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Energy Market Commentary December 29, 2016: Nasdaq Advisory Services

Thursday, December 29, 2016

Sector Commentary

Oil and gas stocks are set for a mixed open, with oil futures trading marginally higher and as U.S. equity futures are marginally lower this morning.

WTI crude oil futures are lower, while their overseas counterpart are seeing some modest strength in the pre-market session. Prices steadied this morning after a surprise increase in U.S. inventories helped stall an upward trend that has pushed global crude benchmarks to their highest levels since July last year. Trading volumes were thin with many investors away for year-end holidays, although the expiry of the front-month February ICE Brent contract on Thursday could generate some activity. Both crude oil benchmarks have made big gains this month since OPEC and other producers agreed to curb production in an attempt to balance an over-supplied fuel market.

Natural gas futures are trading off by over 2% this morning on some technical weakness after yesterday’s strong session in which prices touched a two-year high on expectations of stronger heating demand amid forecasts of colder-than-normal temperatures in early January.

INTERNATIONAL INTEGRATEDS

Reuters - Petroleo Brasileiro closed the sale of a 100 percent stake in Nansei Sekiyu to Taiyo Oil Company.

(Late Wednesday) Reuters - Petroleo Brasileiro said it will miss its target for asset divestment in 2015-2016 despite two sales announced on Wednesday that will raise $587 million.

(Late Wednesday) Reuters - Petroleo Brasileiro said on Wednesday it had sold its stake in Guarani for $202 million to Tereos.

Drillers

Press Release - Seadrill received a three year contract extension from Saudi Aramco for the jack-up AOD III expiring in December 2019. The extension is in direct continuation of the current contract and will add approximately $112.5 million in contract backlog.

Macquarie Research upgraded Veresen to ‘Outperform’ from ‘Neutral.’

MLPs & Pipelines

Macquarie Research upgraded Veresen to ‘Outperform’ from ‘Neutral.’

MARKET COMMENTARY

U.S. stock futures were little changed as investors readied for a three-day New Years break, while the dollar weakened and gold inched higher. November data for new home sales and building permits are scheduled for release. Gains in Deutsche Bank and Credit Suisse, after the banks settled mortgage securities fraud suits with the United States helped push European shares higher. Oil slipped below $55 a barrel after Libya said it would increase production in the next three months.


Nasdaq Advisory Services Energy Team Tamar Essner
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