding hopes of a sharp U.S. interest rate cut continued to support the dollar. Oil rose after industry data showed U.S. inventories fell more than expected and gold prices dropped. The minutes from the Fed's previous meeting will also be released later in the day.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 5/2/19 - CNBC Worldwide Exchange – Energy sector M&A
- 4/23/19 - Bloomberg Daybreak Asia – Iran sanctions implications
- 3/26/19 - CNBC World Wide Exchange – Energy sector performance
- 3/18/19 - Bloomberg Daybreak Asia – OPEC meeting, Iran sanctions
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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