Markets

Energy Market Commentary: Energy Stocks Begin New Year Flat

MONDAY, JANUARY 09, 2017

SECTOR COMMENTARY

Energy stocks are poised for a weaker opening while the broader index futures are more mixed as traders eyed a potential breakthrough on the elusive 20,000 mark for the Dow coupled with steep weakness in oil prices. Company specific news in the energy space is light today.

Oil prices are reversing last week’s gains, trading down by 2% in both the WTI and Brent benchmarks on signs of growing U.S. production as well as USD strength. The more bearish factors outweighed continued signs of OPEC members as well as Russia complying with output cuts. News that Libya declared force majeure is also failing to lift prices as the market instead focused on Friday’s Baker Hughes data which showed a rise in the US rig count as a sign that output will rise in the US as well as signs of increased exports from Iran.

Natural gas futures are extending last week’s 12% losses on cold near-term temperatures.

U.S. INTEGRATEDS

Reuters - A fire broke out at one of the units at ExxonMobil's Singapore Chemical Plant on Sunday and has since been put out.

(Sunday) Reuters - Exxon Mobil said it was restarting units on Sunday at its 344,600-barrel-per-day Beaumont, Texas, refinery.

INTERNATIONAL INTEGRATEDS

(Saturday) Reuters - Gazprom said on Saturday its daily supplies of natural gas to countries outside of the former Soviet Union reached a record high due to cold weather in Europe.

Press Release - Petróleo Brasileiro announced that its wholly-owned subsidiary Petrobras Global Finance B.V., plans to offer global notes in one or more series, subject to market and other conditions. The Notes will be unsecured obligations of PGF and will be fully and unconditionally guaranteed by Petrobras.

U.S. E&PS

Suntrust Robinson Humphrey Capital Markets dropped coverage of Abraxas Petroleum, Approach Resources, Bill Barrett, Cabot Oil & Gas, Denbury Resources, Eclipse Resources, EP Energy, Laredo Petroleum and Southwestern Energy.

Press Release - Comstock Resources announced that it entered into a joint development venture that will target the Haynesville shale. Comstock and USG Properties Haynesville, entered an agreement to jointly develop certain acreage prospective for the Haynesville shale in Louisiana and Texas which has recently been acquired by USG.

Barclays upgraded Dril-Quip to ‘Overweight’ from ‘Equal Weight.’

Press Release - Noble Energy announced that the Company finalized the previously announced bolt-on transactions which have added approximately 7,200 net acres to the Company’s Southern Delaware Basin position in Reeves County, Texas.

Macquarie Research upgraded Oasis Petroleum to ‘Outperform’ from ‘Neutral.’

OIL SERVICES

Press Release - Baker Hughes announced that the international rig count for December 2016 was 929, up 4 from the 925 counted in November 2016, and down 166 from the 1,095 counted in December 2015. The international offshore rig count for December 2016 was 210, down 1 from the 211 counted in November 2016, and down 40 from the 250 counted in December 2015.

(Late Friday) Press Release - The Board of Directors of C&J Energy Services declared a dividend of one preferred stock purchase right for each outstanding share of the Company’s common stock, par value $0.01 per share.

Barclays upgraded Fairmount Santrol Holdings to ‘Overweight’ from ‘Equal Weight.’

Nordea initiated coverage of Petroleum Geo Services with a ‘Buy’ rating.

Barclays downgraded Weatherford International to ‘Equal Weight’ from ‘Overweight.’

DRILLERS

Barclays upgraded Diamond Offshore Drilling and Noble Corporation to ‘Equal Weight’ from ‘Underweight.’

Barclays upgraded Dril-Quip to ‘Overweight’ from ‘Equal Weight.’

Press Release - North Atlantic Drilling announced an amendment has been agreed with Jurong Shipyard Pte, which extends the delivery deferral period to July 6, 2017. The extension allows the parties to continue to explore commercial opportunities for the Unit.

MLPs & PIPELINES

Press Release - Energy Transfer Partners announced that it entered into a definitive agreement with Energy Transfer Equity in connection with a private placement of common units representing limited partner interests in ETP pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. The closing of the transaction, which is scheduled to occur on January 12, 2017, is conditioned upon the closing of ETE’s previously announced $580 million private placement, or PIPE, financing transaction.

Bernstein downgraded Energy Transfer Equity and Energy Transfer Partners to ‘Market Perform’ from ‘Outperform.’

MARKET COMMENTARY

U.S. stock index futures pointed to a mixed open on Monday as traders eyed a potential breakthrough the elusive 20,000 mark for the Dow Jones industrial average and focused on earnings. Dow and S&P futures pointed to a slightly lower open, while the Nasdaq was pointing marginally higher. On the data front, Monday will see consumer credit for November released at 3 p.m ET. In Europe, the pan-European Stoxx-600 index was around 0.5 percent lower on Monday. In Asia, the Shanghai Composite in China closed 0.55 percent higher, while the Nikkei in Japan closed 0.34 percent lower.


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