Markets

Energy Market Commentary: Traders Waiting On OPEC

Tuesday, November 21, 2017

Sector Commentary

Energy stocks appear capped in the pre-market as traders remain reluctant to take positions ahead of next week’s OPEC meeting and as oil prices are flat after yesterday’s losses. Meanwhile, broader index futures continue to advance.

Corporate news is very light and the pace of ratings changes also moderated. Shares of BP are stronger on news that the company will sell stakes in its Bruce assets in the North Sea for around $398 million and on news that the company is in talks with exploration company Cairn Energy to acquire a 30% stake in a field offshore Senegal, which could be valued at around $600 million.

Oil prices are paring their overnight gains and flat lining as the narrative remains the same from yesterday. Expectations that OPEC will extend supply cuts next week were supported by comments from Iran and Saudi that affirmed their commitment to the deal while doubts continue to emerge about Russia’s willingness to commit.

Henry Hub natural gas remains weaker on forecasts for less heating demand over the next two weeks than previously expected, especially during the U.S. Thanksgiving holiday week.

INTERNATIONAL INTEGRATEDS

Reuters - BP said it agreed to sell stakes in three fields in its Bruce assets in the North Sea to Serica Energy plc.

Reuters - Oil exploration company Cairn Energy is in talks with BP to sell a 30 percent stake in its deepwater SNE field offshore Senegal, which could be valued at around $600 million, banking sources and a Senegal oil ministry source said.

HSBC downgraded Royal Dutch Shell to ‘Hold’ from ‘Buy’.

(Late Monday) Reuters - Shell Canada, a unit of Royal Dutch Shell, warned customers synthetic crude volumes from its 255,000 barrel per day Scotford, Alberta, upgrader may be reduced in November and potentially December.

(Late Monday) Reuters - An overhaul of the gasoline-producing unit at Total’s 225,500-barrel-per-day Port Arthur, Texas, refinery will be extended at least a week.

U.S. E&PS

(Late Monday) Press Release - Bill Barrett announced that it has entered into an agreement with unaffiliated third parties to sell its remaining non-core assets located in the Uinta Basin for cash proceeds of approximately $110 million. The transaction is expected to close on or before December 31, 2017, and is subject to customary closing conditions and adjustments.

Mizuho Securities upgraded Callon Petroleum and QEP Resources to ‘Buy’ from ‘Neutral’.

(Late Monday) Press Release - EP Energy LLC, a wholly-owned subsidiary of EP Energy Corp announced that it and its wholly-owned subsidiary, Everest Acquisition Finance Inc., as co-issuer, have launched exchange offers to exchange up to $1.2 billion aggregate principal amount of new 9.375% Senior Secured Notes due 2024 for the Issuers' outstanding Senior Notes.

(Late Monday) Press Release - The Board of Directors of Lonestar Resources US voted to increase the size of the Board froma total of nine to ten directors and elected Matthew B. Ockwood as a director of the Company.

Mizuho Securities downgraded Southwestern Energy to ‘Neutral’ from ‘Buy’.

OIL SERVICES

Suntrust Robinsons upgraded Superior Energy Services to ‘Buy’ from ‘Hold’.

MLPs & PipelinES

Press Release - Philly Shipyard delivered the American Pride, the fourth of four next generation 50,000 dwt product tankers that it built for American Petroleum Tankers, a subsidiary of Kinder Morgan.

(Late Monday) Reuters - TransCanada started initial excavation work at the site of an oil spill on its Keystone pipeline in South Dakota but has not yet pinpointed where the leak came from.

MARKET COMMENTARY

U.S. stock indexes looked set to open higher, with upbeat results from retailer Lowe's and cyber security firm Palo Alto helping pre-market sentiment. Existing home sales data for October is also scheduled for release later in the day. European stocks and the euro were lower amid the governing crisis in Germany. Oil prices rose on expectations of an extended OPEC-led production cut, though rising output in the United States capped gains. Gold advanced, as focus turned to the minutes of a November Federal Reserve meeting due Wednesday.


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