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Energy Market Commentary April 11, 2017: Nasdaq Advisory Services

Tuesday, April 11, 2017

Sector Commentary

Energy stocks are set to open around breakeven from yesterday’s strong gains amid flat lining oil, natural gas and equity futures prices. Focal points today should remain on the approaching earnings season, comments from Fed Chair Janet Yellen late yesterday saying that the bank’s focus is to maintain the progress made, and geopolitical tensions in the Middle East and the Korean peninsula. Some energy companies will be steered by analyst research recommendation changes made this morning as well.

Oil prices remained buoyant around the $53-level on WTI, while Brent oil futures were just below $56. WTI’s close yesterday marked the highest settlement price since March 7th, underscoring the alleviation of sell pressure from recent liquidations of short-term long positions in oil futures, while disruptions at Libya’s largest oilfield also lent support to the commodity. Expectations of drawdowns beginning to emerge heading into the driving season, and as refiners switch to summer fuel processing remain the bull’s case for higher prices throughout the nearing summer driving period. Reports from AAA also stating that retail gasoline prices reached 19-month highs supported prices.

Natural gas futures inched lower by a penny this morning on low volume and amid recent profit taking above the $3.20-mark. Last week’s smaller than expected build in storage signaled to some that the shoulder season may be short in duration amid expectations of a quicker than expected rise in temperatures. The markets are also awaiting the EIA’s short-term energy outlook on demand and production expectations.

U.S. E&PS

Bank of America added Hess Corp to its “US 1 List.”

Wolfe Research upgraded Hess Corp to “Outperform” from “Peer Perform.”

CANADIAN E&PS

Press Release - Canacol Energy Ltd. is pleased to report on the conventional natural gas prospective resources for its Esperanza, VIM-21, VIM-5, and VIM-19 exploration blocks in the Lower Magdalena valley basin of Colombia.

OIL SERVICES

Press Release - Seventy Seven Energy Inc. and Patterson-UTI Energy, Inc. announced that SSE was extending the deadline for holders of its outstanding warrants to exercise those warrants in advance of the consummation of the merger contemplated by the previously announced Agreement and Plan of Merger dated as of December 12, 2016, by and among SSE, Patterson-UTI, and Pyramid Merger Sub, Inc.

Credit Suisse upgraded Tetra Technologies Inc. to “Outperform” from “Neutral.”

DRILLERS

North Atlantic Drilling Ltd a majority owned subsidiary of Seadrill Limited, has secured 10-year contract awards for the jack-ups West Elara and West Linus with ConocoPhillips Skandinavia AS for work in the Greater Ekofisk Area. The total additional backlog for the new contract awards is estimated at $1.4 billion excluding performance bonuses.

MLPs & Pipelines

Press Release - Pembina Pipeline Corporation is pleased to provide an update on its natural gas liquids value chain strategy. This update includes progress on the Company's plans to develop a west coast liquefied petroleum gas export terminal as well as an update regarding activity in the Company's Gas Services business.

MARKET COMMENTARY

U.S. stock index futures were little changed as investors abstained from betting on riskier assets amid rising global geopolitical tensions. Safe-haven assets benefited, with the yen recording broad gains against major currencies and gold hit its highest level since November. On the economic front, the U.S. Labor Department is expected to issue its job openings and labor turnover survey for February. Weakness in shares of banking and tech companies weighed on European bourses, while Asian markets ended on mixed.


Nasdaq Advisory Services Energy Team Nasdaq's Advisory Services Tamar Essner
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