Markets

Energy Market Commentary: Energy Sector Carrying Over Declines Into Fourth Straight Session

Wednesday, November 15, 2017

Sector Commentary

The energy sector is set for another weak start, carrying over declines into their fourth-straight session on the backs of further weakness in the crude complex and major equity indices. The declines also come amid a lack of any significant company news and ahead of the closely watched EIA report later this morning.

WTI crude oil futures are down ~1.15% in early trading, in line with Brent. Futures on both sides of the Atlantic are continuing to be weighed down by yesterday’s IEA data that offered a gloomy outlook for oil demand growth while last night’s API report applied new additional pressures and stoked concerns that the EIA inventory report later today would show U.S. output rising, undermining OPEC cuts. The industry data showed builds in both crude and gasoline stocks, compared to expectations of draws which if in line with the EIA report, would be the largest crude build since March.

Natural gas futures started to recover from their recent slide and are up near 0.75% so far this morning, supported by cold weather forecasts in key consuming regions over the next two weeks.

INTERNATIONAL INTEGRATEDS

Reuters - BP announced that it is to commence a share buyback programme to repurchase ordinary shares in the capital of the Company.

(Late Tuesday) Reuters - Petróleo Brasileiro SA said that oil production in the country in October reached 2.16 million barrels per day on average, stable compared with September.

Canadian Intergrateds

Scotiabank downgraded CVE to ‘Sector Perform’ from ‘Sector Outperform’.

(Late Tuesday) Press Release - Suncor's Board of Directors has approved a quarterly dividend of $0.32 per share on its common shares, payable December 22, 2017 to shareholders of record at the close of business on December 1, 2017.

U.S. E&PS

(Late Tuesday) Press Release - Devon Energy announced it has brought online a high-rate Lower Meramec oil well offsetting its Coyote development in the over-pressured oil window of the STACK play.

Imperial Capital initiated Extraction Oil & Gas with ‘Outperform.’

(Late Tuesday) Press Release - PDC Energy announced that it has priced an offering of $600 million aggregate principal amount of 5.75% senior unsecured notes due 2026. The offering is expected to close on November 29, 2017, subject to customary closing conditions.

(Late Tuesday) Press Release - Rex Energy announced its third quarter 2017 financial and operational results. Production volumes from the third quarter of 2017 were 182.0 MMcfe/d, including 38% from liquids. The company reported adjusted non-gaap loss per share $1.00 and quarterly ‍total operating revenue $48.0 million.

Press Release - SandRidge Energy and Bonanza Creek Energy jointly announced that the two companies have entered into a definitive merger agreement under which SandRidge will acquire all of the outstanding shares of common stock of Bonanza Creek in a cash-and-stock transaction valued at $36.00 per share.

CANADIAN E&PS

(Late Tuesday) Press Release - Canacol Energy is pleased to report its financial and operating results for the three and nine months ended September 30, 2017. The company reported quarterly loss per share of $0.01 and total petroleum and natural gas revenues decreased 15% to $38 million. The company also reported that average production volumes decreased 11% to 16,587 boepd​.

OIL SERVICES

HSBC downgraded TechnipFMC to ‘Reduce’ from ‘Hold.’

TD Securities downgraded Trican Well Service to ‘Hold’ from ‘Buy.’

REFINERS

UBS downgraded Marathon Petroleum to ‘Neutral’ from ‘Buy.’

MLPs & Pipelines

UBS downgraded CVR Refining to ‘Sell’ from ‘Neutral.’

MARKET COMMENTARY

The broader markets Street are likely to continue its losing streaks as oil prices dipped after the International Energy Agency cast doubts over demand outlook. Investors will also watch for U.S. Energy Information Administration’s data on crude inventories. European stocks fell on lower commodity prices, but Airbus rallied after winning its biggest order. The euro rose as investors resumed buying European equities, while the U.S. dollar dipped as U.S. bond yields declined and gold edged higher.


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