Tuesday, June 28, 2016
Sector Commentary
The energy sector is set for a higher open following two consecutive days of sizeable declines, tracking the broader equity markets and underlying commodities as traders looked to bargain hunt. This comes despite investors continuing to digest the ramifications of Britain's exit from the EU as the U.K. Prime Minister traveled to Brussels to discuss it with EU leaders. We can expect to see shorts and fast money making up most of today’s fragile relief session as the lingering uncertainty could keep most longs to the sidelines.
WTI and Brent crude oil futures are both higher this morning after falling over 7% during the prior two sessions, boosted by strength in equities, a rise in the dollar and a looming strike at several Norwegian oil and gas fields which threatened to cut output in Western Europe's biggest producer. A report by industry monitor Genscape that showed a 1.3 million barrel fall in crude inventories at the benchmark's pricing hub in Cushing, Oklahoma, added further support.
Natural gas futures continued to climb higher on the last day of trading for the July contract, with forecasts calling for above normal temperatures in key consuming regions continuing to drive prices higher.
INTERNATIONAL INTEGRATEDS
Reuters - A fire at a BP gas processing plant near Pasacagoula, Mississippi was under control early Tuesday morning.
Raymond James resumed coverage of Eni with an ‘Outperform’ rating.
Reuters - Statoil and JX Nippon completed their previously announced transaction whereby Statoil has acquired JX Nippon’s 45% equity share in, and operatorship of, the UK licence for the Utgard field. Through this transaction Statoil now has a 100% interest in UK Continental Shelf licence P312 which, with Norwegian Continental Shelf licence PL046, comprises the Utgard field.
(Late Monday) Reuters - Total has won a 30 percent stake in a new 25-year contract to operate Qatar's largest offshore oilfield, officials said on Monday, in the second major upstream development deal for the French oil firm in the Gulf region in as many years.
CAnadian INTEGRATEDS
Desjardins Securities upgraded Husky Energy to ‘Buy’ from ‘Hold.’
U.S. E&PS
(Late Monday) Reuters - Energen expected its 2016 production of 52.7-53.5 mboepd, excluding asset sales. It also expected to build 37-39 net DUCs to be drilled in the
Midland Basin and 17-19 net in Delaware Basin.
Reuters - Norway's $834 billion sovereign wealth fund, the world's largest, said on Tuesday it has banned Cairn Energy and Kosmos Energy from its portfolio due to their business in the disputed territory of Western Sahara.
Wolfe Research upgraded Marathon Oil to ‘Peer Perform’ from ‘Underperform.’
(Late Monday) Press Release - QEP Resources announced that it has completed the sale of 23,000,000 shares of common stock in connection with its previously announced underwritten public offering, including 3,000,000 shares of common stock issued in connection with the underwriters’ full exercise of their option to purchase additional shares.
(Late Monday) Press Release - Southwestern Energy announced that it has entered into agreements with substantially all of its bank group for its $2.0 billion revolving line of credit and its $750 million term loan to extend maturities and modify certain other terms and conditions of the credit facilities.
OIL SERVICES
Piper Jaffray upgraded Calfrac Well Services to ‘Neutral’ from ‘Underweight.’
DRILLERS
Susquehanna Financial upgraded Ensco to ‘Neutral’ from ‘Negative.’
REFINERS
Press Release - Calumet Specialty Products Partners announced the sale of its 50% equity interest in Dakota Prairie Refining to joint venture partner WBI Energy, a wholly-owned subsidiary of MDU Resources Group. Concurrent with Calumet's sale of its equity interest to WBI, Tesoro has acquired 100% of DPR from WBI in a separate transaction that closed on June 27, 2016.
MARKET COMMENTARY
U.S. stock index futures rose sharply on Tuesday as investors rushed to pick up Brexit-hit stocks after Wall Street crumbled under fear and uncertainty to its worst two-day fall in 10 months. Banks, which were the worst hit since Britain voted to leave the European Union on Thursday, were among the most attractive stocks for bargain hunters. Wall Street closed lower on Monday with all three indexes lower for the year. A rebound in oil prices on Tuesday signaled an appetite for riskier assets, while gold lost its two-day shine and fell 1.1 percent. While investors do not expect the U.S. Federal Reserve to raise short-term interest rates anytime this year, they will keep an eye on economic data that can steer the Fed's sentiment.
Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services -- the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
