Markets

Energy Market Commentary April 7, 2017: Nasdaq Advisory Services

Friday, April 7, 2017

Sector Commentary

Oil and gas stocks are looking to extend yesterday’s gains as crude oil futures are trading at one-month highs and while there is a lack of direction in the broader equity markets.

Crude oil futures are higher on both sides of the Atlantic in pre-market trading with WTI marginally outpacing Brent futures after the United States fired missiles at a Syrian government airbase, sending shockwaves through global markets and raising concerns that the conflict could spread in the oil-rich region. The toughest U.S. action yet in Syria's six-year-old civil war has ramped up geopolitical uncertainty in the Middle East. Although Syria has limited oil production, its location and alliances with big oil producers in the region mean any escalation of the conflict has the potential to increase supply-side fears.

Natural gas futures are trending lower, erasing most of yesterday’s gains on warm weather and on lower demand expectations.

U.S. INTEGRATEDS

Reuters - Exxon Mobil is marketing 1.3 million tonnes per year of mid-term liquefied natural gas volumes from its $19 billion Papua New Guinea LNG plant, reflecting overproduction and an increase in gas reserves.

(Late Thursday) Reuters - ExxonMobil was continuing work on the smaller of two gasoline-producing units at its 560,500 barrel per day Baytown, Texas, refinery.

INTERNATIONAL INTEGRATEDS

Reuters - Some big utilities in eastern Europe are backing a proposed EU antitrust settlement with Gazprom, increasing the chances of a deal that is opposed by countries striving to loosen the Kremlin's grip over their energy sectors.

CAnadian INTergrateds

(Late Thursday) Press Release - Cenovus Energy made significant progress executing on its previously announced financing plan for the company's $17.7 billion purchase of assets in Western Canada from ConocoPhillips. The acquisition is expected to close in the second quarter of this year.

U.S. E&PS

Stifel Nicolaus and Company initiated Apache and Oasis Petroleum at ‘Hold.’

(Late Thursday) Press Release - On April 6, 2017, each outstanding share of 8.0% Automatically Convertible Preferred Stock, par value $0.0001 per share of Halcón Resources automatically converted into 10,000 shares of the Company’s common stock, par value $0.0001 per share.

(Late Thursday) Press Release - Rice Energy announced the appointment of Dr. Kate Jackson to its Board of Directors, effective April 4, 2017. Dr. Jackson will serve on the Nominating and Governance Committee and the Compensation Committee.

Citigroup upgraded Williams Companies to ‘Buy’ from ‘Neutral.’

CANADIAN E&PS

(Late Thursday) Press Release - Parex Resources provides an operational update. Its Q1 2017 production was approximately 32,600 barrels of oil equivalent, an increase of 5% from 31,049 boe/d in the prior quarter. For Q2 2017, we expect production to average 34,000 boe/d for an overall increase of approximately 10% for the first half of the year.

OIL SERVICES

Press Release - Baker Hughes announced that the international rig count for March 2017 was 943, up 2 from the 941 counted in February 2017, and down 42 from the 985 counted in March 2016. The international offshore rig count for March 2017 was 197, down 3 from the 200 counted in February 2017, and down 14 from the 211 counted in March 2016.

DRILLERS

Press Release - Precision Drilling announced thatRobert Phillips, Chairman of the Board of Directors will not be standing for re-election and will retire from Precision's Board at the conclusion of Precision's Annual and Special Meeting of Shareholders on May 17, 2017.

REFINERs

(Late Thursday) Reuters - Valero Energy returned the smaller of two hydrocracking units at its 335,000 barrel per day (bpd) Port Arthur, Texas, refinery to full production on Thursday.

MLPs & Pipelines

Credit Suisse reinstated Enbridge Energy Partners at ‘Neutral.’

(Late Thursday) Reuters - Kinder Morgan restarted a gasoline pipeline after a faulty sensor falsely indicated a possible leak in West Sacramento, California, prompting the company to shut the line as a precaution.

Press Release - Seadrill Partners secured a one well contract with BP Canada Energy Group ULC for the West Aquarius in eastern Canada. The contract is expected to commence in the second quarter of 2018. The backlog for the contract, estimated to be a maximum of 120 days, is expected to be approximately $31 million.

Credit Suisse reinstated Spectra Energy Partners at ‘Outperform.’

Citigroup upgraded Williams Partners to ‘Buy’ from ‘Neutral.’

MARKET COMMENTARY

U.S. stock-index futures on Friday, already jittery after President Donald Trump’s late-Thursday airstrike against Syria, stepped lower as a key employment report came in weaker than expected. The Labor Department report showed that the U.S. created just 98,000 new jobs in March, marking the smallest gain in almost a year, as hiring cooled. Economists had predicted a 185,000 increase in nonfarm jobs. European markets fell as mining and financial stocks slipped, while Asian stocks ended on a mixed note. Gold prices rose as bids for safe-haven assets picked up after the United States fired dozens of cruise missiles at a Syrian airbase, escalating tensions with Russia and Iran. Oil prices hit a one-month high on concerns that the conflict could spread in the oil-rich region.


Nasdaq Advisory Services Energy Team Tamar Essner
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