Markets

Energy Commentary: Sector Set For Mixed To Higher Start

Wednesday, July 19, 2017

Sector Commentary

The energy sector is set for another mixed to higher start, supported by further strength in the crude complex while weakness in the major equity indices weighed.

WTI and Brent crude oil futures are marginally higher this morning, boosted by yesterday’s API report showing that while crude stocks rose against expectations, gasoline and distillates drop significantly and versus expectations of builds. The markets will be looking to towards today’s government report for verification. Meanwhile, markets continue to speculate ahead of OPEC agreement meetings in Russia starting this weekend with expectations building on potential for a Nigeria/Libya cap.

Natural gas futures slid lower this morning after three straight days of gains which brought the front month up to seven-week highs, pressured by slightly cooler than originally expected temperatures over the next two weeks.

INTERNATIONAL INTEGRATEDS

(Late Tuesday) Press Release - BP is considering spinning off certain U.S. pipeline assets in an initial public offering. It would be structured as a master limited partnership.

Reuters - Gazprom started laying undersea pipes for the second line of its new TurkStream gas pipeline in the Black Sea, citing an unnamed counterparty of a contractor and an unnamed government official.

Press Release - CGG said that it has been contracted by Petroleo Brasileiro to process the seismic data from a 3D Ocean Bottom Node survey covering a full-fold area of 2,180 square kilometers in Brazil's deep water Santos Basin.

(Late Tuesday) Press Release - Petroleo Brasileiro began discussions with construction company Odebrecht to revise the shareholder accord in petrochemical company Braskem.

U.S. E&PS

(Late Tuesday) Press Release - Extraction Oil & Gas priced its previously announced private offering of senior unsecured notes due in 2024. The senior unsecured notes will bear interest at 7.375% per annum. Extraction upsized the offering amount from $350 million to $400 million in aggregate principal amount.

Barclays upgraded Plains All American Pipeline and Williams Companies to ‘Overweight’ from ‘Equal Weight’.

OIL SERVICES

Press Release - CGG said that it has been contracted by Petroleo Brasileiro to process the seismic data from a 3D Ocean Bottom Node survey covering a full-fold area of 2,180 square kilometers in Brazil's deep water Santos Basin.

REFINERs

(Late Tuesday) Press Release - Tesoro to become Andeavor on August 1, 2017, announced it reached a definitive agreement with Petróleos Mexicanos for terminaling and transportation services in Mexico. The agreement will enable Tesoro to supply transportation fuels in the Mexican states of Sonora and Baja California.

MLPs & Pipelines

Barclays downgraded Magellan Midstream Partners and Targa Resources to ‘Equal Weight’ from ‘Overweight’.

Press Release - ONEOK completed the public offering of 4.95% senior unsecured notes, due July 13, 2047, for gross proceeds of US$700 million. The notes were priced at 98.753% of the principal amount and yield to maturity of 5.031%. Interest on notes is payable semi-annually on January 13 and July 13 of each year, beginning from January 13, 2018.

(Late Tuesday) Press Release - ONEOK announced the retirement of Stephen W. Lake, Senior Vice President, General Counsel and Assistant Secretary effective July 21, 2017. Stephen B. Allen, ONEOK vice president and associate general counsel, assumed Lake's responsibilities.

Barclays upgraded Phillips 66 Partners, Plains All American Pipeline and Williams Partners to ‘Overweight’ from ‘Equal Weight’.

Press Release - A subsidiary of Plains All American Pipeline announced a successful conclusion to the open season for additional capacity from the Delaware Basin to Cushing, OK. The Partnership announced that it has received sufficient committed volume from shippers to expand portions of its pipeline systems to accommodate a volume increase of approximately 120,000 barrels per day of movements from the Delaware Basin and Midland to Cushing, OK.

(Late Tuesday) Press Release - Western Gas Partners announced that the board of directors of its general partner declared a quarterly cash distribution of $0.890 per unit for the second quarter of 2017. This distribution represents a 2-percent increase over the prior quarter and a 7-percent increase over the second quarter of 2016. WES's second quarter 2017 distribution is payable on August 11, 2017, to unitholders of record at the close of business on July 31, 2017.

Press Release - Williams Partners announced that Northwest Pipeline filed an application with the Federal Energy Regulatory Commission seeking authorization for its North Seattle Lateral Upgrade project in south Snohomish County in the state of Washington.

MARKET COMMENTARY

Major U.S. stock index futures looked set to open little changed while the Nasdaq futures rose, signaling a gain in the tech sector. Building permits and housing starts data are on the radar. European shares advanced, boosted by strong earnings and Asian stocks ended higher. Oil prices inched up, supported by a strong gasoline market. Gold slipped as the dollar's recovery from 10-month lows dampened upward momentum in the metal after three straight sessions of gains.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.